10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  ___________________________________________________________

FORM 10-Q

 ___________________________________________________________

 (Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-12933 

___________________________________________________________

LAM RESEARCH CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________________

Delaware	94-2634797
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4650 Cushing Parkway Fremont, California	94538
(Address of principal executive offices)	(Zip Code)

(510) 572-0200

(Registrant’s telephone number, including area code)

__________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 26, 2019, the Registrant had 149,926,529 shares of Common Stock outstanding.

LAM RESEARCH CORPORATION

TABLE OF CONTENTS

		Page No.
	PART I. Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2019 and March 25, 2018	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2019, and March 25, 2018	4
	Condensed Consolidated Balance Sheets as of March 31, 2019, and June 24, 2018	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2019, and March 25, 2018	6
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2019, and March 25, 2018	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	40
	PART II. Other Information
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
Revenue	$	2,439,048		$	2,892,115		$	7,292,412		$	7,951,070
Cost of goods sold	1,364,711			1,561,401			4,014,844			4,265,446
Gross margin	1,074,337			1,330,714			3,277,568			3,685,624
Research and development	318,514			305,412			895,742			861,801
Selling, general, and administrative	190,306			197,791			534,179			565,719
Total operating expenses	508,820			503,203			1,429,921			1,427,520
Operating income	565,517			827,511			1,847,647			2,258,104
Other income (expense), net	20,532			(55,810		)	(10,494		)	(64,464		)
Income before income taxes	586,049			771,701			1,837,153			2,193,640
Income tax (expense) benefit	(38,659		)	7,099			(187,548		)	(834,105		)
Net income	$	547,390		$	778,800		$	1,649,605		$	1,359,535
Net income per share:
Basic	$	3.62		$	4.80		$	10.72		$	8.40
Diluted	$	3.47		$	4.33		$	10.20		$	7.45
Number of shares used in per share calculations:
Basic	151,201			162,378			153,891			161,885
Diluted	157,849			179,779			161,683			182,565

See Notes to Condensed Consolidated Financial Statements

3

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
Net income	$	547,390		$	778,800		$	1,649,605		$	1,359,535
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	6,684			12,197			(6,845		)	25,305
Cash flow hedges:
Net unrealized (losses) gains during the period	(7,950		)	(36,616		)	4,038			(26,624		)
Net losses (gains) reclassified into earnings	2,086			5,290			(2,492		)	2,019
	(5,864		)	(31,326		)	1,546			(24,605		)
Available-for-sale investments:
Net unrealized gains (losses) during the period	1,143			(25,406		)	1,441			(45,472		)
Net (gains) losses reclassified into earnings	(147		)	43,109			(201		)	43,070
	996			17,703			1,240			(2,402		)
Defined benefit plans, net change in unrealized component	216			155			(1,152		)	(2,029		)
Other comprehensive income (loss), net of tax	2,032			(1,271		)	(5,211		)	(3,731		)
Comprehensive income	$	549,422		$	777,529		$	1,644,394		$	1,355,804

See Notes to Condensed Consolidated Financial Statements

4

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

	March 31, 2019			June 24, 2018
	(unaudited)			(1)
ASSETS
Cash and cash equivalents	$	4,931,611		$	4,512,257
Investments	1,209,315			437,338
Accounts receivable, less allowance for doubtful accounts of $4,952 as of March 31, 2019, and $5,343 as of June 24, 2018	1,522,273			2,176,936
Inventories	1,622,242			1,876,162
Prepaid expenses and other current assets	156,800			147,218
Total current assets	9,442,241			9,149,911
Property and equipment, net	1,040,329			902,547
Restricted cash and investments	255,774			256,301
Goodwill	1,484,908			1,484,904
Intangible assets, net	223,022			317,836
Other assets	448,988			367,979
Total assets	$	12,895,262		$	12,479,478
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable	$	416,187		$	510,983
Accrued expenses and other current liabilities	1,046,938			1,309,209
Deferred profit	378,396			720,086
Current portion of convertible notes, capital leases, and commercial paper	964,107			610,030
Total current liabilities	2,805,628			3,150,308
Long-term debt and capital leases, less current portion	3,801,514			1,806,562
Income taxes payable	863,155			851,936
Other long-term liabilities	83,986			90,629
Total liabilities	7,554,283			5,899,435
Commitments and contingencies
Temporary equity, convertible notes	49,783			78,192
Stockholders’ equity:
Preferred stock, at par value of $0.001 per share; authorized, 5,000 shares, none outstanding	—			—
Common stock, at par value of $0.001 per share; authorized, 400,000 shares; issued and outstanding, 149,886 shares at March 31,2019, and 156,892 shares at June 24, 2018	150			157
Additional paid-in capital	6,315,495			6,144,425
Treasury stock, at cost; 135,045 shares at March 31, 2019, and 119,679 shares at June 24, 2018	(10,509,750		)	(7,846,476		)
Accumulated other comprehensive loss	(62,660		)	(57,449		)
Retained earnings	9,547,961			8,261,194
Total stockholders’ equity	5,291,196			6,501,851
Total liabilities and stockholders’ equity	$	12,895,262		$	12,479,478

(1) Derived from audited financial statements

See Notes to Condensed Consolidated Financial Statements

5

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

	Nine Months Ended
	March 31, 2019			March 25, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,649,605		$	1,359,535
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	243,873			241,276
Deferred income taxes	(75,105		)	(209,214		)
Equity-based compensation expense	142,389			125,002
Amortization of note discounts and issuance costs	5,137			13,469
Impairment of investment	—			42,456
Other, net	(646		)	23,327
Changes in operating assets and liabilities	330,273			341,538
Net cash provided by operating activities	2,295,526			1,937,389
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets	(237,543		)	(193,814		)
Business acquisition, net of cash acquired	—			(115,697		)
Purchases of available-for-sale securities	(1,975,688		)	(2,377,459		)
Maturities of available-for-sales securities	395,569			549,539
Sales of available-for-sale securities	809,379			3,639,331
Other, net	(5,288		)	(14,358		)
Net cash (used for) provided by investing activities	(1,013,571		)	1,487,542
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt	(116,496		)	(577,415		)
Net (repayments) proceeds from issuance of commercial paper	(61,754		)	997,971
Proceeds from borrowings on revolving credit facility	—			750,000
Repayments of borrowings on revolving credit facility	—			(750,000		)
Proceeds from issuance of long-term debt, net of issuance costs	2,476,720			—
Treasury stock purchases	(2,672,051		)	(1,346,940		)
Dividends paid	(513,475		)	(225,604		)
Reissuance of treasury stock related to employee stock purchase plan	32,920			34,057
Proceeds from issuance of common stock	5,119			6,632
Other, net	(13,207		)	11
Net cash used for financing activities	(862,224		)	(1,111,288		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(904		)	8,200
Net increase in cash, cash equivalents, and restricted cash	418,827			2,321,843
Cash, cash equivalents, and restricted cash at beginning of period	4,768,558			2,633,739
Cash, cash equivalents, and restricted cash at end of period	$	5,187,385		$	4,955,582
Schedule of non-cash transactions:
Accrued payables for stock repurchases	1,637			2,165
Accrued payables for capital expenditures	27,283			32,610
Dividends payable	164,874			82,030
Transfers of inventory to property and equipment, net	42,519			38,878
Reconciliation of cash, cash equivalents, and restricted cash	March 31, 2019			March 25, 2018
Cash and cash equivalents	$	4,931,611		$	4,698,995
Restricted cash and investments	255,774			256,587
Total Cash, cash equivalents, and restricted cash	$	5,187,385		$	4,955,582

See Notes to Condensed Consolidated Financial Statements

6

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Three Months Ended
	March 31, 2019
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at December 23, 2018	153,961		$	154		$	6,256,942		$	(9,573,486	)	$	(64,692	)	$	9,165,445		$	5,784,363
Sale of common stock	947		1			5,009			—			—			—			5,010
Purchase of treasury stock	(5,702	)	(6		)	—			(936,264		)	—			—			(936,270		)
Equity-based compensation expense	—		—			53,240			—			—			—			53,240
Effect of conversion of convertible notes	680		1			(6,921		)	—			—			—			(6,920		)
Reclassification from temporary to permanent equity	—		—			7,225			—			—			—			7,225
Net income	—		—			—			—			—			547,390			547,390
Other comprehensive income	—		—			—			—			2,032			—			2,032
Cash dividends declared ($1.10 per common share)	—		—			—			—			—			(164,874		)	(164,874		)
Balance at March 31, 2019	149,886		$	150		$	6,315,495		$	(10,509,750	)	$	(62,660	)	$	9,547,961		$	5,291,196
	Nine Months Ended
	March 31, 2019
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at June 24, 2018	156,892		$	157		$	6,144,425		$	(7,846,476	)	$	(57,449	)	$	8,261,194		$	6,501,851
Sale of common stock	1,026		1			5,118			—			—			—			5,119
Purchase of treasury stock	(15,193	)	(15		)	—			(2,673,557		)	—			—			(2,673,572		)
Reissuance of treasury stock	273		—			22,637			10,283			—			—			32,920
Equity-based compensation expense	—		—			142,389			—			—			—			142,389
Effect of conversion of convertible notes	2,783		3			(27,470		)	—			—			—			(27,467		)
Exercise of warrants	4,105		4			(12		)	—			—			—			(8		)
Reclassification from temporary to permanent equity	—		—			28,408			—			—			—			28,408
Adoption of ASU 2014-09(1)	—		—			—			—			—			139,355			139,355
Adoption of ASU 2016-16(1)	—		—			—			—			—			(443		)	(443		)
Adoption of ASU 2018-02(1)	—		—			—			—			(2,227		)	2,227			—
Net income	—		—			—			—			—			1,649,605			1,649,605
Other comprehensive loss	—		—			—			—			(2,984		)	—			(2,984		)
Cash dividends declared ($3.30 per common share)	—		—			—			—			—			(503,977		)	(503,977		)
Balance at March 31, 2019	149,886		$	150		$	6,315,495		$	(10,509,750	)	$	(62,660	)	$	9,547,961		$	5,291,196
(1) Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.

See Notes to Condensed Consolidated Financial Statements

7

	Three Months Ended
	March 25, 2018
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at December 24, 2017	159,451		$	159		$	5,959,945		$	(6,470,434	)	$	(64,160	)	$	6,717,621		$	6,143,131
Sale of common stock	1,367		1			2,516			—			—			—			2,517
Purchase of treasury stock	(1,470	)	(1		)	—			(81,196		)	—			—			(81,197		)
Equity-based compensation expense	—		—			41,095			—			—			—			41,095
Effect of conversion of convertible notes	5,147		5			(47,458		)	—			—			—			(47,453		)
Effect of bond hedge, cash in lieu of shares	(395	)	—			7			—			—			—			7
Reclassification from temporary to permanent equity	—		—			49,452			—			—			—			49,452
Net income	—		—			—			—			—			778,800			778,800
Other comprehensive loss	—		—			—			—			(1,271		)	—			(1,271		)
Cash dividends declared ($0.50 per common share)	—		—			—			—			—			(82,026		)	(82,026		)
Balance at March 25, 2018	164,100		$	164		$	6,005,557		$	(6,551,630	)	$	(65,431	)	$	7,414,395		$	6,803,055
	Nine Months Ended
	March 25, 2018
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at June 25, 2017	161,723		$	162		$	5,845,485		$	(5,216,187	)	$	(61,700	)	$	6,249,691		$	6,817,451
Sale of common stock	1,833		1			6,631			—			—			—			6,632
Purchase of treasury stock	(7,067	)	(7		)	—			(1,349,098		)	—			—			(1,349,105		)
Reissuance of treasury stock	413		—			20,402			13,655			—			—			34,057
Equity-based compensation expense	—		—			125,002			—			—			—			125,002
Effect of conversion of convertible notes	10,053		10			(80,864		)	—			—			—			(80,854		)
Effect of bond hedge, cash in lieu of shares	(2,855	)	(2		)	13			—			—			—			11
Reclassification from temporary to permanent equity	—		—			88,888			—			—			—			88,888
Adoption of ASU 2016-09	—		—			—			—			—			40,065			40,065
Net income	—		—			—			—			—			1,359,535			1,359,535
Other comprehensive loss	—		—			—			—			(3,731		)	—			(3,731		)
Cash dividends declared ($1.45 per common share)	—		—			—			—			—			(234,896		)	(234,896		)
Balance at March 25, 2018	164,100		$	164		$	6,005,557		$	(6,551,630	)	$	(65,431	)	$	7,414,395		$	6,803,055

See Notes to Condensed Consolidated Financial Statements

8

LAM RESEARCH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2019

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 24, 2018, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 24, 2018 (the “2018 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov. The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com. The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.

The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2019 and includes 53 weeks. The quarters ended March 31, 2019 (the “March 2019 quarter”) and March 25, 2018 (the “March 2018 quarter”) included 14 weeks and 13 weeks, respectively.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In conjunction with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 3 - Revenue for a description of the amendments.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

	June 24, 2018					June 25, 2018
	As reported		Adjustments			As Adjusted
	(In thousands)
Total assets	$	12,479,478	$	12,955		$	12,492,433
Deferred profit	$	720,086	$	(160,695	)	$	559,391
Total liabilities	$	5,899,435	$	(126,400	)	$	5,773,035
Stockholders' equity	$	6,501,851	$	139,355		$	6,641,206

9

Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:

	Three months ended						Nine Months Ended
	March 31, 2019						March 31, 2019
	As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)		As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
	(In thousands)
Revenue	$	2,439,048	$	2,203,034	$	236,014	$	7,292,412	$	6,691,212	$	601,200
Cost of goods sold	$	1,364,711	$	1,213,852	$	150,859	$	4,014,844	$	3,705,203	$	309,641
							March 31, 2019
							As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
							(In thousands)
Deferred profit							$	378,396	$	809,712	$	(431,316	)
Retained earnings							$	9,547,961	$	9,116,645	$	431,316

Except as disclosed above, the adoption of ASC 606 did not have a significant impact on the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended March 31, 2019.

In January 2016, the FASB released ASU 2016-01, “Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities.” The FASB issued a subsequent amendment to the initial guidance in February 2018 within ASU 2018-03. These amendments change the accounting for and financial statement presentation of equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee. The amendments provide clarity on the measurement methodology to be used for the required disclosure of fair value of financial instruments measured at amortized cost on the balance sheet and clarifies that an entity should evaluate the need for a valuation allowance on deferred tax assets related to available-for-sale securities in combination with the entity’s other deferred tax assets, among other changes. The Company’s adoption of this standard in the first quarter of fiscal year 2019 did not have a material impact on its Condensed Consolidated Financial Statements.

In August 2016, the FASB released ASU 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.” The amendment provides and clarifies guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice. The Company adopted this standard update in the first quarter of fiscal year 2019 using a retrospective transition method. The Company’s adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In October 2016, the FASB released ASU 2016-16, “Income Tax – Intra-Entity Transfers of Assets Other than Inventory.” This standard update improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The Company’s adoption of this standard resulted in a $0.4 million decrease to retained earnings and a corresponding $0.4 million increase to other assets on its Condensed Consolidated Financial Statements.

10

In November 2016, the FASB released ASU 2016-18, “Statement of Cash Flows – Restricted Cash.” This standard update requires that restricted cash and restricted cash equivalents be included in cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2019, using a retrospective transition method to each period presented. The adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In February 2018, the FASB released ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S Tax Reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The adoption of this standard resulted in a $2.2 million increase to retained earnings, with a corresponding $2.2 million decrease to other comprehensive income.

In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to eliminate, integrate, update or modify certain of its disclosure requirements. The amendments are part of the SEC’s efforts to improve disclosure effectiveness and were focused on eliminating disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. The Company adopted these amendments in the first quarter of fiscal Year 2019 and as a result the Company has included a Condensed Consolidated Statement of Stockholders’ Equity to this quarterly report on Form 10-Q. The Company expects that the Company’s 2019 annual report on Form 10-K will omit a number of disclosures previously required in Part II. Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, as well as other minor changes.

Updates Not Yet Effective

In January 2016, the FASB released ASU 2016-02, “Leases.” The FASB issued a subsequent amendment to the initial guidance in January 2018 within ASU 2018-01. The core principle of the standard requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The amendment offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company is required to adopt these standards starting in the first quarter of fiscal year 2020. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides companies an optional adoption method to ASU 2016-02 whereby a company does not have to adjust comparative period financial statements for the new standard. The Company currently believes the most significant impact upon adoption will be the recognition of right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets for those leases currently classified as operating leases. As part of the Company’s assessment and implementation plan, the Company is evaluating and implementing changes to its systems, procedures, and controls.

In June 2016, the FASB released ASU 2016-13, “Financial Instruments – Credit Losses.” The amendment revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including but not limited to, available for sale debt securities and accounts receivable. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021 using a modified-retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its Condensed Consolidated Financial Statements.

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808).” The amendment clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account. The amendment also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021. The standard should be applied retrospectively to the period when the Company initially adopted ASC 606. The Company is currently evaluating the impact of adoptions on its Condensed Consolidated Financial Statements.

11

NOTE 3 — REVENUE

Revenue Recognition

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

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

Identify the performance obligations in the contract. Performance obligations include sales of systems, spare parts, and services; as well as, installation and training services included in customer contracts, both of which have been deemed immaterial in the context of the contract.

Determine the transaction price. The transaction price for the Company’s contracts with its customers consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage which are based on contractual terms outlined in volume purchase agreements and other factors known at the time. The Company generally invoices customers at shipment and for professional services either as provided or upon meeting certain milestones. Customer invoices are generally due within 30 to 90 days after issuance. The Company’s contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.

Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.

Recognize revenue when or as the Company satisfies a performance obligation. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

Deferred Revenue

Revenue of $126.9 million and $539.6 million included in deferred revenue at June 25, 2018 was recognized during the three and nine months ended March 31, 2019, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of March 31, 2019 and when the Company expects to recognize the amounts as revenue:

	Less than 1 Year		1-3 Years			More than 3 Years		Total
	(In thousands)
Deferred revenue	$	386,170	$	54,774	(1)	$	—	$	440,944

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

Disaggregation of Revenue

The Company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. The Company’s material operating segments qualify for aggregation due to their customer base and similarities in economic characteristics, nature of products and services, and processes for procurement, manufacturing, and distribution.

The Company operates in seven geographic regions: United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan. For geographical reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. The Company serves three primary markets: memory, foundry, logic/integrated device manufacturing.

12

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(In thousands)
Korea	$	609,892	$	1,038,376	$	1,621,165	$	2,750,710
Taiwan	570,300		352,191		1,275,883		1,083,904
China	415,999		499,061		1,371,612		1,120,319
Japan	403,592		391,673		1,765,449		1,308,122
United States	230,636		226,623		486,436		674,618
Southeast Asia	120,363		227,558		483,703		616,337
Europe	88,266		156,633		288,164		397,060
	$	2,439,048	$	2,892,115	$	7,292,412	$	7,951,070

The following table presents the percentages of system revenues to each of the primary markets we serve:

	Three Months Ended		Nine Months Ended
	March 31, 2019		March 31, 2019
Memory	61	%	72	%
Foundry	27	%	19	%
Logic/integrated device manufacturing	12	%	9	%

NOTE 4 — EQUITY-BASED COMPENSATION PLANS

The Lam Research Corporation 2015 Stock Incentive Plan, as amended (the “2015 Plan”), provides for the grant of non-qualified equity-based awards of the Company’s Common Stock to eligible employees and non-employee directors, including stock options, restricted stock units (“RSUs”), and market-based performance RSUs (“market-based PRSUs”). An option is a right to purchase Common Stock at a set price. An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting. The Company’s market-based PRSUs contain both a market condition and a service condition. The Company’s options, RSU, and market-based PRSU awards typically vest over a period of three years. The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions.

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Equity-based compensation expense	$	53,240	$	41,095	$	142,389	$	125,002
Income tax benefit recognized related to equity-based compensation expense	$	28,337	$	46,366	$	42,204	$	77,842

Stock Options

The fair value of the Company’s stock options granted during the nine months ended March 31, 2019 was estimated using a Black-Scholes options valuation model, which requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award.

13

The following table summarizes stock option activity: 

	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price
June 24, 2018	482,928		$	86.53
Granted	181,450		164.54
Exercised	(69,948	)	73.18
Expired or forfeited	(59,068	)	126.05
March 31, 2019	535,362		$	110.35

Restricted Stock

During the nine months ended March 31, 2019, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the grant date, discounted for dividends. The fair value of the Company’s market-based PRSUs was calculated using a Monte Carlo simulation model at the date of the grant. Market-based PRSUs generally vest three years from the grant date if certain performance criteria are achieved and require continued employment. Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s Common Stock price performance compared to the market price performance of the Philadelphia Semiconductor Sector Index (“SOX”), ranging from 0% to 150% of target. The stock price performance or market price performance is measured using the closing price for the 50-trading days prior to the dates the performance period begins and ends. The target number of shares represented by the market-based PRSUs is increased by 2% of target for each 1% that Common Stock price performance exceeds the market price performance of the SOX index. The result of the vesting formula is rounded down to the nearest whole number.

The following table summarizes restricted stock activity:

	Service-based RSUs Outstanding				Market-based PRSUs Outstanding
	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
June 24, 2018	2,193,088		$	134.34	693,726		$	104.59
Granted	873,769		161.34		163,529		165.78
Vested	(1,101,015	)	114.64		(301,622	)	70.58
Expired or Forfeited	(126,148	)	138.44		(117,851	)	104.52
March 31, 2019	1,839,694		$	158.65	437,782		$	144.35

14

NOTE 5 — OTHER INCOME (EXPENSE), NET

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Interest income	$	26,966		$	21,761		$	63,709		$	62,548
Interest expense	(30,263		)	(25,734		)	(71,835		)	(72,956		)
Gains (losses) on deferred compensation plan-related assets, net	21,395			(1,995		)	4,235			7,532
Loss on impairment of investments	—			(42,456		)	—			(42,456		)
Foreign exchange gains (losses), net	720			(1,065		)	3,352			(2,869		)
Other, net	1,714			(6,321		)	(9,955		)	(16,263		)
	$	20,532		$	(55,810	)	$	(10,494	)	$	(64,464	)

NOTE 6 — INCOME TAX EXPENSE

On December 22, 2017, the “Tax Cuts & Jobs Act” (hereafter referred to as “U.S. tax reform”) was signed into law and was effective for the Company starting in the quarter ended December 24, 2017. U.S. tax reform reduced the U.S. federal statutory tax rate from 35% to 21%, mandated payment of a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. The impact on income taxes due to change in legislation is required under the authoritative guidance of Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted. In conjunction, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which allowed for the recording of provisional amounts related to U.S. tax reform and subsequent adjustments related to U.S. tax reform during an up to one-year measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded what it believed to be reasonable estimates during the SAB 118 measurement period. During the December 2018 quarter, the Company finalized the accounting of the income tax effects of U.S. tax reform. Although the SAB 118 measurement period has ended, there may be some aspects of U.S. tax reform that remain subject to future regulations and/or notices which may further clarify certain provisions of U.S. tax reform. The Company may need to adjust its previously recorded amounts to reflect the recognition and measurement of its tax accounting positions in accordance with ASC 740; such adjustments could be material.

The Company recorded an income tax expense of $38.7 million and $187.5 million for the three and nine months ended March 31, 2019, which yielded an effective tax rate of approximately 6.6% and 10.2%, respectively.

The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate for the three and nine months ended March 31, 2019 is primarily due to the impact of U.S. tax reform, outlined below, and income in lower tax jurisdictions.

The computation of the one-time transition tax on accumulated unrepatriated foreign earnings was recorded on a provisional basis in the fiscal year ended June 24, 2018, as permitted under SAB 118. The Company recorded a subsequent provisional adjustment of $36.5 million, as a result of incorporating new information into the estimate, in the Condensed Consolidated Financial Statements in the three months ended September 23, 2018. The Company finalized the computation of the transition tax liability during the December 2018 quarter. The final adjustment resulted in a tax benefit of $51.2 million, which was recorded in the Company’s Condensed Consolidated Financial Statements in the three months ended December 23, 2018. The final balance of total transition tax is $868.4 million. The one-time transition tax is based on the Company’s total post-1986 earnings and profits (“E&P”) that was previously deferred from U.S. income taxes. The Company had previously accrued deferred taxes on a portion of this E&P. The Company has completed the calculation of total post-1986 E&P and related income tax pools for its foreign subsidiaries. The Company elected to pay the one-time transition tax over a period of eight years.

Beginning in fiscal year 2019, the Company is subject to the impact of the “Global Intangible Low-Taxed Income” (“GILTI”) provision of U.S. tax reform. The GILTI provision imposes taxes on foreign earnings in excess of a deemed return on tangible assets. The Company has calculated the impact of the GILTI provision on current year earnings and has included the impact in the effective tax rate. In addition, the Company evaluated whether deferred taxes should be recorded in relation to the GILTI provision or if the tax should be recorded in the period in which it occurs. Based on current interpretation, the Company could choose either method as an accounting policy election. The Company made an accounting policy election in the September 2018 quarter to record deferred taxes in relation to the GILTI provision, and recorded a provisional tax benefit of $48.0 million

15

in the Condensed Consolidated Financial Statements in the three months ended September 23, 2018, under SAB 118. The Company finalized the computation of the accounting policy election during the December 2018 quarter. The final adjustment resulted in a tax expense of $0.4 million, which was recorded in the Company’s Condensed Consolidated Financial Statements in the three months ended December 23, 2018. The final tax benefit of the election is $47.6 million.

The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its unrecognized tax benefits as a result of tax examinations or lapses of statute of limitations. The change in unrecognized tax benefits may range up to $14.0 million.

NOTE 7 — NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the treasury stock method, for dilutive stock options, restricted stock units, convertible notes, and warrants. Dilutive shares outstanding include the effect of the convertible notes. Refer to Note 12 - Long-term Debt and Other Borrowings for additional information regarding the Company’s convertible notes. The following table reconciles the numerators and denominators of the basic and diluted computations for net income per share. 

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands, except per share data)
Numerator:
Net income	$	547,390	$	778,800	$	1,649,605	$	1,359,535
Denominator:
Basic average shares outstanding	151,201		162,378		153,891		161,885
Effect of potential dilutive securities:
Employee stock plans	1,413		2,367		1,461		2,546
Convertible notes	5,235		10,279		5,663		13,618
Warrants	—		4,755		668		4,516
Diluted average shares outstanding	157,849		179,779		161,683		182,565
Net income per share - basic	$	3.62	$	4.80	$	10.72	$	8.40
Net income per share - diluted	$	3.47	$	4.33	$	10.20	$	7.45

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

	Three Months Ended		Nine Months Ended
	March 31, 2019	March 25, 2018	March 31, 2019	March 25, 2018
	(in thousands)
Options and RSUs	640	19	717	6

Diluted shares outstanding do not include any effect resulting from note hedges associated with the Company’s 2018 Notes as their impact would have been anti-dilutive.

NOTE 8 — FINANCIAL INSTRUMENTS

The Company maintains an investment portfolio of various holdings, types, and maturities. The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as other income (expense) in the Condensed Consolidated Statements of Operations. All of the Company’s other investments are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income (loss), net of tax.

16

Fair Value

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities with sufficient volume and frequency of transactions.

Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data, for substantially the full term of the assets or liabilities.

Level 3: Valuations based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities and based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data.

The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and capital leases, and foreign currency related derivative instruments. The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of capital lease obligations approximate their carrying value as the substantial majority of these obligations have interest rates that adjust to market rates on a periodic basis. Refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes and convertible senior notes.

The following table sets forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of March 31, 2019, and June 24, 2018:

	March 31, 2019
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	577,420	$	—	$	—		$	577,420	$	571,673	$	—	$	5,747	$	—
Time deposit	1,872,626		—		—			1,872,626		1,622,599		—		250,027		—
Level 1:
Money market funds	2,024,322		—		—			2,024,322		2,024,322		—		—		—
U.S. Treasury and agencies	668,405		74		(69		)	668,410		380,623		287,787		—		—
Mutual funds	77,127		1,025		(183		)	77,969		—		—		—		77,969
Level 1 Total	2,769,854		1,099		(252		)	2,770,701		2,404,945		287,787		—		77,969
Level 2:
Government-sponsored enterprises	11,029		—		(97		)	10,932		—		10,932		—		—
Foreign government bonds	10,111		4		—			10,115		—		10,115		—		—
Corporate notes and bonds	1,176,117		523		(426		)	1,176,214		324,951		851,263		—		—
Mortgage backed securities — residential	17,397		2		—			17,399		7,443		9,956		—		—
Mortgage backed securities — commercial	39,236		40		(14		)	39,262		—		39,262		—		—
Level 2 Total	1,253,890		569		(537		)	1,253,922		332,394		921,528		—		—
Total	$	6,473,790	$	1,668	$	(789	)	$	6,474,669	$	4,931,611	$	1,209,315	$	255,774	$	77,969

17

	June 24, 2018
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	708,364	$	—	$	—		$	708,364	$	702,090	$	—	$	6,274	$	—
Time deposit	999,666		—		—			999,666		749,639		—		250,027		—
Level 1:
Money market funds	2,341,807		—		—			2,341,807		2,341,807		—		—		—
U.S. Treasury and agencies	356,679		—		(170		)	356,509		333,721		22,788		—		—
Mutual funds	68,568		516		(142		)	68,942		—		—		—		68,942
Level 1 Total	2,767,054		516		(312		)	2,767,258		2,675,528		22,788		—		68,942
Level 2:
Municipal notes and bonds	152,378		37		(279		)	152,136		—		152,136		—		—
Government-sponsored enterprises	110,963		—		(201		)	110,762		99,934		10,828		—		—
Foreign government bonds	19,986		—		(1		)	19,985		19,985		—		—		—
Corporate notes and bonds	516,955		95		(1,184		)	515,866		265,081		250,785		—		—
Mortgage backed securities — residential	804		—		(3		)	801		—		801		—		—
Level 2 Total	801,086		132		(1,668		)	799,550		385,000		414,550		—		—
Total	$	5,276,170	$	648	$	(1,980	)	$	5,274,838	$	4,512,257	$	437,338	$	256,301	$	68,942

The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company also considers whether changes in the credit ratings of the issuer could impact the assessment of fair value. Additionally, the Company also considers factors such as the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

The Company did not recognize any losses on investments due to other-than-temporary impairments during the three and nine months ended March 31, 2019. During the three and nine months ended March 25, 2018, the Company recorded a $42.5 million other-than-temporary impairment charge on a portion of its available-for-sale investments as a result of a decision to sell selected investments held in foreign jurisdictions in conjunction with our cash repatriation strategy following the U.S. tax reform legislation. Gross realized gains/(losses) from sales of investments were insignificant in the three and nine months ended March 31, 2019 and March 25, 2018, other than the March 2018 impairment discussed above.

The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions:

	March 31, 2019
	Unrealized Losses Less than 12 Months					Unrealized Losses 12 Months or Greater					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(in thousands)
U.S. Treasury and agencies	$	179,766	$	(2	)	$	8,121	$	(67	)	$	187,887	$	(69	)
Mutual funds	—		—			6,563		(183		)	6,563		(183		)
Government-sponsored enterprises	—		—			10,895		(97		)	10,895		(97		)
Corporate notes and bonds	365,003		(161		)	46,939		(265		)	411,942		(426		)
Mortgage backed securities — commercial	15,406		(14		)	—		—			15,406		(14		)
	$	560,175	$	(177	)	$	72,518	$	(612	)	$	632,693	$	(789	)

18

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of March 31, 2019:

	Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	5,391,453	$	5,391,323
Due after one year through five years	380,219		380,361
Due in more than five years	47,571		47,596
	$	5,819,243	$	5,819,280

The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Condensed Consolidated Balance Sheets.

Derivative Instruments and Hedging

The Company carries derivative financial instruments (“derivatives”) on its Condensed Consolidated Balance Sheets at their fair values. The Company enters into foreign currency forward contracts and foreign currency options with financial institutions with the primary objective of reducing volatility of earnings and cash flows related to foreign currency exchange rate fluctuations. In addition, the Company enters into interest rate swap arrangements to manage interest rate risk. The counterparties to these derivatives are large global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material.

Cash Flow Hedges

The Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations on non-U.S. dollar transactions or cash flows, primarily from Japanese yen-denominated revenues and euro- denominated and Korean won-denominated expenses. The Company’s policy is to mitigate the foreign exchange risk arising from the fluctuations in the value of these non-U.S. dollar denominated transactions or cash flows through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that generally expire within 12 months and no later than 24 months. These hedge contracts are designated as cash flow hedges and are carried on the Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in revenue/expense in the same period the hedged items are recognized.

In addition, the Company has entered into interest rate swap agreements to hedge against the variability of cash flows due to changes in certain benchmark interest rates on fixed rate debt. These instruments are designated as cash flow hedges at inception and are settled in conjunction with the issuance of debt. The effective portion of the contracts’ gains or losses is included in accumulated other comprehensive income (loss) and is amortized into income as the hedged item impacts earnings.

At inception and at each quarter-end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis. Changes in the fair value of foreign exchange contracts due to changes in time value are included in the assessment of effectiveness. To qualify for hedge accounting, the hedge relationship must meet criteria relating to both the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured. There were no material gains or losses during the three or nine months ended March 31, 2019 and March 25, 2018 associated with forecasted transactions that failed to occur.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. When derivative instruments are designated and qualify as effective cash flow hedges, the Company recognizes effective changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that the underlying hedged forecasted transactions will occur, the Company may not be able to account for its derivative instruments as cash flow hedges. If this were to occur, future changes in the fair values of the Company’s derivative instruments would be recognized in earnings. Additionally, related amounts previously recorded in other comprehensive income would be reclassified to income immediately. As of March 31, 2019, the Company had a net loss of $0.4 million accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges which it expects to reclassify from other comprehensive income into earnings over the next 12 months. Additionally, as of March 31, 2019, the

19

Company had a net loss of $2.1 million accumulated in other comprehensive income, net of tax, related to interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 6.0 years.

Fair Value Hedges

The Company has interest rate contracts whereby the Company receives fixed rates and pays variable rates based on certain benchmark interest rates, resulting in a net increase or decrease to interest expense, a component of other expense, net in our Condensed Consolidated Statement of Operations. These interest rate contracts are designated as fair value hedges and hedge against changes in the fair value of our debt portfolio. The Company concluded that these interest rate contracts meet the criteria necessary to qualify for the short-cut method of hedge accounting, and as such an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swap. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized.

Balance Sheet Hedges

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. These forward contracts are not designated for hedge accounting treatment. Therefore, the change in fair value of these derivatives is recorded as a component of other income (expense) and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in other income (expense).

As of March 31, 2019, the Company had the following outstanding foreign currency contracts that were entered into under its cash flow and balance sheet hedge programs:

	Notional Value
	Derivatives Designated as Hedging Instruments:				Derivatives Not Designated as Hedging Instruments:
	(in thousands)
Foreign currency forward contracts
	Buy Contracts		Sell Contracts		Buy Contracts		Sell Contracts
Japanese yen	$	—	$	171,192	$	35,801	$	129,820
Euro	71,946		—		50,752		—
Korean won	23,234		—		23,817		—
British pound sterling	—		—		39,687		—
Taiwan dollar	—		—		25,953		—
Swiss franc	—		—		22,180		—
Chinese renminbi	—		—		13,213		—
Singapore dollar	—		—		5,904		—
Indian rupee	—		—		8,521		—
	$	95,180	$	171,192	$	225,828	$	129,820
Foreign currency option contracts
	Buy Put		Sell Call		Buy Put		Sell Call
Japanese yen (1)	$	—	$	—	$	8,849	$	9,403

⁽¹⁾ The local currency notional amounts of these foreign currency option contracts are equal to each other.

20

The fair value of derivative instruments in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2019, and June 24, 2018 were as follows:

	March 31, 2019						June 24, 2018
	Fair Value of Derivative Instruments (Level 2)						Fair Value of Derivative Instruments (Level 2)
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	$	1,730	Accrued expenses and other current liabilities	$	2,897	Prepaid expense and other assets	$	7,581	Accrued expenses and other current liabilities	$	8,866
Interest rate contracts, short-term		—		Accrued expenses and other current liabilities	3,551			—		Accrued expenses and other current liabilities	7,468
Interest rate contracts, long-term		—		Other long-term liabilities	11,366			—		Other long-term liabilities	23,720
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	752		Accrued expenses and other current liabilities	354		Prepaid expense and other assets	111		Accrued expenses and other current liabilities	32
Total Derivatives		$	2,482		$	18,168		$	7,692		$	40,086

Under the master netting agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. However, the Company has elected to present the derivative assets and derivative liabilities on a gross basis on its balance sheet. As of March 31, 2019, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be an offset to assets and liabilities by $1.3 million, resulting in a net derivative asset of $1.2 million and net derivative liability of $16.9 million. As of June 24, 2018, the potential effect of rights of offset associated with the above foreign exchange contracts would be an offset to both assets and liabilities by $5.6 million, resulting in a net derivative asset of $2.1 million and a net derivative liability of $34.4 million. The Company is not required to pledge, nor is the Company entitled to receive, cash collateral for these derivative transactions.

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

		Three Months Ended March 31, 2019						Nine Months Ended March 31, 2019
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(7,203	)	$	206		$	9,467		$	8,693
Foreign Exchange Contracts	Cost of goods sold	(1,395		)	(2,097		)	(3,484		)	(4,505		)
Foreign Exchange Contracts	Selling, general, and administrative	(475		)	(600		)	(1,353		)	(1,778		)
Interest Rate Contracts	Other expense, net	—			(34		)	—			(100		)
		$	(9,073	)	$	(2,525	)	$	4,630		$	2,310

21

		Three Months Ended March 25, 2018						Nine Months Ended March 25, 2018
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income			(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(44,399	)	$	(7,375	)	$	(36,214	)	$	(7,410	)
Foreign Exchange Contracts	Cost of goods sold	2,735			1,084			4,928			3,556
Foreign Exchange Contracts	Selling, general, and administrative	690			501			1,840			2,227
Interest Rate Contracts	Other expense, net	—			(32		)	—			(94		)
		$	(40,974	)	$	(5,822	)	$	(29,446	)	$	(1,721	)

The effect of derivative instruments not designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations was as follows:

		Three Months Ended					Nine Months Ended
		March 31, 2019			March 25, 2018		March 31, 2019		March 25, 2018
Derivatives Not Designated as Hedging Instruments:	Location  of Gain (Loss) Recognized  in Income	Loss Recognized in Income			Gain Recognized in Income		Gain Recognized in Income		Gain Recognized in Income
		(in thousands)
Foreign Exchange Contracts	Other income	$	(6,747	)	$	1,198	$	4,142	$	6,482

22

The following table presents the effect of the fair value cash flow hedge accounting on the Statement of Financial Performance as well as presents the location and amount of gain/(loss) recognized in Income on fair value and cash flow hedging relationships:

	Three Months Ended											Nine Months Ended
	March 31, 2019											March 31, 2019
	Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)			Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)
	(in thousands)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded:
	$	2,439,048	$1,364,711			$	190,306		$	20,532		$	7,292,412	$	4,014,844		$	534,179		$	(10,494	)
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20:
Interest contracts:
Hedged items	$	—	$	—		$	—		$	(10,395	)	$	—	$	—		$	—		$	(16,272	)
Derivatives designated as hedging instruments	$	—	$	—		$	—		$	10,395		$	—	$	—		$	—		$	16,272
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	206	$	(2,097	)	$	(600	)	$	—		$	8,693	$	(4,505	)	$	(1,778	)	$	—
Interest rate contracts:
Amount of loss reclassified from accumulated other comprehensive income into income	$	—	$	—		$	—		$	(34	)	$	—	$	—		$	—		$	(100	)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit at large global financial institutions. Such deposits may be in excess of insured limits. Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances.

The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services. To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer.

The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements. These counterparties are large global financial institutions and, to date, no such counterparty has failed to meet its financial obligations to the Company.

23

Credit risk evaluations, including trade references, bank references, and Dun & Bradstreet ratings, are performed on all new customers and the Company monitors its customers’ financial condition and payment performance. In general, the Company does not require collateral on sales.

NOTE 9 — INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. System shipments to customers in Japan, for which title does not transfer until customer acceptance, are classified as finished goods inventory and carried at cost until title transfers. Inventories consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Raw materials	$	1,034,636	$	916,438
Work-in-process	206,245		222,921
Finished goods	381,361		736,803
	$	1,622,242	$	1,876,162

NOTE 10 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

The balance of goodwill is approximately $1.5 billion as of March 31, 2019 and June 24, 2018, respectively. As of March 31, 2019, $61.1 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Intangible Assets

The following table provides the Company’s intangible assets:

	March 31, 2019							June 24, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	630,220	$	(470,760	)	$	159,460	$	630,220	$	(433,309	)	$	196,911
Existing technology	669,521		(644,423		)	25,098		669,520		(576,844		)	92,676
Patents and other intangible assets	114,335		(75,871		)	38,464		99,767		(71,518		)	28,249
Total intangible assets	$	1,414,076	$	(1,191,054	)	$	223,022	$	1,399,507	$	(1,081,671	)	$	317,836

The Company recognized $36.6 million and $40.8 million in intangible asset amortization expense during the three months ended March 31, 2019 and March 25, 2018. During the nine months ended March 31, 2019 and March 25, 2018, the Company recognized $109.4 million and $120.9 million, respectively, in intangible asset amortization expense.

The estimated future amortization expense of intangible assets as of March 31, 2019, was as follows:

Fiscal Year	Amount
	(in thousands)
2019 (remaining 3 months)	$	17,910
2020	64,302
2021	61,612
2022	57,352
2023	12,805
Thereafter	9,041
	$	223,022

24

NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Accrued compensation	$	408,088	$	506,471
Warranty reserves	159,321		192,480
Income and other taxes payable	89,259		185,384
Dividend payable	164,874		174,372
Other	225,396		250,502
	$	1,046,938	$	1,309,209

NOTE 12 — LONG-TERM DEBT AND OTHER BORROWINGS

As of March 31, 2019, and June 24, 2018, the Company’s outstanding debt consisted of the following:

	March 31, 2019							June 24, 2018
	Amount (in thousands)				Effective Interest Rate			Amount (in thousands)				Effective Interest Rate
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes")	$	500,000			2.88	%		$	500,000			2.88	%
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes")	800,000				2.95	%		800,000				2.95	%
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes")	500,000				3.87	%		500,000				3.87	%
Fixed-rate 3.75% Senior Notes Due March 15, 2026 ("2026 Notes")	750,000				3.86	%		—				—
Fixed-rate 4.00% Senior Notes Due March 15, 2029 ("2029 Notes")	1,000,000				4.09	%		—				—
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes")	212,352			(1)	4.28	%		326,953			(1)	4.28	%
Fixed-rate 4.875% Senior Notes Due March 15, 2049 ("2049 Notes")	750,000				4.93	%		—				—
Commercial paper	300,000				3.00	%	(2)	360,000				2.33	%	(2)
Total debt outstanding, at par	4,812,352							2,486,953
Unamortized discount	(74,987		)					(85,196		)
Fair value adjustment - interest rate contracts	(14,917		)					(31,189		)
Unamortized bond issuance costs	(5,993		)					(1,820		)
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748
Reported as:
Current portion of long-term debt, and commercial paper	$	961,154						$	608,532
Long-term debt	3,755,301							1,760,216
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748

____________________________

⁽¹⁾ As of the report date, these notes were convertible at the option of the bondholder. This is a result of the following condition being met: the market value of the Company’s Common Stock was greater than 130% of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end. As a result, the 2041 Notes were classified in current liabilities and a portion of the equity component, associated with the convertible notes representing the unamortized discount, was classified in temporary equity on the Company’s Consolidated Balance Sheets. Upon closure of the conversion period, the notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity.

⁽²⁾ Represents the weighted average effective interest rate for all outstanding balances as of the report date.

Convertible Senior Notes

In June 2012, with the acquisition of Novellus Systems, Inc., the Company assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 15, 2041 (the “2041 Notes,”). The Company pays cash interest at an annual rate of 2.625%, on a semi-annual basis on May 15 and November 15 of each year. The 2041 Notes also have a contingent interest payment provision that may require the Company to pay additional interest, up to 0.60% per year, based on certain thresholds, beginning with the semi-annual interest payment on May 15, 2021, and upon the occurrence of certain events, as outlined in the indenture governing the 2041 Notes.

25

The Company separately accounts for the liability and equity components of the 2041 Notes. The initial debt components of the 2041 Notes were valued based on the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without the conversion feature, which equals the effective interest rate on the liability component disclosed in the table below, respectively. The equity component was initially valued equal to the principle value of the notes, less the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without a conversion feature, which equated to the initial debt discount.

The 2041 Notes may be redeemed on or after May 21, 2021 at a price equal to outstanding principal plus accrued and unpaid interest if the last reported sales price of common shares has been equal to or more than 150% of the then applicable conversion price for at least 20 trading days during the 30 consecutive trading days prior to the redemption notice date.

Under certain circumstances, the 2041 Notes may be converted into shares of the Company’s Common Stock. The number of shares each debenture is convertible into is based on conversion rates, disclosed in the table below. The principal value of the 2041 Note conversions in the three and nine months ended March 31, 2019, was approximately $29.2 million and $114.6 million, respectively.

Selected additional information regarding the 2041 Notes outstanding as of March 31, 2019, and June 24, 2018, is as follows:

	March 31, 2019		June 24, 2018
	2041 Notes		2041 Notes
	(in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax	$	160,261	$	159,120
Carrying amount of temporary equity component, net of tax	$	49,783	$	78,192
Remaining amortization period (years)	22.1		22.9
Fair Value of Notes (Level 2)	$	1,166,900
Conversion rate (shares of common stock per $1,000 principal amount of notes)	30.7418
Conversion price (per share of common stock)	$	32.53
If-converted value in excess of par value	$	956,238
Estimated share dilution using average quarterly stock price $164.19 per share	5,235

Convertible Warrants

During the fiscal year 2019, the Company had warrants outstanding in connection with its 2018 convertible notes that matured in May 2018. The 7.6 million warrants were fully exercised during the first half of fiscal year 2019 resulting in the issuance of approximately 4.1 million shares of the Company's Common Stock.

Senior Notes

On March 4, 2019, the company completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”). The Company will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year beginning September 15, 2019.

On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 Notes”). The Company pays interest at an annual rate of 2.75% and 3.80%, on the 2020 Notes and 2025 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. During the year ended June 26, 2016, the Company entered into a series of interest rate contracts hedging the fair value of a portion of the 2025 Notes par value, whereby the Company receives a fixed rate and pays a variable rate based on a certain benchmark interest rate. Refer to Note 8 - Financial Instruments for additional information regarding these interest rate contracts.

On June 7, 2016, the Company completed a public offering of $800 million aggregate principal amount of Senior Notes due June 15, 2021 (the “2021 Notes”). The Company pays interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.

26

The Company may redeem the 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively the “Senior Notes”) at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024 for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.

Selected additional information regarding the Senior Notes outstanding as of March 31, 2019, is as follows: 

	Remaining Amortization period	Fair Value of Notes (Level 2)
	(years)	(in thousands)
2020 Notes	1.0	$	499,720
2021 Notes	2.2	$	798,880
2025 Notes	6.0	$	515,335
2026 Notes	7.0	$	764,295
2029 Notes	10.0	$	1,021,010
2049 Notes	30.0	$	791,888

Commercial Paper Program

On November 13, 2017, the Company established a commercial paper program (“the CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $1.25 billion. The net proceeds from the commercial paper program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time under the Company’s stock repurchase program. Amounts available under the CP Program may be re-borrowed. The CP Program is backstopped by the Company’s Revolving Credit Arrangement. As of March 31, 2019, borrowings under the CP Program totaled $300.0 million, with a weighted-average interest rate of 3.00% and maturities of 90 days or less.

Revolving Credit Facility

On March 12, 2014, the Company established an unsecured Credit Agreement; this agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the 2nd Amendment”), and February 25, 2019 (the “3rd Amendment”). Under the Amended and Restated Credit Agreement (as amended by the 2nd and 3rd Amendment), the Company has a revolving credit facility of $1.25 billion with a syndicate of lenders with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600 million, for a potential total commitment of $1.85 billion. The facility matures on October 13, 2022.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) one-month LIBOR plus 1.0%, plus a spread of 0.0% to 0.5%, or (2) LIBOR multiplied by the statutory rate, plus a spread of 0.9% to 1.50% in each case as the applicable spread is determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating. The Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants and events of default. As of March 31, 2019, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

27

Interest Cost

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the three and nine months ended March 31, 2019 and March 25, 2018.

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Contractual interest coupon	$	24,837	$	20,663	$	58,814	$	57,246
Amortization of interest discount	956		2,860		2,743		10,374
Amortization of issuance costs	355		561		1,013		1,590
Effect of interest rate contracts, net	1,558		51		3,088		(552		)
Total interest cost recognized	$	27,706	$	24,135	$	65,658	$	68,658

NOTE 13 — COMMITMENTS AND CONTINGENCIES

Operating Leases and Related Guarantees

The Company leases the majority of its administrative, research and development (“R&D”) and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable operating leases. Certain of the Company’s facility leases for buildings located at its Fremont, California headquarters, Tualatin, Oregon campus, and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities. Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation.

The Company has operating leases regarding certain improved properties in Fremont and Livermore, California (the “Operating Leases”). The Company was required to maintain cash collateral in an aggregate of approximately $250.0 million in separate interest-bearing accounts as security for the Company’s obligations. These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2019.

During the term of the Operating Leases and when the terms of the Operating Leases expire, the property subject to those Operating Leases may be remarketed. The Company has guaranteed to the lessor that each property will have a certain minimum residual value. The aggregate guarantee made by the Company under the Operating Leases is generally no more than approximately $220.4 million; however, under certain default circumstances, the guarantee with regard to an Operating Lease may be 100% of the lessor’s aggregate investment in the applicable property, which in no case will exceed $250.0 million, in the aggregate.

Other Guarantees

The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements. The Company has entered into certain insurance contracts that are intended to limit its exposure to such indemnifications. As of March 31, 2019, the Company had not recorded any liability in connection with these indemnifications, as it does not believe that it is probable that any amounts will be paid under these guarantees.

Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third party intellectual property rights by the Company’s products or services. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services subject to its indemnification obligations. The Company does not believe that it is probable that any material amounts will be paid under these guarantees.

The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business. As of March 31, 2019, the maximum potential amount of future payments that it could be required to make under these arrangements and letters of credit was $27.2 million. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid.

In addition, the Company has entered into indemnification agreements with its officers and directors, consistent with its Bylaws and Articles of Incorporation; and under California law, the Company is required to provide indemnification to all its employees for actions within the scope of their employment. Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be

28

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

Warranties

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

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Balance at beginning of period	$	166,906		$	179,680		$	192,480		$	161,981
Warranties issued during the period	62,853			70,176			190,250			176,664
Settlements made during the period	(74,432		)	(50,118		)	(237,310		)	(138,518		)
Changes in liability for pre-existing warranties	3,994			340			13,901			(49		)
Balance at end of period	$	159,321		$	200,078		$	159,321		$	200,078

Legal proceedings

While the Company is not currently a party to any legal proceedings that it believes are material, the Company is either a defendant or plaintiff in various actions that have arisen from time to time in the normal course of business, including intellectual property claims. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. Based on current information, the Company does not believe that a material loss from known matters is probable and therefore has not recorded an accrual of any material amount for litigation or other contingencies related to existing legal proceedings.

NOTE 14 — STOCK REPURCHASE PROGRAM

In November 2018, the Board of Directors authorized the Company to repurchase up to an additional $5.0 billion of Common Stock. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. Funding for this repurchase program may be through a combination of cash on hand, cash generation, and borrowings.

Repurchases under the repurchase program were as follows during the periods indicated:

Period	Total Number of Shares Repurchased		Total Cost of Repurchase		Average Price Paid Per Share (1)		Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 24, 2018							$	1,733,638
Quarter ended September 23, 2018	7,807		$	1,733,530	$	183.55	$	108
Board authorization, $5.0 billion, November 2018	—		$	—	$	—	$	5,000,000
Quarter ended December 23, 2018	1,683	(2)	$	—	$	—	$	5,000,000
Quarter ended March 31, 2019	5,702	(2)	$	861,506	$	168.78	$	4,138,494

(1) Average price paid per share excludes effect of accelerated share repurchases; see additional disclosure below regarding the Company’s accelerated share repurchase activity during the fiscal year.

(2) Includes shares received at final settlement of accelerated share repurchase agreements; see additional disclosures below regarding the Company’s accelerated share repurchase activity during the fiscal year.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and nine months ended March 31, 2019, the Company acquired 423 thousand shares at a total cost of $74.8 million and 447 thousand shares at a total cost of $78.5 million, respectively, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation

29

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

Accelerated Share Repurchase Agreements

On January 31, 2019, the Company entered into two separate accelerated share repurchase agreements (collectively, the "January 2019 ASR") with two financial institutions to repurchase a total of $760 million of Common Stock. The Company took an initial delivery of approximately 3.3 million shares, which represented 75% of the prepayment amount divided by the Company’s closing stock price on January 30, 2019. The total number of shares received under the January 2019 ASR will be based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the January 2019 ASR is anticipated to occur no later than June 5, 2019.

On August 15, 2018, the Company entered into four separate accelerated share repurchase agreements (collectively, the "August 2018 ASR") with two financial institutions to repurchase a total of $1.4 billion of Common Stock. The Company took an initial delivery of approximately 5.8 million shares, which represented 75% of the prepayment amount divided by the Company’s closing stock price on August 14, 2018. The total number of shares received under the August 2018 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of two of the agreements occurred during the quarter ended December 23, 2018. Approximately 1.7 million shares were received at final settlement, which resulted in a weighted-average share price of approximately $148.72 for the transaction period. The remaining two agreements settled during the quarter ended March 31, 2019, resulting in the receipt of approximately 1.8 million additional shares, which yielded a weighted-average share price of approximately $146.00 for the transaction period.

NOTE 15 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive income (loss), net of tax at March 31, 2019, as well as the activity for the nine months ending March 31, 2019, were as follows:

	Accumulated Foreign Currency Translation Adjustment			Accumulated Unrealized  Gain or Loss on Cash flow hedges				Accumulated Unrealized  Holding Gain or Loss on Available-For-Sale Investments				Accumulated Unrealized  Components of Defined  Benefit Plans			Total
	(in thousands)
Balance at June 24, 2018	$	(32,722	)	$	(4,042	)		$	(1,190	)		$	(19,495	)	$	(57,449	)
Other comprehensive (loss) income before reclassifications	(8,081		)	4,437				1,441				676			(1,527		)
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income	1,236			(2,492		)	(1)	(201		)	(2)	—			(1,457		)
Effects of ASU 2018-02 adoption	—			(399		)		—				(1,828		)	(2,227		)
Net current-period other comprehensive (loss) income	(6,845		)	1,546				1,240				(1,152		)	(5,211		)
Balance at March 31, 2019	$	(39,567	)	$	(2,496	)		$	50			$	(20,647	)	$	(62,660	)

(1) Amount of after tax gain reclassified from AOCI into net income located in revenue: $7,727 gain; cost of goods sold: $3,819 loss; selling, general, and administrative expenses: $1,339 loss; and other income and expense: $77 loss.

(2) Amount of after tax gain reclassified from accumulated other comprehensive income into net income located in other expense, net.

30

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

With the exception of historical facts, the statements contained in this discussion are forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Certain, but not all, of the forward-looking statements in this report are specifically identified as forward-looking, by use of phrases and words such as “believe,” “estimated,” “anticipate,” “expect,” “probable,” “intend,” “plan,” “aim,” “may,” “should,” “could,” “would,” “will,” “continue,” and other future-oriented terms. The identification of certain statements as “forward-looking” does not mean that other statements not specifically identified are not forward-looking. Forward-looking statements include but are not limited to statements that relate to: trends and opportunities in the global economic environment and the semiconductor industry; the anticipated levels of, and rates of change in, margins, market share, served addressable market, capital expenditures, research and development expenditures, international sales, revenue (actual and/or deferred), operating expenses and earnings generally; management’s plans and objectives for our current and future operations and business focus; volatility in our quarterly results; customer and end user requirements and our ability to satisfy those requirements; customer capital spending and their demand for our products and services, and the reliability of indicators of change in customer spending and demand; the effect of variability in our customers’ business plans or demand for our equipment and services; changes in demand for our products and in our market share resulting from, among other things, any change in our customers’ proportion of capital expenditure (with respect to certain technology inflections); hedging transactions; debt or financing arrangements; our competition, our ability to defend our market share, and to gain new market share; our ability to obtain and qualify alternative sources of supply; changes in state, federal and international tax laws, our estimated annual tax rate and the factors that affect our tax rates; anticipated growth or decline in the industry and the total market for wafer fabrication equipment, our growth relative thereto and the resulting impact on us from such growth or decline; the success of joint development and collaboration relationships with customers, suppliers, or others; outsourced activities; the role of component suppliers in our business; our leadership and competency, and their ability to facilitate innovation; our ability to continue to, including the underlying factors that, create sustainable differentiation; the resources invested to comply with evolving standards and the impact of such efforts; legal and regulatory compliance; the estimates we make, and the accruals we record, in order to implement our critical accounting policies (including but not limited to the adequacy of prior tax payments, future tax benefits or liabilities, and the adequacy of our accruals relating to them); our investment portfolio; our access to capital markets; uses of, payments of, and impact of interest rate fluctuations on, our debt; our intention to pay quarterly dividends and the amounts thereof, if any; our ability and intention to repurchase our shares; credit risks; controls and procedures; recognition or amortization of expenses; our ability to manage and grow our cash position; and the sufficiency of our financial resources or liquidity to support future business activities (including but not limited to operations, investments, debt service requirements, and capital expenditures). Such statements are based on current expectations and are subject to risks, uncertainties, and changes in condition, significance, value, and effect, including without limitation those discussed below under the heading “Risk Factors” within Part II Item 1A and elsewhere in this report and other documents we file from time to time with the Securities and Exchange Commission (“SEC”), such as our annual report on Form 10-K for the year ended June 24, 2018 (our “2018 Form 10-K”), our quarterly report on form 10-Q for the fiscal quarters ended September 23, 2018 and December 23, 2018, and our current reports on Form 8-K. Such risks, uncertainties, and changes in condition, significance, value, and effect could cause our actual results to differ materially from those expressed in this report and in ways not readily foreseeable. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances that occur after the date of this report or to reflect the occurrence or effect of anticipated or unanticipated events.

Documents To Review In Connection With Management’s Discussion and Analysis Of Financial Condition and Results Of Operations

For a full understanding of our financial position and results of operations for the three and nine months ended March 31, 2019, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations below, you should also read the Condensed Consolidated Financial Statements and notes presented in this Form 10-Q and the financial statements and notes in our 2018 Form 10-K.

EXECUTIVE SUMMARY

Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We have built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering and a broad range of operational disciplines. Our products and

31

services are designed to help our customers build smaller, faster, and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive devices, storage devices, and networking equipment.

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, DRAM, and logic devices. We aim to increase our strategic relevance with our customers by contributing more to their continued success. Our core technical competency is integrating hardware, process, materials, software, and process control enabling results on the wafer.

Semiconductor manufacturing, our customers’ business, involves the complete fabrication of multiple dies or integrated circuits on a wafer. This involves the repetition of a set of core processes and can require hundreds of individual steps. Fabricating these devices requires highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

Demand from the Cloud, Internet of Things, and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical 3D scaling strategies as well as multiple patterning to enable shrinks.

We believe we are in a strong position with our leadership and competency in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with ecosystem partners; and (iv) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.

Despite recent semiconductor capital investment volatility, over the longer term, we believe that technology inflections in our industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration will lead to an increase in our served addressable market for our products and services in deposition, etch, and clean. While there could be continued variability in the near-term, we believe that demand for our products and services will increase faster than overall spending on wafer fabrication equipment, as the proportion of customers’ capital expenditures rises in these technology inflection areas, and as we continue to gain market share.

The following table summarizes certain key financial information for the periods indicated below:

	Three Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018
	(in thousands, except per share data and percentages)
Revenue	$	2,439,048		$	2,522,673		$	2,892,115
Gross margin	$	1,074,337		$	1,145,033		$	1,330,714
Gross margin as a percent of total revenue	44.0		%	45.4		%	46.0		%
Total operating expenses	$	508,820		$	454,654		$	503,203
Net income	$	547,390		$	568,855		$	778,800
Diluted net income per share	$	3.47		$	3.51		$	4.33

In the March 2019 quarter, revenue decreased slightly compared to the December 2018 quarter. Gross margin as a percentage of revenue in the March 2019 quarter declined compared to the December 2018 quarter primarily due to lower factory and field utilization and customer and product mix. The increase in operating expenses in the March 2019 quarter compared to the December 2018 quarter was mainly driven by increases in employee-related costs resulting from seasonal impacts, an extra work week in the quarter, and restructuring charges. Additionally, our March 2019 quarter operating income was negatively impacted primarily by the appreciation of the stock market during the quarter as we incurred additional costs related to our deferred compensation plan liabilities. We have deferred compensation plan-related assets designed to mitigate market valuation exposure to these liabilities, and the market gains for the March 2019 quarter associated with these assets are recognized in other income and expense.

Our cash and cash equivalents, investments, and restricted cash and investments balances increased to $6.4 billion at the end of the March 2019 quarter compared to $3.9 billion at the end of the December 2018 quarter, primarily due to $2.5 billion of debt

32

issuance during the quarter. Cash flow generated by operating activities during the March 2019 quarter of $933 million and a portion of the proceeds on debt issuance, were used for $935 million of treasury stock purchases, $171 million of dividends paid to stockholders, and $76 million for capital expenditures. Employee headcount as of March 31, 2019, was approximately 10,800.

RESULTS OF OPERATIONS

Revenue

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
Revenue (in millions)	$	2,439		$	2,523		$	2,892		$	7,292		$	7,951
Korea	25		%	25		%	36		%	22		%	35		%
Taiwan	23		%	17		%	12		%	17		%	14		%
Japan	17		%	27		%	14		%	24		%	16		%
China	17		%	14		%	17		%	19		%	14		%
United States	9		%	5		%	8		%	7		%	9		%
Southeast Asia	5		%	7		%	8		%	7		%	7		%
Europe	4		%	5		%	5		%	4		%	5		%

Revenue for the March 2019 quarter decreased 3% from the December 2018 quarter, reflecting lower customer demand for semiconductor equipment. Revenue for the March 2019 quarter decreased 16% compared to the same prior year period, and decreased 8% in the nine months ended March 31, 2019 compared to the same period in 2018, reflecting lower customer demand for semiconductor equipment.

Our deferred revenue balance at March 31, 2019 decreased to $441 million, as compared to $493 million as of December 23, 2018. Our deferred revenue balance does not include system shipments to customers in Japan, for which title does not transfer until customer acceptance. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue value from shipments to customers in Japan was approximately $80 million as of March 31, 2019, and $262 million as of December 23, 2018.

The percentages of system revenues to each of the markets we serve were as follows for the periods presented:

	Three Months Ended
	March 31, 2019		December 23, 2018
Memory	61	%	79	%
Foundry	27	%	13	%
Logic/integrated device manufacturing	12	%	8	%

Gross Margin

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands, except percentages)
Gross margin	$	1,074,337		$	1,145,033		$	1,330,714		$	3,277,568		$	3,685,624
Percent of revenue	44.0		%	45.4		%	46.0		%	44.9		%	46.4		%

Gross margin as a percentage of revenue reduced in the March 2019 quarter compared to the December 2018 quarter primarily due to lower factory and field utilization, customer and product mix, and deferred compensation plan-related costs. The decrease in gross margin as a percentage of revenue in the March 2019 quarter compared to the March 2018 quarter is primarily due to lower factory utilization and changes in customer and product mix. In the nine months ended March 31, 2019, gross margin as a percentage of revenue decreased compared to the same period in the prior year primarily due to lower factory utilization.

33

Research and Development

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands, except percentages)
Research & development (“R&D”)	$	318,514		$	285,556		$	305,412		$	895,742		$	861,801
Percent of revenue	13.1		%	11.3		%	10.6		%	12.3		%	10.8		%

We continued to make significant R&D investments focused on leading-edge deposition, etch, clean and other semiconductor manufacturing requirements. The spending in the March 2019 quarter increased compared to the December 2018 quarter primarily due to an increase of $54 million in employee-related costs resulting from seasonal employer payroll expense, deferred compensation plan-related costs, costs associated with a reduction in workforce occurring at the end of the March 2019 quarter, and an extra work week in the quarter, partially offset by a decrease of $18 million in supplies.

The increase in R&D during the March 2019 quarter compared to the same period in the prior year was mainly due to an increase of $29 million in employee-related costs as a result of higher headcount combined with costs associated with a reduction in workforce occurring at the end of the March 2019 quarter, partially offset by a decrease of $14 million in supplies and employee-related other expenses.

The increase in R&D for the nine months ended March 31, 2019 compared to the same period in 2018 was primarily driven by an increase of $25 million in employee-related costs as a result of higher headcount combined with costs associated with a reduction in workforce occurring at the end of the March 2019 quarter, and an increase of $8 million in supplies.

Selling, General, and Administrative

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands, except percentages)
Selling, general, and administrative (“SG&A”)	$	190,306		$	169,098		$	197,791		$	534,179		$	565,719
Percent of revenue	7.8		%	6.7		%	6.8		%	7.3		%	7.1		%

SG&A during the March 2019 quarter increased in comparison to the December 2018 quarter mainly due to an increase of $41 million in employee-related costs resulting from seasonal employer payroll expense, deferred compensation plan-related costs, costs associated with a reduction in workforce occurring at the end of the March 2019 quarter, and an extra work week in the quarter, partially offset by a decrease of $6 million in outside services, and $6 million in supplies.

SG&A during the March 2019 quarter compared to the same period in the prior year decreased primarily due to a $7 million decrease in employee variable compensation.

SG&A for the nine months ended March 31, 2019 compared to the same period in the prior year decreased primarily as a result of a $43 million decrease in employee variable compensation, partially offset by a $9 million increase in depreciation.

34

Other Income (Expense), Net

Other income (expense), net consisted of the following:

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Interest income	$	26,966		$	17,809		$	21,761		$	63,709		$	62,548
Interest expense	(30,263		)	(19,784		)	(25,734		)	(71,835		)	(72,956		)
Gains (losses) on deferred compensation plan-related assets, net	21,395			(22,374		)	(1,995		)	4,235			7,532
Loss on impairment of investments	—			—			(42,456		)	—			(42,456		)
Foreign exchange gains (losses), net	720			2,581			(1,065		)	3,352			(2,869		)
Other, net	1,714			(8,881		)	(6,321		)	(9,955		)	(16,263		)
	$	20,532		$	(30,649	)	$	(55,810	)	$	(10,494	)	$	(64,464	)

Interest income increased in the March 2019 quarter compared to the December 2018 quarter as a result of higher cash balances and higher yield. Interest income increased compared to the March 2018 quarter as a result of higher yield. Interest income increased in the nine months ended March 31, 2019 compared to the same period in 2018 as a result of higher yield.

Interest expense increased in the March 2019 quarter compared to the December 2018 and March 2018 quarters primarily due to the issuance of $2.5 billion of senior notes. Interest expense was slightly lower in the nine months ended March 31, 2019 as compared to the same period in the prior year due to the retirement of the 2018 Notes and partial conversions of the 2041 Notes, partially offset by the issuance of $2.5 billion of senior notes.

Significant changes in the market value of securities in the portfolio drove the gains on assets related to obligations under our deferred compensation plan in the March 2019 quarter compared to the December 2018 and March 2018 quarters.

The loss on impairment of investments in the three and nine months ended March 25, 2018 is the result of a decision to sell selected investments held in foreign jurisdictions in conjunction with our cash repatriation strategy following the Tax Cuts & Jobs Act of 2017.

Foreign exchange fluctuations are primarily due to currency movements against portions of our unhedged balance sheet exposures.

Other, net resulted in higher income during the March 2019 quarter compared to the December 2018 and March 2018 quarters primarily due to a decrease in charitable contributions and gain from equity investments. Other, net resulted in lower expense during the nine months ended March 31, 2019 compared to the same period in the prior year due to proceeds from insurance claims.

Income Tax Expense

As discussed in Note 6, “Income Tax Expense” of our Condensed Consolidated Financial Statements of this Form 10-Q, the “Tax Cuts & Jobs Act” was signed into law on December 22, 2017 and was effective starting in our quarter ended December 24, 2017. U.S. tax reform reduced the U.S. federal statutory tax rate from 35% to 21%, mandated payment of a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. The impact on income taxes due to change in legislation is required under the authoritative guidance of Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted. In conjunction, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which allowed for the recording of provisional amounts related to U.S. tax reform and subsequent adjustments related to U.S. tax reform during an up to one-year measurement period that is similar to the measurement period used when accounting for business combinations. We recorded what we believed to be reasonable estimates during the SAB 118 measurement period. During the December 2018 quarter, we finalized the accounting of the income tax effects of U.S. tax reform. Although the SAB 118 measurement period has ended, there may be some aspects of U.S. tax reform that remain subject to future regulations and/or notices which may further clarify certain provisions of U.S. tax reform. We may need to adjust our previously recorded amounts to reflect the recognition and measurement of our tax accounting positions in accordance with ASC 740; such adjustments could be material.

The below discussion around the provision for income taxes and effective tax rate are significantly impacted by U.S. tax reform.

35

Our provision for income taxes and effective tax rate for the periods indicated were as follows:

	Three Months Ended									Nine Months Ended
	March 31, 2019			December 23, 2018			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands, except percentages)
Income tax expense (benefit)	$	38,659		$	90,875		$	(7,099	)	$	187,548		$	834,105
Effective tax rate	6.6		%	13.8		%	(0.9		)%	10.2		%	38.0		%

The decrease in the effective tax rate for the three months ended March 31, 2019 compared to the three months ended December 23, 2018 was primarily due to the final tax expense adjustment under SAB 118 to the U.S. tax reform mandated one-time transition tax on accumulated unrepatriated foreign earnings in the three months ended December 23, 2018, and stock-based compensation excess tax benefits in the three months ended March 31, 2019.

The increase in the effective tax rate for the three months ended March 31, 2019 compared to the three months ended March 25, 2018 was primarily due to the impact of U.S. taxation on low-taxed foreign intangible income applicable beginning in fiscal year 2019.

The decrease in the effective tax rate for the nine months ended March 31, 2019 compared to the nine months ended March 25, 2018 was primarily due to the reduction of the federal statutory tax rate and the impact of U.S. taxation on low-taxed foreign intangible income applicable beginning in fiscal year 2019, and the impact of the U.S. tax reform mandated one-time transition tax expense on accumulated unrepatriated foreign earnings in the nine months ended March 25, 2018.

International revenues account for a significant portion of our total revenues, such that a material portion of our pre-tax income is earned and taxed outside the United States. Due to the GILTI provisions described in Note 6 - Income Taxes, international pre-tax income is taxable in the United States at a lower effective tax rate than the federal statutory tax rate. Please refer to Note 6, “Income Taxes,” to our Consolidated Financial Statements in Part II, Item 8 of our 2018 Form 10-K for additional information.

Uncertain Tax Positions

We reevaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Any change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A critical accounting policy is defined as one that has both a material impact on our financial condition and results of operations and requires us to make difficult, complex and/or subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make certain judgments, estimates and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experience and on various other assumptions we believe to be applicable and evaluate them on an ongoing basis to ensure they remain reasonable under current conditions. Actual results could differ significantly from those estimates, which could have a material impact on our business, results of operations, and financial condition. Our critical accounting estimates include:

• the recognition and valuation of revenue from arrangements with multiple performance obligations which impacts revenue;

• the valuation of inventory, which impacts gross margin;

• the valuation of warranty reserves, which impacts gross margin;

• the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, which impact our provision for income tax expenses; and

• the valuation and recoverability of long-lived assets, which impacts gross margin and operating expenses when we record asset impairments or accelerate their depreciation or amortization.

We believe that the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements regarding the critical accounting estimates indicated above.

36

Revenue Recognition: On June 25, 2018, we adopted FASB ASU No. 2014-09 (ASC 606) - Revenue From Contracts with Customers which provides guidance for revenue recognition that superseded the revenue recognition requirements in ASC 605, Revenue Recognition and most industry specific guidance. Refer to Note 3 - Revenue, of our Condensed Consolidated Financial Statements, included in Part 1 of this report, for a summary of our revenue recognition policy.

Inventory Valuation: Our policy is to assess the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods, and spare parts in each reporting period. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. Estimates of market value include but are not limited to management’s forecasts related to our future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses. If future customer demand or market conditions are less favorable than our projections, additional inventory write-downs may be required and would be reflected in cost of goods sold in the period in which we make the revision.

Warranty: We record a provision for estimated warranty expenses to cost of sales for each system when we recognize revenue. We periodically monitor the performance and cost of warranty activities, if actual costs incurred are different than our estimates, we may recognize adjustments to provisions in the period in which those differences arise or are identified. We do not maintain general or unspecified reserves; all warranty reserves are related to specific systems.

Income Taxes: Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. In the event that we determine that we will not be able to realize all or part of our net deferred tax assets, an adjustment will be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that the deferred tax assets will be realized, then the previously provided valuation allowance will be reversed.

We recognize the benefit from a tax position only if it is more likely than not that the position will be sustained upon audit based solely on the technical merits of the tax position. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Long-lived Assets: We review goodwill at least annually for impairment. If certain events or indicators of impairment occur between annual impairment tests, we will perform an impairment test at that date. In testing for a potential impairment of goodwill, we: (1) allocate goodwill to the reporting units to which the acquired goodwill relates; (2) estimate the fair value of our reporting units; and (3) determine the carrying value (book value) of those reporting units. Prior to this allocation of the assets to the reporting units, we assess long-lived assets for impairment. Furthermore, if the estimated fair value of a reporting unit is less than the carrying value, we must estimate the fair value of all identifiable assets and liabilities of that reporting unit, in a manner similar to a purchase price allocation for an acquired business. This can require independent valuations of certain internally generated and unrecognized intangible assets such as in-process R&D and developed technology. Only after this process is completed can the amount of goodwill impairment, if any, be determined. In our goodwill impairment process we first assess qualitative factors to determine whether it is necessary to perform a quantitative analysis. We do not calculate the fair value of a reporting unit unless we determine, based on a qualitative assessment, that it is more likely than not that the reporting unit’s fair value is less than its carrying amount.

The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. We determine the fair value of our reporting units by using an income approach. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

In estimating the fair value of a reporting unit, we make estimates and judgments about the future cash flows of our reporting units, including estimated growth rates and assumptions about the economic environment. Although our cash flow forecasts are based on assumptions that are consistent with the plans and estimates we are using to manage the underlying businesses, there is significant judgment involved in determining the cash flows attributable to a reporting unit. In addition, we make certain judgments about allocating shared assets to the estimated balance sheets of our reporting units. Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge.

37

As a result, several factors could result in an impairment of a material amount of our goodwill balance in future periods, including but not limited to: (1) weakening of the global economy, weakness in the semiconductor equipment industry, or our failure to reach internal forecasts, which could impact our ability to achieve our forecasted levels of cash flows and reduce the estimated discounted cash flow value of our reporting units; and (2) a decline in our Common Stock price and resulting market capitalization, to the extent we determine that the decline is sustained and indicates a reduction in the fair value of our reporting units below their carrying value. Further, the value assigned to intangible assets, other than goodwill, is based on estimates and judgments regarding expectations such as the success and lifecycle of products and technology acquired. If actual product acceptance differs significantly from the estimates, we may be required to record an impairment charge to write down the asset to its realizable value.

For other long-lived assets, we routinely consider whether indicators of impairment are present. If such indicators are present, we determine whether the sum of the estimated undiscounted cash flows attributable to the assets is less than their carrying value. If the sum is less, we recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. We recognize an impairment charge to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset’s carrying value. The fair value of the asset then becomes the asset’s new carrying value, which we depreciate over the remaining estimated useful life of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements, see Note 2 - Recent Accounting Pronouncements, of our Condensed Consolidated Financial Statements, included in Part 1 of this Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

Total gross cash and cash equivalents, investments, and restricted cash and investments (together comprising total cash and investments) were $6.4 billion at March 31, 2019 compared to $5.2 billion as of June 24, 2018. This increase was primarily due to cash provided by operating activities and the issuance of $2.5 billion of senior notes, partially offset by Common Stock repurchases in connection with our stock repurchase program and dividends paid.

Cash Flow from Operating Activities

Net cash provided by operating activities of $2.3 billion during the nine months ended March 31, 2019, consisted of (in millions):

Net income	$	1,649.6
Non-cash charges:
Depreciation and amortization	243.9
Equity-based compensation expense	142.4
Deferred income taxes	(75.1		)
Amortization of note discounts and issuance costs	5.1
Changes in operating asset and liability accounts	330.3
Other	(0.7		)
	$	2,295.5

Significant changes in operating asset and liability accounts, net of foreign exchange impact, included the following sources of cash: decreases in accounts receivable of $664.9 million and inventories of $211.3 million. The sources of cash are offset by uses of cash from the following: decreases in accrued expenses and other liabilities of $253.7 million, deferred profit of $181.0 million, and trade accounts payable of $100.0 million, along with increases in prepaid expense and other assets of $11.2 million.

Cash Flow from Investing Activities

Net cash used for investing activities during the nine months ended March 31, 2019, was $1.0 billion, primarily consisting of capital expenditures of $237.5 million, along with net purchases of available-for-sale securities of $770.7 million.

38

Cash Flow from Financing Activities

Net cash used for financing activities during the nine months ended March 31, 2019, was $862.2 million, primarily consisting of $2.7 billion in treasury stock repurchases, $178.3 million of cash paid for debt repayment, and $513.5 million in dividends paid, partially offset by $2.5 billion in net proceeds from issuance of long term debt.

Liquidity

Given that the semiconductor industry is highly competitive and has historically experienced rapid changes in demand, we believe that maintaining sufficient liquidity reserves is important to support sustaining levels of investment in R&D and capital infrastructure. Anticipated cash flows from operations based on our current business outlook, combined with our current levels of cash, cash equivalents, and short-term investments as of March 31, 2019, are expected to be sufficient to support our anticipated levels of operations, investments, debt service requirements, capital expenditures, capital redistributions, and dividends through at least the next 12 months. However, uncertainty in the global economy and the semiconductor industry, as well as disruptions in credit markets, have in the past, and could in the future, impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers, and creditors.

On March 4, 2019, we completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”, collectively with the 2026 and 2029 Notes, the “Senior Notes issued in 2019”). We will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, respectively on the 2026, 2029 and 2049 Notes, on a semi-annual basis on March 15 and September 15 of each year, beginning September 15, 2019.

We may redeem the Senior Notes issued in 2019 at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before January 15, 2026, for the 2026 Notes, before December 15, 2028, for the 2029 Notes, and before September 15, 2048, for the 2049 Notes. We may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after January 15, 2026 for the 2026 Notes, December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, we will be required to make an offer to repurchase the Senior Notes issued in 2019 at a price equal to 101% of the principal amount of the Senior Notes issued in 2019, plus accrued and unpaid interest.

Under certain circumstances, our 2041 Notes may be converted and settled in cash and shares of our Common Stock. During the nine months ended March 31, 2019, approximately $114.6 million principal value of convertible 2041 Notes were converted. We expect to have sufficient levels of cash, cash equivalents, and short term investments to fund the near-term settlement of these Convertible Notes.

During the December 2017 quarter, a one-time transition tax on accumulated unrepatriated foreign earnings, estimated at $991 million, was recognized associated with the December 2017 U.S. tax reform. In accordance with SAB 118, we have now finalized the amount of the transition tax during the period ended December 23, 2018. The final amount is $868.4 million. The Company elected to pay the one-time transition tax over a period of eight years with 8% of the transition tax to be paid each September 15 for years 2018 through 2022, and 15%, 20%, and 25%, respectively, to be paid each September 15 for years 2023 through 2025.

In the longer term, liquidity will depend to a great extent on our future revenues and our ability to appropriately manage our costs based on demand for our products and services. While we have substantial cash balances, we may require additional funding and need or choose to raise the required funds through borrowings or public or private sales of debt or equity securities. We believe that, if necessary, we will be able to access the capital markets on terms and in amounts adequate to meet our objectives. However, given the possibility of changes in market conditions or other occurrences, there can be no assurance that such funding will be available in needed quantities or on terms favorable to us.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

For financial market risks related to changes in interest rates, marketable equity security prices, and foreign currency exchange rates, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, in our 2018 Form 10-K. Other than noted below, our exposure related to market risk has not changed materially since June 24, 2018. All of the potential changes noted below are based on sensitivity analysis performed on our financial position as of March 31, 2019. Actual results may differ materially.

39

Fixed Income Securities

Our investments in various interest earning securities carry a degree of market risk for changes in interest rates. At any time, a sharp rise in interest rates could have a material adverse impact on the fair value of our fixed income investment portfolio. Conversely, declines in interest rates could have a material adverse impact on interest income for our investment portfolio. We target to maintain a conservative investment policy, which focuses on the safety and preservation of our capital by limiting default risk, market risk, reinvestment risk, and concentration risk.

The following table presents the hypothetical fair values of fixed income securities that would result from selected potential decreases and increases in interest rates. Market changes reflect immediate hypothetical parallel shifts in the yield curve of plus or minus 50 basis points (“BPS”), 100 BPS, and 150 BPS. The hypothetical fair values as of March 31, 2019, were as follows:

	Valuation of Securities Given an Interest Rate Decrease of X Basis Points						Fair Value  as of March 31, 2019		Valuation of Securities Given an Interest Rate Increase of X Basis Points
	(150 BPS)		(100 BPS)		(50 BPS)		0.00%		50 BPS		100 BPS		150 BPS
	(in thousands)
U.S. Treasury and agencies	$	670,747	$	669,968	$	669,189	$	668,410	$	667,631	$	666,852	$	666,072
Government-sponsored enterprises	11,091		11,038		10,985		10,932		10,879		10,826		10,773
Foreign government bonds	10,198		10,170		10,142		10,115		10,087		10,059		10,031
Corporate notes and bonds	1,186,600		1,183,138		1,179,676		1,176,214		1,172,753		1,169,292		1,165,831
Mortgage backed securities - residential	17,442		17,427		17,413		17,399		17,385		17,370		17,356
Mortgage backed securities - commercial	39,838		39,646		39,455		39,262		39,071		38,880		38,688
Total	$	1,935,916	$	1,931,387	$	1,926,860	$	1,922,332	$	1,917,806	$	1,913,279	$	1,908,751

We mitigate default risk by investing in high credit quality securities and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to achieve portfolio liquidity and maintain a prudent amount of diversification.

ITEM 4. Controls and Procedures

Design of Disclosure Controls and Procedures and Internal Control over Financial Reporting

We maintain disclosure controls and procedures and internal control over final reporting that are designed to comply with Rule 13a-15 of the Exchange Act. In designing and evaluating the controls and procedures associated with each, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and that the effectiveness of controls cannot be absolute because the cost to design and implement a control to identify errors or mitigate the risk of errors occurring should not outweigh the potential loss caused by the errors that would likely be detected by the control. Moreover, we believe that a control system cannot be guaranteed to be 100% effective all of the time. Accordingly, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Disclosure Controls and Procedures

As required by Exchange Act Rule 13a-15(b), as of March 31, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer, along with our Chief Financial Officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis and to correct any material deficiencies that we may discover. Our goal is to ensure that our senior management has timely access to material information that could affect our business.

Changes in Internal Control over Financial Reporting

40

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Effectiveness of Controls

While we believe the present design of our disclosure controls and procedures and internal control over financial reporting is effective, future events affecting our business may cause us to modify our disclosure controls and procedures or internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

While we are not currently a party to any legal proceedings that we believe are material, we are either a defendant or plaintiff in various actions that have arisen from time to time in the normal course of business, including intellectual property claims. We accrue for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. Based on current information, we do not believe that a material loss from known matters is probable and therefore have not recorded an accrual of any material amount for litigation or other contingencies related to existing legal proceedings.

ITEM 1A. Risk Factors

In addition to the other information in this Form 10-Q, the following risk factors should be carefully considered in evaluating us and our business because such factors may significantly impact our business, operating results, and financial condition. As a result of these risk factors, as well as other risks discussed in our other SEC filings, our actual results could differ materially from those projected in any forward-looking statements. No priority or significance is intended, nor should be attached, to the order in which the risk factors appear.

The Semiconductor Capital Equipment Industry Is Subject to Variability and Periods of Rapid Growth or Decline; We Therefore Face Risks Related to Our Strategic Resource Allocation Decisions

The semiconductor capital equipment industry has historically been characterized by rapid changes in demand. The industry environment has moved toward being more characterized by variability across segments and customers accentuated by consolidation within the industry. Variability in our customers’ business plans may lead to changes in demand for our equipment and services, which could negatively impact our results. The variability in our customers’ investments during any particular period is dependent on several factors, including but not limited to electronics demand, economic conditions (both general and in the semiconductor and electronics industries), industry supply and demand, prices for semiconductors, and our customers’ ability to develop and manufacture increasingly complex and costly semiconductor devices. The changes in demand may require our management to adjust spending and other resources allocated to operating activities.

During periods of rapid growth or decline in demand for our products and services, we face significant challenges in maintaining adequate financial and business controls, management processes, information systems, and procedures for training, assimilating, and managing our workforce, and in appropriately sizing our supply chain infrastructure and facilities, work force, and other components of our business on a timely basis. If we do not adequately meet these challenges during periods of increasing or declining demand, our gross margins and earnings may be negatively impacted.

We continuously reassess our strategic resource allocation choices in response to the changing business environment. If we do not adequately adapt to the changing business environment, we may lack the infrastructure and resources to scale up our business to meet customer expectations and compete successfully during a period of growth, or we may expand our capacity too rapidly and/or beyond what is appropriate for the actual demand environment, resulting in excess fixed costs.

Especially during transitional periods, resource allocation decisions can have a significant impact on our future performance, particularly if we have not accurately anticipated industry changes. Our success will depend, to a significant extent, on the ability of our executive officers and other members of our senior management to identify and respond to these challenges effectively.

41

Future Declines in the Semiconductor Industry, and the Overall World Economic Conditions on Which It Is Significantly Dependent, Could Have a Material Adverse Impact on Our Results of Operations and Financial Condition

Our business depends on the capital equipment expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits. With the consolidation of customers within the industry, the semiconductor capital equipment market may experience rapid changes in demand driven both by changes in the market generally and the plans and requirements of particular customers. The economic, political, and business conditions occurring nationally, globally, or in any of our key sales regions, which are often unpredictable, have historically impacted customer demand for our products and normal commercial relationships with our customers, suppliers, and creditors. Additionally, in times of economic uncertainty, our customers’ budgets for our products, or their ability to access credit to purchase them, could be adversely affected. This would limit their ability to purchase our products and services. As a result, changing business or economic conditions can cause material adverse changes to our results of operations and financial condition, including but not limited to: 

• a decline in demand for our products or services;

• an increase in reserves on accounts receivable due to our customers’ inability to pay us;

• an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory;

• valuation allowances on deferred tax assets;

• restructuring charges;

• asset impairments including the potential impairment of goodwill and other intangible assets;

• a decline in the value of our investments;

• exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition;

• a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and

• challenges maintaining reliable and uninterrupted sources of supply.

Fluctuating levels of investment by semiconductor manufacturers may materially affect our aggregate shipments, revenues, operating results, and earnings. Where appropriate, we will attempt to respond to these fluctuations with cost management programs aimed at aligning our expenditures with anticipated revenue streams, which sometimes result in restructuring charges. Even during periods of reduced revenues, we must continue to invest in R&D and maintain extensive ongoing worldwide customer service and support capabilities to remain competitive, which may temporarily harm our profitability and other financial results.

Our Quarterly Revenues and Operating Results Are Variable

Our revenues and operating results may fluctuate significantly from quarter to quarter due to a number of factors, not all of which are in our control. We manage our expense levels based in part on our expectations of future revenues. Because our operating expenses are based in part on anticipated future revenues, and a certain amount of those expenses are relatively fixed, a change in the timing of recognition of revenue and/or the level of gross profit from a small number of transactions can unfavorably affect operating results in a particular quarter. 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;

• our ability to develop, introduce, and market new, enhanced, and competitive products in a timely manner;

• our competitors’ introduction of new products;

• legal or technical challenges to our products and technologies;

42

• 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 and tariffs) 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) on our earnings per share.

We May Incur Impairments to Goodwill or Long-lived Assets

We review our long-lived assets, including goodwill and intangible assets identified in business combinations and other intangible assets, for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Negative industry or economic trends, including reduced market prices of our Common Stock, reduced estimates of future cash flows, disruptions to our business, slower growth rates, or lack of growth in our relevant business units, could lead to impairment charges against our long-lived assets, including goodwill and other intangible assets. If, in any period, our stock price decreases to the point where our fair value, as determined by our market capitalization, is less than the book value of our assets, this could also indicate a potential impairment, and we may be required to record an impairment charge in that period, which could adversely affect our result of operations.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and to rely heavily on projections of future operating performance. We operate in a highly competitive environment and projections of future operating results and cash flows may vary significantly from actual results. Additionally, if our analysis indicates potential impairment to goodwill in one or more of our business units, we may be required to record additional charges to earnings in our financial statements, which could negatively affect our results of operations.

Our Leverage and Debt Service Obligations and Potential Note Conversion or Related Hedging Activities May Adversely Affect Our Financial Condition, Results of Operations, and Earnings per Share

We have $4.8 billion in aggregate principal amount of senior unsecured notes, convertible notes, and commercial paper instruments outstanding. Additionally, we have funding available to us under our $1.25 billion commercial paper program and our $1.25 billion revolving credit facility, which serves as a backstop to our commercial paper program. Our revolving credit facility also includes an option to increase the amount up to an additional $600.0 million, for a potential total commitment of $1.85 billion. We may, in the future, decide to enter into additional debt arrangements.

In addition, we have entered, and in the future may enter, into derivative instrument arrangements to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. We could be exposed to losses in the event of nonperformance by the counterparties to our derivative instruments.

Our indebtedness could have adverse consequences, including:

• risk associated with any inability to satisfy our obligations;

• a portion of our cash flows that may have to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions, or general corporate or other purposes; and

• impairing our ability to obtain additional financing in the future.

Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory, and other factors. Furthermore, our operations may not generate sufficient cash flows to enable us to meet our expenses and service our debt. As a result, we may need to enter into new financing arrangements to obtain the necessary funds. If we determine it is necessary to seek additional funding for any reason, we may not be able to obtain such funding or, if funding is available, obtain it on acceptable terms. If we fail to make a payment on our debt, we could be in default on such debt, and this default could cause us to be in default on our other outstanding indebtedness.

Conversion of our Convertible Notes may cause dilution to our stockholders and to our earnings per share. The number of shares of our Common Stock into which the Convertible Notes are convertible may be adjusted from time to time, including increases in such rates as a result of dividends that we pay to our stockholders. Upon conversion of any Convertible Notes, we will deliver cash in the amount of the principal amount of the Convertible Notes and, with respect to any excess conversion value greater than the principal amount of the Convertible Notes, shares of our Common Stock, which would result in dilution to our stockholders. Prior to the maturity of the Convertible Notes, if the price of our Common Stock exceeds the conversion price, U.S. generally accepted accounting principles require that we report an increase in diluted share count, which would result in lower reported earnings per share. The price of our Common Stock could also be affected by sales of our Common

43

Stock by investors who view the Convertible Notes as a more attractive means of equity participation in our company and also by hedging activity that may develop involving our Common Stock by holders of the Convertible Notes.

Our Credit Agreements Contain Covenant Restrictions That May Limit Our Ability to Operate Our Business

We may be unable to respond to changes in business and economic conditions, engage in transactions that might otherwise be beneficial to us, or obtain additional financing because our debt agreements contain, and any of our other future similar agreements may contain, covenant restrictions that limit our ability to, among other things:

• incur additional debt, assume obligations in connection with letters of credit, or issue guarantees;

• create liens;

• enter into transactions with our affiliates;

• sell certain assets; and

• merge or consolidate with any person.

Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. In addition, our failure to comply with these covenants could result in a default under the Senior Notes, the Convertible Notes, or our other debt, which could permit the holders to accelerate such debt. If any of our debt is accelerated, we may not have sufficient funds available to repay such debt, which could materially and negatively affect our financial condition and results of operation.

We Have a Limited Number of Key Customers

Sales to a limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections, and profitability. As a result, the actions of even one customer may subject us to variability in those areas that is difficult to predict. In addition, large customers may be able to negotiate requirements that result in decreased pricing, increased costs, and/or lower margins for us; compliance with specific environmental, social, and corporate governance standards; and limitations on our ability to share jointly developed technology with others. Similarly, significant portions of our credit risk may, at any given time, be concentrated among a limited number of customers so that the failure of even one of these key customers to pay its obligations to us could significantly impact our financial results.

We Depend on Creating New Products and Processes and Enhancing Existing Products and Processes for Our Success. Consequently, We Are Subject to Risks Associated with Rapid Technological Change

Rapid technological changes in semiconductor manufacturing processes subject us to increased pressure to develop technological advances that enable those processes. We believe that our future success depends in part upon our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products or existing products have reliability, quality, design, or safety problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance of and payment for new products, and additional service and warranty expenses. We may be unable to develop and manufacture products successfully, or products that we introduce may fail in the marketplace. For more than 25 years, the primary driver of technology advancement in the semiconductor industry has been to shrink the lithography that prints the circuit design on semiconductor chips. That driver could be approaching its technological limit, leading semiconductor manufacturers to investigate more complex changes in multiple technologies in an effort to continue technology development. In the face of uncertainty on which technology solutions will become successful, we will need to focus our efforts on developing the technology changes that are ultimately successful in supporting our customer requirements. Our failure to develop and offer the correct technology solutions in a timely manner with productive and cost-effective products could adversely affect our business in a material way. Our failure to commercialize new products in a timely manner could result in loss of market share, unanticipated costs, and inventory obsolescence, which would adversely affect our financial results.

In order to develop new products and processes and enhance existing products and processes, we expect to continue to make significant investments in R&D, to investigate the acquisition of new products and technologies, to invest in or acquire such business or technologies, and to pursue joint development relationships with customers, suppliers, or other members of the industry. Our investments and acquisitions may not be as successful as we may expect, particularly as we seek to invest or acquire product lines and technologies that are new to us. We may find that acquisitions are not available to us, for regulatory or other reasons, and that we must therefore limit ourselves to collaboration and joint venture development activities, which do not have the same benefits as acquisitions. Pursuing development through collaboration and/or joint development activities rather than through an acquisition poses substantial challenges for management, including those related to aligning business objectives, sharing confidential information and intellectual property, sharing value with third parties, and realizing synergies that might have been available in an acquisition but are not available through a joint development project. We must manage product transitions and joint development relationships successfully, as the introduction of new products could adversely affect

44

our sales of existing products and certain jointly developed technologies may be subject to restrictions on our ability to share that technology with other customers, which could limit our market for products incorporating those technologies. Future technologies, processes, or product developments may render our current product offerings obsolete, leaving us with non-competitive products, obsolete inventory, or both. Moreover, customers may adopt new technologies or processes to address the complex challenges associated with next-generation devices. This shift may result in a reduction in the size of our addressable markets or could increase the relative size of markets in which we either do not compete or have relatively low market share.

We Are Subject to Risks Relating to Product Concentration and Lack of Product Revenue Diversification

We derive a substantial percentage of our revenues from a limited number of products. Our products are priced up to approximately $11 million per system. As a result, the inability to recognize revenue on even a few systems can cause a significantly adverse impact on our revenues for a given quarter, and, in the longer term, the continued market acceptance of these products is critical to our future success. Our business, operating results, financial condition, and cash flows could therefore be adversely affected by:

• a decline in demand for even a limited number of our products,

• a failure to achieve continued market acceptance of our key products,

• export restrictions or other regulatory or legislative actions that could limit our ability to sell those products to key customers or customers within certain markets,

• an improved version of products being offered by a competitor in the markets in which we participate,

• increased pressure from competitors that offer broader product lines,

• technological changes that we are unable to address with our products, or

• a failure to release new or enhanced versions of our products on a timely basis.

In addition, the fact that we offer limited product lines creates the risk that our customers may view us as less important to their business than our competitors that offer additional products and/or product capabilities. This may impact our ability to maintain or expand our business with certain customers. Such product concentration may also subject us to additional risks associated with technology changes. Our business is affected by our customers’ use of our products in certain steps in their wafer fabrication processes. Should technologies change so that the manufacture of semiconductors requires fewer steps using our products, this could have a larger impact on our business than it would on the business of our less concentrated competitors.

Strategic Alliances and Customer Consolidation May Have Negative Effects on Our Business

Increasingly, semiconductor manufacturing companies are entering into strategic alliances or consolidating with one another to expedite the development of processes and other manufacturing technologies and/or achieve economies of scale. The outcomes of such an alliance can be the definition of a particular tool set for a certain function and/or the standardization of a series of process steps that use a specific set of manufacturing equipment, while the outcomes of consolidation can lead to an overall reduction in the market for semiconductor manufacturing equipment as customers’ operations achieve economies of scale and/or increased purchasing power based on their higher volumes. In certain instances, this could work to our disadvantage if a competitor’s tools or equipment become the standard equipment for such functions or processes. Additional outcomes of such consolidation may include our customers re-evaluating their future supplier relationships to consider our competitors’ products and/or gaining additional influence over the pricing of products and the control of intellectual property.

Similarly, our customers may partner with, or follow the lead of, educational or research institutions that establish processes for accomplishing various tasks or manufacturing steps. If those institutions utilize a competitor’s equipment when they establish those processes, it is likely that customers will tend to use the same equipment in setting up their own manufacturing lines. Even if they select our equipment, the institutions and the customers that follow their lead could impose conditions on acceptance of that equipment, such as adherence to standards and requirements or limitations on how we license our proprietary rights, that increase our costs or require us to take on greater risk. These actions could adversely impact our market share and financial results.

We Depend on a Limited Number of Key Suppliers and Outsource Providers, and We Run the Risk That They Might Not Perform as We Expect

Outsource providers and component suppliers have played and will continue to play a key role in our manufacturing operations, field installation and support, and many of our transactional and administrative functions, such as information technology, facilities management, and certain elements of our finance organization. These providers and suppliers might suffer financial setbacks, be acquired by third parties, become subject to exclusivity arrangements that preclude further business with us, or be unable to meet our requirements or expectation due to their independent business decisions or force majeure events that could interrupt or impair their continued ability to perform as we expect.

45

Although we attempt to select reputable providers and suppliers and we attempt to secure their performance on terms documented in written contracts, it is possible that one or more of these providers or suppliers could fail to perform as we expect, or fail to secure or protect intellectual property rights, and such failure could have an adverse impact on our business. In some cases, the requirements of our business mandate that we obtain certain components and sub-assemblies included in our products from a single supplier or a limited group of suppliers. Where practical, we endeavor to establish alternative sources to mitigate the risk that the failure of any single provider or supplier will adversely affect our business, but this is not feasible in all circumstances. There is therefore a risk that a prolonged inability to obtain certain components or secure key services could impair our ability to manage operations, ship products, and generate revenues, which could adversely affect our operating results and damage our customer relationships.

We Face Risks Related to the Disruption of Our Primary Manufacturing Facilities

Our manufacturing facilities are concentrated in a limited number of locations. These locations are subject to disruption for a variety of reasons, such as natural or man-made disasters, terrorist activities, disruptions of our information technology resources, utility interruptions, or other events beyond our control. Such disruptions may cause delays in shipping our products, which could result in the loss of business or customer trust, adversely affecting our business and operating results.

Once a Semiconductor Manufacturer Commits to Purchase a Competitor’s Semiconductor Manufacturing Equipment, the Manufacturer Typically Continues to Purchase That Competitor’s Equipment, Making It More Difficult for Us to Sell Our Equipment to That Customer

Semiconductor manufacturers must make a substantial investment to qualify and integrate wafer processing equipment into a semiconductor production line. We believe that once a semiconductor manufacturer selects a particular supplier’s processing equipment, the manufacturer generally relies upon that equipment for that specific production line application for an extended period of time, especially for customers that are more focused on tool reuse. Accordingly, we expect it to be more difficult to sell our products to a given customer if that customer initially selects a competitor’s equipment for the same product line application.

We Face a Challenging and Complex Competitive Environment

We face significant competition from multiple competitors, and with increased consolidation efforts in our industry, we may face increasing competitive pressures. Other companies continue to develop systems and/or acquire businesses and products that are competitive to ours and may introduce new products and product capabilities that may affect our ability to sell and support our existing products. We face a greater risk if our competitors enter into strategic relationships with leading semiconductor manufacturers covering products similar to those we sell or may develop, as this could adversely affect our ability to sell products to those manufacturers.

We believe that to remain competitive we must devote significant financial resources to offer products that meet our customers’ needs, to maintain customer service and support centers worldwide, and to invest in product and process R&D. Certain of our competitors, including those that are created and financially backed by foreign governments, have substantially greater financial resources and more extensive engineering, manufacturing, marketing, and customer service and support resources than we do and therefore have the potential to offer customers a more comprehensive array of products and/or product capabilities and to therefore achieve additional relative success in the semiconductor equipment industry. These competitors may deeply discount or give away products similar to those that we sell, challenging or even exceeding our ability to make similar accommodations and threatening our ability to sell those products. We also face competition from our own customers, who in some instances have established affiliated entities that manufacture equipment similar to ours. In addition, we face competition from companies that exist in a more favorable legal or regulatory environment than we do, allowing the freedom of action in ways that we may be unable to match. In many cases speed to solution is necessary for customer satisfaction and our competitors may be better positioned to achieve these objectives. For these reasons, we may fail to continue to compete successfully worldwide.

In addition, our competitors may be able to develop products comparable or superior to those we offer or may adapt more quickly to new technologies or evolving customer requirements. In particular, while we continue to develop product enhancements that we believe will address future customer requirements, we may fail in a timely manner to complete the development or introduction of these additional product enhancements successfully, or these product enhancements may not achieve market acceptance or be competitive. Accordingly, competition may intensify, and we may be unable to continue to compete successfully in our markets, which could have a material adverse effect on our revenues, operating results, financial condition, and/or cash flows.

46

Our Future Success Depends Heavily on International Sales and the Management of Global Operations

Non-U.S. sales, as reflected in Part 1 Item 1. Business, accounted for approximately 93%, 93%, and 92% of total revenue in the nine months ended March 31, 2019 and fiscal years 2018, and 2017, respectively. We expect that international sales will continue to account for a substantial majority of our total revenue in future years.

We are subject to various challenges related to international sales and the management of global operations including but not limited to:

• domestic and international trade policies, practices, relations, disputes and issues;

• domestic and international tariffs and other barriers;

• developing customers and/or suppliers, whom may have limited access to capital resources;

• 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, tax, and labor laws;

• 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, and effectively manage people, in all necessary locations for the successful operation of our business.

There is inherent risk, based on the complex relationships among China, Japan, Korea, Taiwan, and the United States, that political, diplomatic and national security influences might lead to trade disputes, impacts and/or disruptions. This would adversely affect our business with China, Japan, Korea, and/or Taiwan and perhaps the entire Asia Pacific region or global economy. A significant trade dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits. Tariffs, additional taxes, trade barriers or sanctions may increase our manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial conditions. In addition, there are risks that foreign governments may, among other things, insist on the use of local suppliers; compel companies to partner with local companies to design and supply equipment on a local basis, requiring the transfer of intellectual property rights and/or local manufacturing; utilize their influence over their judicial systems to respond to intellectual property disputes or issues; and provide special incentives to government-backed local customers to buy from local competitors, even if their products are inferior to ours; all of which could adversely impact our revenues and margins. Certain international sales depend on our ability to obtain export licenses from the U.S. or foreign governments. Our failure or inability to obtain such licenses could potentially limit our markets and impact our revenues. Many of the challenges noted above are applicable in China, which is a fast developing market for the semiconductor equipment industry and therefore an area of anticipated growth for our business.

We are exposed to potentially adverse movements in foreign currency exchange rates. The majority of our sales and expenses are denominated in U.S. dollars. However, we are exposed to foreign currency exchange rate fluctuations primarily related to revenues denominated in Japanese yen and expenses denominated in euro and Korean won. Currently, we hedge certain anticipated foreign currency cash flows, primarily anticipated revenues denominated in Japanese yen and expenses dominated in euro and Korean won. In addition, we enter into foreign currency hedge contracts to minimize the short-term impact of the foreign currency exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities, primarily third-party accounts receivables, accounts payables, and intercompany receivables and payables. We believe these are our primary exposures to currency rate fluctuation. We expect to continue to enter into hedging transactions, for the purposes outlined, for the foreseeable future. However, these hedging transactions may not achieve their desired effect because differences between the actual timing of the underlying exposures and our forecasts of those exposures may leave us either over or under hedged on any given transaction. Moreover, by hedging these foreign currency denominated revenues, expenses, monetary assets, and liabilities, we may miss favorable currency trends that would have been advantageous to us but for the hedges. Additionally, we are exposed to short-term foreign currency exchange rate fluctuations on non-U.S. dollar-denominated monetary assets and liabilities (other than those currency exposures previously discussed), and currently we do not enter into foreign currency hedge contracts against these exposures. Therefore, we are subject to potential unfavorable foreign currency exchange rate fluctuations to the extent that we transact business (including intercompany transactions) in these currencies.

47

The magnitude of our overseas business also affects where our cash is generated. Certain uses of cash, such as share repurchases, payment of dividends, or the repayment of our notes, can usually only be made with onshore cash balances. Since the majority of our cash is generated outside of the United States, this may impact certain business decisions and outcomes.

Our Ability to Attract, Retain, and Motivate Key Employees Is Critical to Our Success

Our ability to compete successfully depends in large part on our ability to attract, retain, and motivate key employees with the appropriate skills, experiences and competencies. This is an ongoing challenge due to intense competition for top talent, fluctuations in industry or business economic conditions, as well as increasing geographic expansion that may require cycles of hiring activity and workforce reductions. Our success in hiring depends on a variety of factors, including the attractiveness of our compensation and benefit programs, global economic or political and industry conditions, our organizational structure, global competition for talent and the availability of qualified employees, the availability of career development opportunities, the ability to obtain necessary authorizations for workers to provide services outside their home countries, and our ability to offer a challenging and rewarding work environment. We periodically evaluate our overall compensation and benefit programs and make adjustments, as appropriate, to maintain or enhance their competitiveness. If we are not able to successfully attract, retain, and motivate key employees, we may be unable to capitalize on market opportunities and our operating results may be materially and adversely affected.

Certain Critical Information Systems, That We Rely on for the Operation of Our Business, and Products That We Sell Are Susceptible to Cybersecurity and Other Threats or Incidents

We maintain and rely upon certain critical information systems for the effective operation of our business. These information systems include but are not limited to, telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, (some of which may be integrated into the products that we sell or be required in order to provide the services that we offer), network communications, and email. These information systems may be owned and maintained by us, our outsourced providers, or third parties such as vendors, contractors, and Cloud providers. In addition, we make use of Software-As-A-Service (SAAS) products for certain important business functions that are provided by third parties and hosted on their own networks and servers, or third party networks and servers, all of which rely on networks, email and/or the Internet for their function. All of these information systems are subject to disruption, breach or failure from various sources, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event, or that may continue undetected for an extended period of time. Those sources may include mistakes or unauthorized actions by our employees or contractors; phishing schemes and other third-party attacks, and degradation or loss of service or access to our data due to viruses, malware, denial of service attacks, destructive or inadequate code, power failures, and physical damage to computers, hard drives, communication lines, and networking equipment.

We have experienced cyber threats and incidents in the past. Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cyber threats or incidents in the future. If we were subject to a cyber incident, it could have a material adverse effect on our business. Such adverse effects might include:

• Loss of (or inability to access, e.g. through ransomware) confidential and/or sensitive information stored on these critical information systems or transmitted to or from those systems;

• The disruption of the proper function of our products, services and/or operations;

• The failure of our or our customers’ manufacturing processes;

• Errors in the output of our work or our customers’ work;

• The loss or public exposure of the personal information of our employees or customers;

• The public release of customer orders, financial and business plans, and operational results;

• Exposure to claims from third parties who are adversely impacted by such incidents;

• Misappropriation or theft of Company, customer, supplier, or other’s assets or resources, and costs associated therewith;

• Diminution in the value of Lam's investment in research, development and engineering; or

• Our failure to meet, or violation of, regulatory or other legal obligations, such as the timely publication or filing of financial statements, tax information and other required communications.

While we have implemented ISO 27001 compliant security procedures and virus protection software, intrusion prevention systems, identity and access control, and emergency recovery processes, and we carefully select our third-party providers of information systems, to mitigate risks to the information systems that we rely on, those mitigation and protection systems cannot be guaranteed to be fail-safe and we may still suffer cyber-related incidents.

48

Our Financial Results May Be Adversely Impacted by Higher than Expected Tax Rates or Exposure to Additional Tax Liabilities

We are subject to income, transaction, and other taxes in the United States and various foreign jurisdictions, and significant judgment is required to determine worldwide tax liabilities. The amount of taxes we pay is subject to ongoing audits in various jurisdictions, and a material assessment by a governing tax authority could affect our profitability. As a global company, our effective tax rate is highly dependent upon the geographic composition of worldwide earnings and tax regulations governing each region. Our effective tax rate could be adversely affected by changes in the split of earnings between countries with differing statutory tax rates, in the valuation allowance of deferred tax assets, in tax laws, by material audit assessments, or changes in or expirations of agreements with tax authorities. These factors could affect our profitability. In particular, the carrying value of deferred tax assets, which are predominantly in the United States, is dependent on our ability to generate future taxable income in the United States.

A Failure to Comply with Environmental Regulations May Adversely Affect Our Operating Results

We are subject to a variety of domestic and international governmental regulations related to the handling, discharge, and disposal of toxic, volatile, or otherwise hazardous chemicals. Failure to comply with present or future environmental regulations could result in fines being imposed on us, require us to suspend production, and/or cease operations, or cause our customers to not accept our products. These regulations could require us to alter our current operations, acquire significant additional equipment, incur substantial other expenses to comply with environmental regulations, or take other actions. Any failure to comply with regulations governing the use, handling, sale, transport, or disposal of hazardous substances could subject us to future liabilities that may adversely affect our operating results, financial condition, and ability to operate our business.

If We Choose to Acquire or Dispose of Businesses, Product Lines, and Technologies, We May Encounter Unforeseen Costs and Difficulties That Could Impair Our Financial Performance

An important element of our management strategy is to review acquisition prospects that would complement our existing products, augment our market coverage and distribution ability, or enhance our technological capabilities. As a result, we may seek to make acquisitions of complementary companies, products, or technologies, or we may reduce or dispose of certain product lines or technologies that no longer fit our long-term strategies. For regulatory or other reasons, we may not be successful in our attempts to acquire or dispose of businesses, products, or technologies, resulting in significant financial costs, reduced or lost opportunities, and diversion of management’s attention. Managing an acquired business, disposing of product technologies, or reducing personnel entails numerous operational and financial risks, including difficulties in assimilating acquired operations and new personnel or separating existing business or product groups, diversion of management’s attention away from other business concerns, amortization of acquired intangible assets, adverse customer reaction to our decision to cease support for a product, and potential loss of key employees or customers of acquired or disposed operations. There can be no assurance that we will be able to achieve and manage successfully any such integration of potential acquisitions, disposition of product lines or technologies, or reduction in personnel or that our management, personnel, or systems will be adequate to support continued operations. Any such inabilities or inadequacies could have a material adverse effect on our business, operating results, financial condition, and/or cash flows.

In addition, any acquisition could result in changes such as potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, the amortization of related intangible assets, and goodwill impairment charges, any of which could materially adversely affect our business, financial condition, results of operations, cash flows, and/or the price of our Common Stock.

The Market for Our Common Stock Is Volatile, Which May Affect Our Ability to Raise Capital or Make Acquisitions or May Subject Our Business to Additional Costs

The market price for our Common Stock is volatile and has fluctuated significantly over the past years. The trading price of our Common Stock could continue to be highly volatile and fluctuate widely in response to a variety of factors, many of which are not within our control or influence. 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;

49

• 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.

In addition, the stock market experiences significant price and volume fluctuations. Historically, we have witnessed significant volatility in the price of our Common Stock due in part to the price of and markets for semiconductors. These and other factors have and may again adversely affect the price of our Common Stock, regardless of our actual operating performance. In the past, following volatile periods in the price of their stock, many companies became the object of securities class action litigation. If we are sued in a securities class action, we could incur substantial costs, and it could divert management’s attention and resources and have an unfavorable impact on our financial performance and the price for our Common Stock.

Intellectual Property, Indemnity, and Other Claims Against Us Can Be Costly and We Could Lose Significant Rights That Are Necessary to Our Continued Business and Profitability

Third parties may assert infringement, unfair competition, product liability, breach of contract, or other claims against us. From time to time, other persons send us notices alleging that our products infringe their patent or other intellectual property rights. In addition, law enforcement authorities may seek criminal charges relating to intellectual property or other issues. We also face risks of claims arising from commercial and other relationships. In addition, our bylaws and other indemnity obligations provide that we will indemnify officers and members of our Board of Directors against losses that they may incur in legal proceedings resulting from their service to us. From time to time, in the normal course of business, we indemnify third parties with whom we enter into contractual relationships, including customers and suppliers, with respect to certain matters. We have agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that our products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. In such cases, it is our policy either to defend the claims or to negotiate licenses or other settlements on commercially reasonable terms. However, we may be unable in the future to negotiate necessary licenses or reach agreement on other settlements on commercially reasonable terms, or at all, and any litigation resulting from these claims by other parties may materially adversely affect our business and financial results, and we may be subject to substantial damage awards and penalties. Moreover, although we have insurance to protect us from certain claims and cover certain losses to our property, such insurance may not cover us for the full amount of any losses, or at all, and may be subject to substantial exclusions and deductibles.

We May Fail to Protect Our Critical Proprietary Technology Rights, Which Could Affect Our Business

Our success depends in part on our proprietary technology and our ability to protect key components of that technology through patents, copyrights, trade secrets and other forms of protection. Protecting our key proprietary technology helps us achieve our goals of developing technological expertise and new products and systems that give us a competitive advantage; increasing market penetration and growth of our installed base; and providing comprehensive support and service to our customers. As part of our strategy to protect our technology, we currently hold a number of U.S. and foreign patents and pending patent applications, and we keep certain information, processes, and techniques confidential and/or as trade secrets. However, other parties may challenge or attempt to invalidate or circumvent any patents the U.S. or foreign governments issue to us; these governments may fail to issue patents for pending applications; or we may lose trade secret protection over valuable information due to the intentional or unintentional actions or omissions of third parties, of ours, or even of our own employees. Additionally, intellectual property litigation can be expensive and time-consuming and even when patents are issued, or trade secret processes are followed, the legal systems in certain of the countries in which we do business might not enforce patents and other intellectual property rights as rigorously or effectively as the United States or may favor local entities in their intellectual property enforcement. The rights granted or anticipated under any of our patents, pending patent applications, or trade secrets may be narrower than we expect or, in fact, provide no competitive advantages. Moreover, because we selectively file for patent protection in different jurisdictions, we may not have adequate protection in all jurisdictions based on such filing decisions. Any of these circumstances could have a material adverse impact on our business.

50

We Are Exposed to Various Risks from Our Regulatory Environment

We are subject to various risks related to (1) new, different, inconsistent, or even conflicting laws, rules, and regulations that may be enacted by legislative bodies and/or regulatory agencies in the countries that we operate; (2) disagreements or disputes between national or regional regulatory agencies related to international trade; and (3) the interpretation and application of laws, rules, and regulations. As a public company with global operations, we are subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to financial and other disclosures, corporate governance, privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials, conflict minerals or other social responsibility legislation, immigration or travel regulations, and antitrust regulations, among others. Each of these laws, rules, and regulations imposes costs on our business, including financial costs and potential diversion of our management’s attention associated with compliance, and may present risks to our business, including potential fines, restrictions on our actions, and reputational damage if we are unable to fully comply.

To maintain high standards of corporate governance and public disclosure, we intend to invest all reasonably necessary resources to comply with all evolving standards. Changes in or ambiguous interpretations of laws, regulations, and standards may create uncertainty regarding compliance matters. Efforts to comply with new and changing regulations have resulted in, and are likely to continue to result in, increased selling, general, and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If we are found by a court or regulatory agency not to be in compliance with the laws and regulations, our business, financial condition, and/or results of operations could be adversely affected.

There Can Be No Assurance That We Will Continue to Declare Cash Dividends or Repurchase Our Shares at All or in Any Particular Amounts

Our Board of Directors has declared quarterly dividends since April 2014. Our intent to continue to pay quarterly dividends and to repurchase our shares is subject to capital availability and periodic determinations by our Board of Directors that cash dividends and share repurchases are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends by us. Future dividends and share repurchases may also be affected by, among other factors, our views on potential future capital requirements for investments in acquisitions and the funding of our research and development; legal risks; changes in federal, state, and international tax laws or corporate laws; contractual restrictions, such as financial or operating covenants in our debt arrangements; availability of onshore cash flow; and changes to our business model. Our dividend payments and share repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase shares at all or in any particular amounts. A reduction or suspension in our dividend payments or share repurchases could have a negative effect on the price of our Common Stock.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Company Shares

In November 2018, the Board of Directors authorized management to repurchase up to an additional $5.0 billion of Common Stock on such terms and conditions as it deems appropriate. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. Funding for this repurchase program may be through a combination of cash on hand, cash generation, and borrowings.

51

Share repurchases, including those under the repurchase program, were as follows:

	Total Number of Shares Repurchased (1)		Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 24, 2018						$	1,733,638
Quarter ended September 23, 2018	7,821		$	183.46	7,807	108
Quarter ended December 23, 2018	1,693		$	145.30	1,683	5,000,000
December 24, 2018 - January 20, 2019	1,770	(3)	$	143.05	1,768	5,000,000
January 21, 2019 - February 17, 2019	3,577	(3)	$	166.61	3,575	4,199,639
February 18, 2019 - March 31, 2019	778		$	173.82	359	4,138,494
Quarter ended March 31, 2019	6,125		$	172.06	5,702	$	4,138,494

(1) During the three and nine months ended March 31, 2019, we acquired 423 thousand shares at a total cost of $74.8 million, and 447 thousand shares at a total cost of $78.5 million, respectively, which we withheld through net share settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under our equity compensation plans. The shares retained by us through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under our equity compensation plan.

(2) Average price paid per share excludes effect accelerated share repurchases; see additional disclosure below regarding our accelerated share repurchase activity during the fiscal year.

(3) Includes shares received at final settlement of accelerated share repurchase agreements; see additional disclosures below regarding our accelerated share repurchase activity during the fiscal year.

Accelerated Share Repurchase Agreements

On January 31, 2019, we entered into two separate accelerated share repurchase agreements (collectively, the "January 2019 ASR") with two financial institutions to repurchase a total of $760 million of Common Stock. We took an initial delivery of approximately 3.3 million shares, which represented 75% of the prepayment amount divided by our closing stock price on January 30, 2019. The total number of shares received under the January 2019 ASR will be based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the January 2019 ASR is anticipated to occur no later than June 5, 2019.

On August 15, 2018, we entered into four separate accelerated share repurchase agreements (collectively, the "August 2018 ASR") with two financial institutions to repurchase a total of $1.4 billion of Common Stock. We took an initial delivery of approximately 5.8 million shares, which represented 75% of the prepayment amount divided by our closing stock price on August 14, 2018. The total number of shares received under the August 2018 ASR was based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount. Final settlement of two of the agreements occurred during the quarter ended December 23, 2018. Approximately 1.7 million shares were received at final settlement, which resulted in a weighted-average share price of approximately $148.72 for the transaction period. The remaining two agreements settled during the quarter ended March 31, 2019, resulting in the receipt of approximately 1.8 million additional shares, which yielded a weighted-average share price of approximately $146.00 for the transaction period.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

52

ITEM 6. Exhibits

Exhibit Number	Description
4.1 (1)	Third Supplemental Indenture, dated as of March 4. 2019, by and between Lam Research Corporation and the Bank of New York Mellon Trust Company, N.A., as trustee
10.1*	Form of Restricted Stock Unit Agreement (U.S Participants) - 2015 Stock Incentive Plan
10.2*	Form of Restricted Stock Unit Agreement (International Participants) - 2015 Incentive Plan
10.3*	Form of Restricted Stock Unit Agreement (Outside Directors) - 2015 Incentive Plan
10.4*	Form of Market-Based Performance Restricted Stock Unit Award Agreement (U.S. Participant) - 2015 Stock Incentive Plan
10.5*	Form of Market-Based Performance Restricted Stock Unit Award Agreement (International Participant) - 2015 Stock Incentive Plan
10.6 (2)	Amendment No. 3 to Amended and Restated Credit Agreement, dated February  25, 2019, among Lam Research Corporation, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)
32.1	Section 1350 Certification (Principal Executive Officer)
32.2	Section 1350 Certification (Principal Financial Officer)
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
*	Indicates management contract or compensatory plan or arrangement.
(1)	Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 4, 2019 (SEC File No. 000-12933)
(2)	Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 25, 2019 (SEC File No. 000-12933)

53

LAM RESEARCH CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:	April 30, 2019	LAM RESEARCH CORPORATION (Registrant)
		/s/ Douglas R. Bettinger
		Douglas R. Bettinger
		Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

54

EX-10.1

Exhibit 10.1

LAM RESEARCH CORPORATION
2015 Stock Incentive Plan Restricted Stock Unit Award Agreement

(U.S. Participants)

Pursuant to the terms of the 2015 Stock Incentive Plan (the “Plan”) Lam Research Corporation, a Delaware corporation (the “Company”), hereby awards restricted stock units (“RSUs”) to the Grantee (the “Participant) on the terms and conditions as set forth in this Restricted Stock Unit Award Agreement (including the attached Exhibit A) (the “Agreement”) and the Plan. Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan. This Agreement is effective as of the Grant Date.

NOW, THEREFORE, it is hereby agreed as follows:

1.Award of RSUs. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Participant a Number of RSUs as set forth in Exhibit A. The RSUs represent an unfunded, unsecured promise by the Company to deliver Shares subject to the terms and conditions of this Agreement.

2.    Vesting.

(a)     Subject to the terms and conditions of this Agreement and provided that the Participant continues to provide Service (as defined in Section 3 below) to the Company (or any Related Entity) through the applicable Vesting Date(s) as set forth in Exhibit A, the RSUs will vest and become payable in Shares pursuant to the applicable Vesting Date(s) as set forth in Exhibit A.

(b)    In the event of a Corporate Transaction, the RSUs are governed by Section 11 of the Plan (subject to the terms of any applicable Employment or Change in Control Agreement).

3.    Effect of Termination of Service or Leave of Absence.

(a)    For purposes of this Agreement, Continuous Service shall mean the performance of services for the Company (or any Related Entity) in the capacity of an Employee or Director and shall be considered terminated on the later of the last day the Participant is on payroll or the last day of Continuous Service as a director for a Director (“Service”). In the event of termination of the Participant’s Service by the Participant or by the Company or a Related Entity for any reason, excluding Participant’s death or Disability before all RSUs have vested, the unvested RSUs shall be cancelled by the Company.

(b)    In the event of termination of the Participant’s Service due to death, a portion of the RSUs granted to the Participant shall vest on the date of death. To determine the applicable number of Shares, the Number of RSUs (as set forth in Exhibit A) shall be multiplied by the greater of (x) 50% or (y) the percentage of full months worked from the Grant Date until

the date of death (the “Death Vesting Date”) over the total number of full months from the Grant Date until the last Vesting Date (as set forth in Exhibit A). Any remaining unvested portion of the RSUs shall be cancelled.

(c)    In the event of termination of the Participant’s Service due to Disability, a portion of the RSUs granted to the Participant shall vest on the date the Disability is incurred. To determine the applicable number of Shares, the Number of RSUs (as set forth in Exhibit A) shall be multiplied by the greater of (x) 50% or (y) the percentage of full months worked from the Grant Date until the date the Disability is incurred (the “Disability Vesting Date”, and collectively, with the Vesting Date(s) set forth in Exhibit A, and the “Death Vesting Date”, the “Vesting Date”) over the total number of full months from the Grant Date until the last Vesting Date (as set forth in Exhibit A). Any remaining unvested portion of the RSUs shall be cancelled.

(d)    Vesting of the RSUs will be suspended and vesting credit will no longer accrue as of the day of the leave of absence as set forth in Exhibit A, unless otherwise determined by the Administrator or required by contract or statute. If the Participant returns to Service immediately after the end of an approved leave of absence, vesting credit shall continue to accrue from that date of continued Service.

4.    Form and Timing of Payment.

(a)    Subject to Section 5 of this Agreement and provided that the Participant has satisfied the vesting requirements of Section 2 of this Agreement, on each Vesting Date, as applicable, the RSUs shall automatically be converted into unrestricted Shares. Such Shares will be issued to the Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) on the applicable Vesting Date (or as soon as practicable), but in any event, within the period ending on the later to occur of the date that is 2 ½ months after the end of (i) the Participant’s tax year that includes the applicable Vesting Date, or (ii) the Company’s tax year that includes the applicable Vesting Date.

(b)    Shares issued in respect of RSUs shall be deemed to be issued in consideration of past services actually rendered by the Participant to the Company or a Related Entity or for its benefit for which the Participant has not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value of the Shares subject to the RSUs.

5.    Tax Withholding Obligations. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends; and (ii) do

not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.

Prior to the issuance of Shares upon vesting of the RSUs (or any other tax or withholding event), the Participant shall pay, or make arrangements satisfactory to the Company (in the Company’s sole discretion) to satisfy all withholding obligations. In those cases where a prior arrangement has not been made (or where the amount of money provided under the prior arrangement is insufficient to satisfy the obligations for Tax-Related Items), the Company shall withhold a number of whole Shares otherwise deliverable at vesting having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting consequences) of the Participant’s estimated obligations for Tax-Related Items applicable to the RSUs; such withholding will result in the issuance to the participant of a lower number of Shares.

The Company and/or the Employer may also, in lieu of or in addition to the foregoing, at the Company’s sole discretion, as authorized herein by the Participant, withhold all applicable Tax-Related Items legally payable by the Participant from the Participant’s wages or other cash compensation or to withhold in one of the following ways, as determined by the Company: (i) require the Participant to deposit with the Company an amount of cash sufficient to meet his or her obligation for Tax-Related Items, and/or (ii) sell or arrange for the sale of Shares to be issued on the vesting of the RSUs to satisfy the withholding obligation. If the Participant’s obligation for Tax-Related Items is satisfied as described in (ii) of this section, the Company will endeavor to sell only the number of Shares required to satisfy the Participant’s obligations for Tax-Related Items; however, the Participant agrees that the Company may sell more Shares than necessary to cover the Tax-Related Items and that in such event, the Company will reimburse the Participant for the excess amount withheld, in cash and without interest. The Participant shall pay to the Employer any amount of Tax-Related Items that the Employer may be required to withhold as a result of the Participant’s receipt of the RSUs or the vesting of the RSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with his or her obligation in connection with the Tax-Related Items as described herein. The Participant hereby consents to any action reasonably taken by the Company and/or the Employer to meet his or her obligation for Tax-Related Items.

Further, in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises if, in satisfying the Participant’s (and/or the Employer’s) obligation for Tax-Related Items, the Company and/or the Employer withholds an amount in excess of the amount legally required to be withheld, the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim or damages.

6.    Restriction on Transferability. Prior to vesting and delivery of the Shares, neither the RSUs, nor the Shares or any beneficial interest therein, may be sold, transferred, pledged, assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions

hereof shall be null and void. Notwithstanding the above, distribution can be made pursuant to will, the laws of descent and distribution, and if provided by the Administrator, intra-family transfer instruments, or to an inter vivos trust, or as otherwise provided by the Administrator. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

7.    Requirements of Law. The issuance of Shares upon vesting of the RSUs is subject to Sections 9 and 14(b) of the Plan, which generally provides that any such issuance shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Shares may be listed for trading at the time of such issuance. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance of any Shares hereby shall relieve the Company of any liability with respect to the non-issuance of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its reasonable efforts to obtain all such approvals.

8.    Rights as Stockholder. The Participant shall not have voting, dividend or any other rights as a stockholder of the Company with respect to the RSUs. Upon settlement of the Participant’s RSUs into Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), the Participant will obtain full voting, dividend and other rights as a stockholder of the Company.

9.    No Compensation Deferrals. Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). If, notwithstanding the parties’ intent in this regard, at the time of the Participant’s termination of Service, he or she is determined to be a “specified employee” as defined in Code Section 409A, and one or more of the payments or benefits received or to be received by the Participant pursuant to the RSUs would constitute deferred compensation subject to Code Section 409A, no such payment or benefit will be provided under the RSUs until the earliest of (A) the date which is six (6) months after the Participant’s “separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of the Participant’s death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code), or (C) the effective date of a “change in the ownership or effective control” or a “change in ownership of a substantial portion of the assets” of the Company (as such terms are used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 9 shall only apply to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Code Section 409A or any regulations or U.S. Department of the Treasury (“Treasury”) guidance promulgated thereunder. In addition, if any provision of the RSUs would cause the Participant to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to conform it to the maximum extent practicable to the original intent of the applicable provision without violating the provisions of Code Section 409A, including without limitation to limit payment or distribution of any amount of benefit hereunder in connection with

a Corporate Transaction to a transaction meeting the definitions referred to in clause (C) above, or in connection with any disability to a “disability” as referred to in (B) above; provided however that the Company makes no representation that these RSUs are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to these RSUs. In addition, to the extent the Company determines it appropriate to accelerate any vesting conditions applicable to this award, then to the extent necessary to avoid the Participant’s incurring any additional tax or interest as a result of such vesting acceleration under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, and notwithstanding Section 4 above, the Company may as a condition to extending such acceleration benefits provide for the Shares to be issued upon settlement of the RSUs to be issued on the earliest date (the “Permitted Distribution Date”) that would obviate application of such additional tax or interest rather than issuing them upon the date on which such vesting is effective as would otherwise be required under Section 2 (or as soon as practicable after such Permitted Distribution Date and in no event later than that last day of the grace period following such date permitted under Code Section 409A).

10.    Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Participant, the Company, and all other interested persons. No Administrator shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

11.    Effect on Other Employee Benefit Plans. The value of the RSUs granted pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by the Company or any Related Entity, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Related Entity’s employee benefit plans.

12.    No Employment Rights. The award of the RSUs pursuant to this Agreement shall not give the Participant any right to continued Service with the Company or a Related Entity and shall not interfere with the ability of the Employer to terminate the Participant’s Service with the Company at any time with or without cause.

13.    Nature of the Grant. In accepting the RSUs, the Participant acknowledges that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;

(b)the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs even if RSUs have been awarded repeatedly in the past;

(c)all decisions with respect to future grants of RSUs, if any, will be at the sole discretion of the Company;

(d)the Participant’s participation in the Plan is voluntary;

(e)the RSUs are outside the scope of the Participant’s employment contract, if any;

(f)the RSUs are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculation of any overtime, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g)in the event that the Participant is not an employee of the Company, the grant of the RSUs will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of the RSUs will not be interpreted to form an employment contract with the Employer or any Related Entity;

(h)the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(i)if the Participant receives Shares upon vesting of the RSUs, the value of such Shares may increase or decrease in value;

(j)in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises from termination of the RSUs or diminution in value of the RSUs or Shares received upon vesting of RSUs resulting from termination of the Participant’s Service to the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

14.    Amendment of Agreement. This Agreement may be amended only by a writing which specifically states that it amends this Agreement. Notwithstanding the foregoing, this Agreement may be amended unilaterally by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affects the rights of the Participant. Limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the RSUs or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, or, to the extent permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

15.    Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Stock Administrator. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

16.    Severability. The provisions of this Agreement are severable and if all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

17.    Construction. The RSUs are being issued pursuant to the Plan and are subject to the terms of the Plan. A copy of the Plan is available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with a provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

18.    Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the RSUs granted under the Plan and participation in the Plan or future RSUs that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.    Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

20.    Miscellaneous.

(a)    The Company has established the Plan voluntarily, it is discretionary in nature and the Board may terminate, amend, or modify the Plan at any time; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval unless such termination, amendment, or modification of the Plan is necessary in order to comply with any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision or as otherwise permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

(b)    All obligations of the Company under the Plan and this Agreement in a Corporate Transaction shall be governed by the Plan, other than as set forth in Section 2(b) above.

(c)By signing this Agreement, the Participant acknowledges that his or her personal employment or Service information regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing this Agreement, the Participant consents to such transmission of personal data as the Company believes is appropriate to administer the Plan.

(d)    To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to its principles of conflict of laws.

21.    Acceptance of Terms and Conditions. The Participant agrees to abide by all of the governing terms and provisions of the Plan and this Agreement unless the Participant declines the award electronically with the Company sponsored broker by the first vest date. Additionally, the Participant acknowledges having read and understood the terms and conditions of the Plan and this Agreement and has had an opportunity to obtain the advice of counsel prior to accepting this Agreement. In addition, the transfer or sale of the shares obtained at vesting by the Participant shall be considered an additional acknowledgment of the terms and conditions contained in the Plan and Agreement.

* * * * *

PARTICIPANT SIGNATURE

PRINTED NAME

DATE

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan

Restricted Stock Unit Award Agreement

EXHIBIT A

([Three/Two/One] Year Vesting)

Participant (Name & Employee Number):

Grant Date:

Number of RSUs:

Vesting Date(s): [Insert Number] RSUs on [Insert Date]

[Insert Number] RSUs on [Insert Date]

[Insert Number] RSUs on [Insert Date]

Leave of Absence: 31^st day (or 91^st day if reemployment guaranteed by statute or contract)

EX-10.2

Exhibit 10.2

LAM RESEARCH CORPORATION
2015 Stock Incentive Plan
Restricted Stock Unit Award Agreement

(International Participants)

Pursuant to the terms of the 2015 Stock Incentive Plan (the “Plan”) Lam Research Corporation, a Delaware corporation (the “Company”), hereby awards restricted stock units (“RSUs”) to the Grantee (the “Participant”) on the terms and conditions as set forth in this Restricted Stock Unit Award Agreement (including the attached Exhibit A) (the “Agreement”) and the Plan. Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan. This Agreement is effective as of the Grant Date.

NOW, THEREFORE, it is hereby agreed as follows:

1.Award of RSUs. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Participant a Number of RSUs as set forth in Exhibit A. The RSUs represent an unfunded, unsecured promise by the Company to deliver Shares subject to the terms and conditions of this Agreement.

2.    Vesting.

(a)    Subject to the terms and conditions of this Agreement and provided that the Participant continues to provide Service (as defined in Section 3 below) to the Company (or any Related Entity) through the applicable Vesting Date(s) as set forth in Exhibit A, the RSUs will vest and become payable in Shares pursuant to the applicable Vesting Date(s) as set forth in Exhibit A.

(b)    In the event of a Corporate Transaction, the RSUs are governed by Section 11 of the Plan (subject to the terms of any applicable Employment or Change in Control Agreement).

3.    Effect of Termination of Service or Leave of Absence.

(a)    For purposes of this Agreement, Continuous Service shall mean the performance of services for the Company (or any Related Entity) in the capacity of an Employee or Director and shall be considered terminated on the later of the last day the Participant is on payroll or the last day of Continuous Service as a director for a Director (“Service”). In the event of termination of the Participant’s Service by the Participant or by the Company or a Related Entity for any reason, excluding Participant’s death or Disability before all RSUs have vested, the unvested RSUs shall be cancelled by the Company.

(b)    In the event of termination of the Participant’s Service due to death, a portion of the RSUs granted to the Participant shall vest on the date of death. To determine the applicable number of Shares, the Number of RSUs (as set forth in Exhibit A) shall be multiplied by the greater of (x) 50% or (y) the percentage of full months worked from the Grant Date until

the date of death (the “Death Vesting Date”) over the total number of full months from the Grant Date until the last Vesting Date (as set forth in Exhibit A). Any remaining unvested portion of the RSUs shall be cancelled.

(c)    In the event of termination of the Participant’s Service due to Disability, a portion of the RSUs granted to the Participant shall vest on the date the Disability is incurred. To determine the applicable number of Shares, the Number of RSUs (as set forth in Exhibit A) shall be multiplied by the greater of (x) 50% or (y) the percentage of full months worked from the Grant Date until the date the Disability is incurred (the “Disability Vesting Date”, and collectively, with the Vesting Date(s) set forth in Exhibit A, and the “Death Vesting Date”, the “Vesting Date”) over the total number of full months from the Grant Date until the last Vesting Date (as set forth in Exhibit A). Any remaining unvested portion of the RSUs shall be cancelled.

(d)    Vesting of the RSUs will be suspended and vesting credit will no longer accrue as of the day of the leave of absence as set forth in Exhibit A, unless otherwise determined by the Administrator or required by contract, statute or applicable local law. If the Participant returns to Service immediately after the end of an approved leave of absence, vesting credit shall continue to accrue from that date of continued Service.

4.    Form and Timing of Payment.

(a)    Subject to Section 5 of this Agreement and provided that the Participant has satisfied the vesting requirements of Section 2 of this Agreement, on each Vesting Date, as applicable, the RSUs shall automatically be converted into unrestricted Shares. Such Shares will be issued to the Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) on the applicable Vesting Date (or as soon as practicable), but in any event, within the period ending on the later to occur of the date that is 2 ½ months after the end of (i) the Participant’s tax year that includes the applicable Vesting Date, or (ii) the Company’s tax year that includes the applicable Vesting Date.

(b)    Shares issued in respect of RSUs shall be deemed to be issued in consideration of past services actually rendered by the Participant to the Company or a Related Entity or for its benefit for which the Participant has not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value of the Shares subject to the RSUs.

5.Tax Withholding Obligations. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the

RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.

Prior to the issuance of Shares upon vesting of the RSUs (or any other tax or withholding event), the Participant shall pay, or make arrangements satisfactory to the Company (in the Company’s sole discretion) to satisfy all withholding (and payment on account, where applicable) obligations. In those cases where a prior arrangement has not been made (or where the amount of money provided under the prior arrangement is insufficient to satisfy the obligations for Tax-Related Items), the Company shall withhold a number of whole Shares otherwise deliverable at vesting having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting consequences) of the Participant’s estimated obligations for Tax-Related Items applicable to the RSUs; such withholding will result in the issuance to the participant of a lower number of Shares.

The Company and/or the Employer may also, in lieu of or in addition to the foregoing, at the Company’s sole discretion as authorized herein by the Participant, withhold all applicable Tax-Related Items legally payable by the Participant from the Participant’s wages or other cash compensation or to withhold in one of the following ways, as determined by the Company: (i) require the Participant to deposit with the Company an amount of cash sufficient to meet his or her obligation for Tax-Related Items, and/or (ii) sell or arrange for the sale of Shares to be issued on the vesting of the RSUs to satisfy the withholding (or payment on account, when applicable) obligation. If the Participant’s obligation for Tax-Related Items is satisfied as described in (ii) of this section, the Company will endeavor to sell only the number of Shares required to satisfy the Participant’s obligations for Tax-Related Items; however, the Participant agrees that the Company may sell more Shares than necessary to cover the Tax-Related Items and that in such event, the Company will reimburse the Participant for the excess amount withheld, in cash and without interest. The Participant shall pay to the Employer any amount of Tax-Related Items that the Employer may be required to withhold as a result of the Participant’s receipt of the RSUs or the vesting of the RSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with his or her obligation in connection with the Tax-Related Items as described herein. The Participant hereby consents to any action reasonably taken by the Company and/or the Employer to meet his or her obligation for Tax-Related Items.

Further, in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises if, in satisfying the Participant’s (and/or the Employer’s) obligation for Tax-Related Items, the Company and/or the Employer withholds an amount in excess of the amount legally required to be withheld, the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim or damages.

6.Restriction on Transferability. Prior to vesting and delivery of the Shares, neither the RSUs, nor the Shares or any beneficial interest therein, may be sold, transferred, pledged,

assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above, distribution can be made pursuant to will, the laws of descent and distribution, and if provided by the Administrator, intra-family transfer instruments, or to an inter vivos trust, or as otherwise provided by the Administrator. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

7.Requirements of Law. The issuance of Shares upon vesting of the RSUs is subject to Sections 9 and 14(b) of the Plan, which generally provides that any such issuance shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Shares may be listed for trading at the time of such issuance. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance of any Shares hereby shall relieve the Company of any liability with respect to the non-issuance of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its reasonable efforts to obtain all such approvals.

8.Rights as Stockholder. The Participant shall not have voting, dividend or any other rights as a stockholder of the Company with respect to the RSUs. Upon settlement of the Participant’s RSUs into Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), the Participant will obtain full voting, dividend and other rights as a stockholder of the Company.

9.No Compensation Deferrals. Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). If, notwithstanding the parties’ intent in this regard, at the time of the Participant’s termination of Service, he or she is determined to be a “specified employee” as defined in Code Section 409A, and one or more of the payments or benefits received or to be received by the Participant pursuant to the RSUs would constitute deferred compensation subject to Code Section 409A, no such payment or benefit will be provided under the RSUs until the earliest of (A) the date which is six (6) months after the Participant’s “separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of the Participant’s death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code), or (C) the effective date of a “change in the ownership or effective control” or a “change in ownership of a substantial portion of the assets” of the Company (as such terms are used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 9 shall only apply to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Code Section 409A or any regulations or U.S. Department of the Treasury (“Treasury”) guidance promulgated thereunder. In addition, if any provision of the RSUs would cause the Participant to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to conform it to the maximum extent practicable to the original intent of the applicable provision without violating the provisions of Code Section 409A, including without

limitation to limit payment or distribution of any amount of benefit hereunder in connection with a Corporate Transaction to a transaction meeting the definitions referred to in clause (C) above, or in connection with any disability to a “disability” as referred to in (B) above; provided however that the Company makes no representation that these RSUs are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to these RSUs. In addition, to the extent the Company determines it appropriate to accelerate any vesting conditions applicable to this award, then to the extent necessary to avoid the Participant’s incurring any additional tax or interest as a result of such vesting acceleration under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, and notwithstanding Section 4 above, the Company may as a condition to extending such acceleration benefits provide for the Shares to be issued upon settlement of the RSUs to be issued on the earliest date (the “Permitted Distribution Date”) that would obviate application of such additional tax or interest rather than issuing them upon the date on which such vesting is effective as would otherwise be required under Section 2 (or as soon as practicable after such Permitted Distribution Date and in no event later than that last day of the grace period following such date permitted under Code Section 409A).

10.Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Participant, the Company, and all other interested persons. No Administrator shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

11.Effect on Other Employee Benefit Plans. The value of the RSUs granted pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by the Company or any Related Entity, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Related Entity’s employee benefit plans.

12.No Employment Rights. The award of the RSUs pursuant to this Agreement shall not give the Participant any right to continued Service with the Company or a Related Entity and shall not interfere with the ability of the Employer to terminate the Participant’s Service with the Company at any time with or without cause.

13.Nature of the Grant. In accepting the RSUs, the Participant acknowledges that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;

(b)the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of the RSUs, or benefits in lieu of RSUs even if RSUs have been awarded repeatedly in the past;

(c)all decisions with respect to future grants of RSUs, if any, will be at the sole discretion of the Company;

(d)the Participant’s participation in the Plan is voluntary;

(e)the RSUs are outside the scope of the Participant’s employment contract, if any;

(f)the RSUs are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculation of any overtime, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g)in the event that the Participant is not an employee of the Company, the grant of the RSUs will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of the RSUs will not be interpreted to form an employment contract with the Employer or any Related Entity;

(h)the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(i)if the Participant receives Shares upon vesting of the RSUs, the value of such Shares may increase or decrease in value;

(j)in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises from termination of the RSUs or diminution in value of the RSUs or Shares received upon vesting of RSUs resulting from termination of the Participant’s Service to the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

14.Data Privacy Notice and Consent. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement by and among, as applicable, the Employer, the Company and its Related Entities for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, vested,

unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).

The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing his or her participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Shares received upon vesting of the RSUs may be deposited. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Participant understands, however, that refusal or withdrawal of consent may affect his or her ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.

15.Amendment of Agreement. This Agreement may be amended only by a writing which specifically states that it amends this Agreement. Notwithstanding the foregoing, this Agreement may be amended unilaterally by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affects the rights of the Participant. Limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the RSUs or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, or, to the extent permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

16.Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Stock Administrator. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

17.Severability. The provisions of this Agreement are severable and if all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a

Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

18.Construction. The RSUs are being issued pursuant to the Plan and are subject to the terms of the Plan. A copy of the Plan is available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with a provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

19.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the RSUs granted under the Plan and participation in the Plan or future RSUs that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

20.Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

21.Language. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

22.Miscellaneous.

(a)The Company has established the Plan voluntarily, it is discretionary in nature and the Board may terminate, amend, or modify the Plan at any time; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval unless such termination, amendment, or modification of the Plan is necessary in order to comply with any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision or as otherwise permissible under the Plan (including, but not limited, to Sections 10, 11 and 13 of the Plan).

(b)All obligations of the Company under the Plan and this Agreement in a Corporate Transaction shall be governed by the Plan, other than as set forth in Section 2(b) above.

(c)To the extent not preempted by United States federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to its principles of conflict of laws.

23.Country Specific Terms. Appendix A contains additional terms and conditions of the Agreement applicable to Participants residing in those countries. In addition, Appendix A also contains information and notices of exchange control and certain other issues of which the Participant should be aware.

24.Acceptance of Terms and Conditions. The Participant agrees to abide by all of the governing terms and provisions of the Plan and this Agreement unless the Participant declines the award electronically with the Company sponsored broker by the first vest date. Additionally, the Participant acknowledges having read and understood the terms and conditions of the Plan and this Agreement and has had an opportunity to obtain the advice of counsel prior to accepting this Agreement. In addition, the transfer or sale of the shares obtained at vesting by the Participant shall be considered an additional acknowledgment of the terms and conditions contained in the Plan and Agreement.

* * * * *

PARTICIPANT SIGNATURE

PRINTED NAME

DATE

APPENDIX A

TERMS AND CONDITIONS

This Appendix A, which is part of the Agreement, contains additional terms and conditions of the Agreement that will apply to the Participant if he or she resides in one of the countries listed below. Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan and/or the Agreement.

NOTIFICATIONS

This Appendix A also includes information regarding exchange control and certain other issues of which the Participant should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of November 2015. Such laws are often complex and change frequently. The Company therefore strongly recommends that the Participant not rely on the information as the only source of information relating to the consequences of his or her participation in the Plan because such information may be outdated when the Participant vests in the RSUs and/or sells any Shares acquired pursuant to the RSUs.

AUSTRIA

Exchange Control Information. If the Participant holds Shares acquired under the Plan outside of Austria, the Participant must submit a report to the Austrian National Bank. An exemption applies if the value of the Shares as of any given quarter does not exceed €30,000,000 or as of December 31 does not exceed €5,000,000. If the former threshold is exceeded, quarterly obligations are imposed; whereas, if the latter threshold is exceeded, annual reports must be provided. The annual reporting date is December 31 and the deadline for filing the annual report is March 31 of the following year.

When the Participant sells Shares acquired under the Plan, there may be exchange control obligations if the cash proceeds are held outside of Austria. If the transaction volume of all accounts abroad exceeds €3,000,000 the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the fifteenth day of the following month.

BELGIUM

Tax Reporting Information. As a Belgian tax resident, Participant is required to inform the Central Point of Contact (CPC) of the National Bank of Belgium of overseas income (which includes any Shares received in connection with participation in the Plan) by registering any foreign accounts with the CPC before filing Participant’s annual tax return with the Belgian tax authorities. If Participant has previously reported overseas income, Participant will receive a letter from the tax authorities about this requirement and will have two months from the receipt of such letter to report the accounts to the CPC. If Participant has not previously reported

overseas income, Participant will not receive a letter and must proactively report the required information to the CPC.

CHINA (PRC)

Exchange Control Restrictions. The Participant agrees to comply with any requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China. These requirements may include, but are not limited to, immediate repatriation to China of the sale proceeds, an immediate sale of the RSUs at vesting, and/or repatriation of the cash proceeds through a special exchange control account.

FRANCE

Exchange Control Information. If the Participant imports or exports cash (e.g., sales proceeds received under the Plan) with a value equal to or exceeding €10,000 and does not use a financial institution to do so, he or she must submit a report to the customs and excise authorities. If the Participant maintains a foreign bank account, he or she is required to report such account to the French tax authorities when filing his or her annual tax return.

GERMANY

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Participant uses a German bank to transfer a cross-border payment in excess of €12,500 under the Plan, the bank will make the report for the Participant. In addition, the Participant must report any receivables or payables or debts in foreign currency exceeding an amount of €5,000,000 on a monthly basis.

IRELAND

Director Notification Requirement. If the Participant is a director, shadow director or secretary of an Irish Subsidiary or Related Entity of the Company who owns more than a 1% interest in the Company, pursuant to Section 53 of the Irish Company Act 1990, he or she must notify the Irish Subsidiary or Related Entity of the Company in writing within five (5) business days of receiving or disposing of an interest in the Company (e.g., RSUs, Shares, etc.), or within five (5) business days of becoming aware of the event giving rise to the notification requirement, or within five (5) days of becoming a director, shadow director or secretary if such an interest exists at that time. This notification requirement also applies with respect to the interests of a spouse or minor child, whose interests will be attributed to the director, shadow director or secretary.

ISRAEL

No additional provisions apply.

ITALY

Plan Document Acknowledgment. By accepting the terms and conditions of the RSUs, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix A, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement.

Data Privacy. In addition to the data privacy provision that is set forth in the Agreement, the Participant also consents to the following additional data privacy-related terms:

I am aware that providing the Company and my Employer with Data is necessary for participation in the Plan and that my refusal to provide such Data may affect my ability to participate in the Plan. The Controller of personal data processing is the Company with registered offices at 4650 Cushing Parkway, Fremont, California, 94538, United States and, pursuant to D.lgs 196/2003, its representatives in Italy are Lam Research S.r.l., with registered offices in Centro Direzionale Colleoni, Palazzo Sirio 3-Ing, 20041 Agrate Brianza-MI, Italy.

I understand that I may at any time exercise the rights acknowledged by Section 7 of Legislative Decree June 30, 2003 n.196, including, but not limited to, the right to access, delete, update, request the rectification of my Data and cease, for legitimate reasons, the data processing. Furthermore, I am aware that my Data will not be used for direct marketing purposes.

Exchange Control Information. By September 30th of each year, Participants are required to report on their annual tax return (Form RW) any foreign investments (including proceeds from the sale of Shares) held outside of Italy if the investment may give rise to income in Italy. However, deposits and bank accounts held outside of Italy only need to be disclosed if the value of the assets exceeds €10,000 during any part of the tax year.

With respect to Shares received, the Participants must report (i) the value of the Shares at the beginning of the year or on the day the Participant acquired the Shares, whichever is later; and (ii) the value of the Shares when sold, or if the Participant still owns the Shares at the end of the year, the value of the Shares at the end of the year. The value to be reported is the fair market value of the Shares on the applicable dates mentioned above.

JAPAN

Exchange Control Information. If the Participant acquired Shares valued at more than ¥100,000,000 in a single transaction, the Participant must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of Shares. In addition, Japanese permanent residents will be required to report, by March 15 of each year, overseas assets that exceed ¥50,000,000 (approximately US$500,000) at year end.

KOREA

Exchange Control Information. If the Participant receives US$500,000 or more from the sale of Shares, Korean exchange control laws require the Participant to repatriate the proceeds to Korea within 36 months of the sale.

MALAYSIA

Director Notification Requirement. If the Participant is a Director of the local Subsidiary, he or she must notify the local Subsidiary of the grant and also provide notice of any change in his or her interest in the RSUs (e.g. vesting or the sale of Shares).

Exchange Control Information. Because exchange control regulations change frequently and without notice, you should consult your legal advisor before selling shares to ensure compliance with current regulations. It is Participant’s responsibility to comply with exchange control laws in Malaysia, and neither the Company nor your employer will be liable for any fines or penalties resulting from a failure to comply with applicable laws. For purposes of compiling balance of payment statistics on the inflow and outflow of funds from Malaysia, the Bank Negara Malaysia must be notified of any remittance of funds between residents and non-residents of an amount equal to RM200,001 or greater from Malaysia.

NETHERLANDS

Insider-Trading Notification. The Participant should be aware of the Dutch insider-trading rules, which may impact the sale of Shares acquired at vesting of the RSUs. In particular, the Participant may be prohibited from effectuating certain transactions involving Shares if the Participant has inside information about the Company. If the Participant is uncertain whether the insider-trading rules apply to him or her, the Participant should consult his or her personal legal advisor. By accepting the Agreement and participating in the Plan, the Participant acknowledges having read and understood this notification and acknowledges that it is the Participant’s responsibility to comply with the following Dutch insider-trading rules.

SINGAPORE

Director Notification Obligation. Directors of a Singapore Subsidiary or Affiliate are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singapore Subsidiary or Affiliate in writing of an interest (e.g., Shares, etc.) in the Company or any related companies within two (2) days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.

Securities Law Information. The grant is being made on a private basis and is, therefore, exempt from registration in Singapore.

SLOVAKIA

Exchange Control Information. It is the Participant’s obligation to comply with exchange control requirements in the Slovakia Republic, including any notification requirements applicable to opening or maintaining any foreign bank or brokerage accounts.

SLOVENIA

No additional provisions apply.

SWITZERLAND

Securities Law Information. The offer of the RSUs is considered a private offering in Switzerland and is therefore not subject to securities registration in Switzerland.

TAIWAN

Exchange Control Information. The Participant may acquire and remit foreign currency (including funds for the purchase of Shares and proceeds from the sale of Shares) up to US$5,000,000 per year without prior approval.

If the transaction amount is NTD500,000 or more in a single transaction, the Participant must submit a Foreign Exchange Transaction Form. If the transaction amount is US$500,000 or more in a single transaction, the Participant must also provide supporting documentation to the satisfaction of the remitting bank.

UNITED KINGDOM

Securities Requirement. Due to legal requirements, all RSUs at the time of vesting will be settled in Shares.

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan

Restricted Stock Unit Award Agreement

EXHIBIT A

([Three/Two/One] Year Vesting)

Participant (Name & Employee Number):

Grant Date:

Number of RSUs:

Vesting Date(s): [Insert Number] RSUs on [Insert Date]

[Insert Number] RSUs on [Insert Date]

[Insert Number] RSUs on [Insert Date]

Leave of Absence: 31^st day (or 91^st day if reemployment guaranteed by statute or contract)

EX-10.3

Exhibit 10.3

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan
Restricted Stock Unit Award Agreement

Outside Directors

Pursuant to the terms of the 2015 Stock Incentive Plan (the “Plan”) Lam Research Corporation, a Delaware corporation (the “Company”), hereby awards restricted stock units (“RSUs”) to the Grantee (“Participant”) who is an Outside Director of the Company on the terms and conditions as set forth in this Restricted Stock Unit Award Agreement (including the attached Exhibit A) (the “Agreement”) and the Plan. Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan. This Agreement is effective as of the Grant Date.

NOW, THEREFORE, it is hereby agreed as follows:

1.Award of RSUs. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Participant a Number of RSUs as set forth in Exhibit A. The RSUs represent an unfunded, unsecured promise by the Company to deliver Shares subject to the terms and conditions of this Agreement.

2.    Vesting. Subject to the terms and conditions of this Agreement and provided that the Participant continues to provide Service (as defined in Section 3 below) to the Company (or any Related Entity) through the applicable Vesting Date(s) as set forth in Exhibit A, the RSUs will vest and become payable in Shares pursuant to the Vesting Date as set forth in Exhibit A; provided however, that if the RSUs have not otherwise terminated pursuant to this RSU Agreement, the RSUs immediately shall vest in full (i) if the Participant dies or becomes subject to a Disability, or (ii) upon the occurrence of a Corporate Transaction, or (iii) if the Next Annual Meeting of Stockholders occurs prior to the Vesting Date as set forth in Exhibit A, and the Participant is not re-elected and/or resigns at the Next Annual Meeting of Stockholders.

3.    Effect of Termination of Service or Leave of Absence.

(a)    For purposes of this Agreement, Continuous Service shall mean the performance of services for the Company (or any Related Entity) in the capacity of an Employee or Director and shall be considered terminated on the later of the last day the Participant is on payroll or the last day of Continuous Service as a director for a Director (“Service”). In the event of termination of the Participant’s Service by the Participant or by the Company or a Related Entity for any reason, excluding Participant’s death or Disability before all RSUs have vested, the unvested RSUs shall be cancelled by the Company.

(b)    Vesting of the RSUs will be suspended and vesting credit will no longer accrue as of the day of the leave of absence as set forth in Exhibit A, unless otherwise determined by the Administrator or required by contract or statute. If the Participant returns to Service

immediately after the end of an approved leave of absence, vesting credit shall continue to accrue from that date of continued Service.

4.    Form and Timing of Payment.

(a)    Subject to Section 5 of this Agreement and provided that the Participant has satisfied the vesting requirements of Section 2 of this Agreement, on the Vesting Date the RSUs shall automatically be converted into unrestricted Shares. Such Shares will be issued to the Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) on the Vesting Date (or as soon as practicable), but in any event, within the period ending on the later to occur of the date that is 2 ½ months after the end of (i) the Participant’s tax year that includes the Vesting Date, or (ii) the Company’s tax year that includes the Vesting Date. Notwithstanding the above, the delivery of the Shares shall be delayed if the immediate sale of such Shares would cause Participant to be in violation of Section 16 of the Exchange Act or Rule 10b-5 under the Exchange Act until the first business day upon which Participant would be able to sell such Shares in compliance with Section 16 and Rule 10b-5 of the Exchange Act; provided, however, that in no event will the delivery of such Shares be delayed subsequent to the deadline in the immediately preceding sentence.

(b)    Shares issued in respect of RSUs shall be deemed to be issued in consideration of past services actually rendered by the Participant to the Company or a Related Entity or for its benefit for which the Participant has not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value of the Shares subject to the RSUs.

5.    Tax Withholding Obligations. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of the RSUs, or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.

Prior to the issuance of Shares upon vesting of the RSUs (or any other tax or withholding event), the Participant shall pay, or make arrangements satisfactory to the Company (in the Company’s sole discretion) to satisfy all withholding obligations. In those cases where a prior arrangement has not been made (or where the amount of money provided under the prior arrangement is insufficient to satisfy the obligations for Tax-Related Items), the Company shall withhold a number of whole Shares otherwise deliverable at vesting having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting consequences) of the Participant’s estimated obligations for Tax-Related Items applicable to the RSUs; such withholding will result in the issuance to the participant of a lower number of Shares.

The Company and/or the Employer may also, in lieu of or in addition to the foregoing, at the Company’s sole discretion, as authorized herein by the Participant, withhold all applicable Tax-Related Items legally payable by the Participant from the Participant’s wages or other cash compensation or to withhold in one of the following ways, as determined by the Company: (i) require the Participant to deposit with the Company an amount of cash sufficient to meet his or her obligation for Tax-Related Items, and/or (ii) sell or arrange for the sale of Shares to be issued on the vesting of the RSUs to satisfy the withholding obligation. If the Participant’s obligation for Tax-Related Items is satisfied as described in (ii) of this section, the Company will endeavor to sell only the number of Shares required to satisfy the Participant’s obligations for Tax-Related Items; however, the Participant agrees that the Company may sell more Shares than necessary to cover the Tax-Related Items and that in such event, the Company will reimburse the Participant for the excess amount withheld, in cash and without interest. The Participant shall pay to the Employer any amount of Tax-Related Items that the Employer may be required to withhold as a result of the Participant’s receipt of the RSUs or the vesting of the RSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with his or her obligation in connection with the Tax-Related Items as described herein. The Participant hereby consents to any action reasonably taken by the Company and/or the Employer to meet his or her obligation for Tax-Related Items.

Further, in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises if, in satisfying the Participant’s (and/or the Employer’s) obligation for Tax-Related Items, the Company and/or the Employer withholds an amount in excess of the amount legally required to be withheld, the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim or damages.

6.    Restriction on Transferability. Prior to vesting and delivery of the Shares, neither the RSUs, nor the Shares or any beneficial interest therein, may be sold, transferred, pledged, assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above, distribution can be made pursuant to will, the laws of descent and distribution, and if provided by the Administrator, intra-family transfer instruments, or to an inter vivos trust, or as otherwise provided by the Administrator. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

7.    Requirements of Law. The issuance of Shares upon vesting of the RSUs is subject to Sections 9 and 14(b) of the Plan, which generally provides that any such issuance shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Shares may be listed for trading at the time of such issuance. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance of any Shares hereby shall relieve the Company of any liability with respect to the non-issuance of

the Shares as to which such approval shall not have been obtained. The Company, however, shall use its reasonable efforts to obtain all such approvals.

8.    Rights as Stockholder. The Participant shall not have voting, dividend or any other rights as a stockholder of the Company with respect to the RSUs. Upon settlement of the Participant’s RSUs into Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), the Participant will obtain full voting, dividend and other rights as a stockholder of the Company.

9.    No Compensation Deferrals. Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). If, notwithstanding the parties’ intent in this regard, at the time of the Participant’s termination of Service, he or she is determined to be a “specified employee” as defined in Code Section 409A, and one or more of the payments or benefits received or to be received by the Participant pursuant to the RSUs would constitute deferred compensation subject to Code Section 409A, no such payment or benefit will be provided under the RSUs until the earliest of (A) the date which is six (6) months after the Participant’s “separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of the Participant’s death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code), or (C) the effective date of a “change in the ownership or effective control” or a “change in ownership of a substantial portion of the assets” of the Company (as such terms are used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 9 shall only apply to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Code Section 409A or any regulations or U.S. Department of the Treasury (“Treasury”) guidance promulgated thereunder. In addition, if any provision of the RSUs would cause the Participant to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to conform it to the maximum extent practicable to the original intent of the applicable provision without violating the provisions of Code Section 409A, including without limitation to limit payment or distribution of any amount of benefit hereunder in connection with a Corporate Transaction to a transaction meeting the definitions referred to in clause (C) above, or in connection with any disability to a “disability” as referred to in (B) above; provided however that the Company makes no representation that these RSUs are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to these RSUs. In addition, to the extent the Company determines it appropriate to accelerate any vesting conditions applicable to this award, then to the extent necessary to avoid the Participant’s incurring any additional tax or interest as a result of such vesting acceleration under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, and notwithstanding Section 4 above, the Company may as a condition to extending such acceleration benefits provide for the Shares to be issued upon settlement of the RSUs to be issued on the earliest date (the “Permitted Distribution Date”) that would obviate application of such additional tax or interest rather than issuing them upon the date on which such vesting is effective as would otherwise be required under

Section 2 (or as soon as practicable after such Permitted Distribution Date and in no event later than that last day of the grace period following such date permitted under Code Section 409A).

10.    Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Participant, the Company, and all other interested persons. No Administrator shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

11.    Effect on Other Employee Benefit Plans. The value of the RSUs granted pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by the Company or any Related Entity, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Related Entity’s employee benefit plans.

12.    No Continuing Service Rights. The award of the RSUs pursuant to this Agreement shall not give the Participant any right to continue providing Service to the Company or a Related Entity.

13.    Nature of the Grant. In accepting the RSUs, the Participant acknowledges that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;

(b)the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs even if RSUs have been awarded repeatedly in the past;

(c)all decisions with respect to future grants of RSUs, if any, will be at the sole discretion of the Company;

(d)the Participant’s participation in the Plan is voluntary;

(e)the RSUs are outside the scope of the Participant’s service contract, if any;

(f)the RSUs are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculation of any overtime, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g)in the event that the Participant is not an employee of the Company, the grant of the RSUs will not be interpreted to form an employment contract or relationship with the

Company; and furthermore, the grant of the RSUs will not be interpreted to form an employment contract with the Company or any Related Entity;

(h)the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(i)if the Participant receives Shares upon vesting of the RSUs, the value of such Shares may increase or decrease in value;

(j)in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages arises from termination of the RSUs or diminution in value of the RSUs or Shares received upon vesting of RSUs resulting from termination of the Participant’s Service to the Company (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

14.    Amendment of Agreement. This Agreement may be amended only by a writing which specifically states that it amends this Agreement. Notwithstanding the foregoing, this Agreement may be amended unilaterally by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affects the rights of the Participant. Limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the RSUs or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, or, to the extent permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

15.    Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Stock Administrator. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Company’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

16.    Severability. The provisions of this Agreement are severable and if all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

17.    Construction. The RSUs are being issued pursuant to the Plan and are subject to the terms of the Plan. A copy of the Plan is available upon request during normal business hours at the

principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with a provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

18.    Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the RSUs granted under the Plan and participation in the Plan or future RSUs that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.    Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

20.    Miscellaneous.

(a)    The Company has established the Plan voluntarily, it is discretionary in nature and the Board may terminate, amend, or modify the Plan at any time; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval unless such termination, amendment, or modification of the Plan is necessary in order to comply with any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision or as otherwise permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

(b)    All obligations of the Company under the Plan and this Agreement in a Corporate Transaction shall be governed by the Plan, other than as set forth in Section 2 above.

(c)By signing this Agreement, the Participant acknowledges that his or her personal employment or Service information regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing this Agreement, the Participant consents to such transmission of personal data as the Company believes is appropriate to administer the Plan.

(d)    To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to its principles of conflict of laws.

21.    Acceptance of Terms and Conditions. The Participant agrees to abide by all of the governing terms and provisions of the Plan and this Agreement unless the Participant declines the award electronically with the Company sponsored broker by the first vest date. Additionally, the

Participant acknowledges having read and understood the terms and conditions of the Plan and this Agreement and has had an opportunity to obtain the advice of counsel prior to accepting this Agreement. In addition, the transfer or sale of the shares obtained at vesting by the Participant shall be considered an additional acknowledgment of the terms and conditions contained in the Plan and Agreement.

* * * * *

PARTICIPANT SIGNATURE

PRINTED NAME

DATE

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan

Restricted Stock Unit Award Agreement

EXHIBIT A

Outside Directors

Participant (Name):

Grant Date:

Number of RSUs:

Vesting Date:

Next Annual Meeting of Stockholders: The [Insert Year] annual meeting of stockholders of the Company.

Leave of Absence: 31^st day (or 91^st day if reemployment guaranteed by statute or contract)

EX-10.4

Exhibit 10.4

LAM RESEARCH CORPORATION
2015 Stock Incentive Plan

Market-Based Performance Restricted Stock Unit Award Agreement

(U.S. Participants)

Pursuant to the terms of the 2015 Stock Incentive Plan (the “Plan”) Lam Research Corporation, a Delaware corporation (the “Company”), hereby awards market-based performance restricted stock units (“mPRSUs”) to the Grantee (the “Participant”) on the terms and conditions as set forth in this Market-Based Performance Restricted Stock Unit Award Agreement (including the attached Exhibit A) (the “Agreement”) and the Plan. Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan. This Agreement is effective as of the Grant Date.

NOW, THEREFORE, it is hereby agreed as follows:

1.Award of mPRSUs. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Participant a Target Number of mPRSUs as set forth in Exhibit A. Subject to the Company’s attainment of the relative performance set forth in the attached Exhibit A (the “Performance Criteria”), the Participant may vest in the mPRSUs in a designated Payout Range as set forth in Exhibit A. The mPRSUs represent an unfunded, unsecured promise by the Company to deliver Shares subject to the terms and conditions of this Agreement.

2.    Vesting.

(a)     Subject to the terms and conditions of this Agreement, the mPRSUs shall vest and become payable in Shares on the Performance Vesting Date set forth in the attached Exhibit A. The number of mPRSUs that vest shall be determined by the Company’s performance under the Vesting Formula during the Performance Period, as set forth in the attached Exhibit A. Except as otherwise provided herein, the Participant’s right to receive Shares subject to the mPRSUs is contingent upon the Participant continuing to provide Service (as defined in Section 3 below) to the Company (or any Related Entity) through the Performance Vesting Date.

(b)    Notwithstanding the provisions above, in the event of a Corporate Transaction or a Change in Control (defined hereinafter as “Triggering Event”) prior to the Performance Vesting Date in Section 2(a), a portion of the mPRSUs shall convert into a cash award (the “Cash Award”). The number of mPRSUs that convert into a Cash Award shall be the sum of the “performance pro rata” number of Shares and the “target pro rata” number of Shares. This sum shall be multiplied by the closing price of the Company’s common stock as of the closing date of the Triggering Event to determine the dollar amount of the Cash Award. The Cash Award will vest on the Performance Vesting Date, contingent upon the Participant continuing to provide Service (as defined in Section 3 below) to the Company (or any Related

Entity) through the Performance Vesting Date. Any remaining portion of the mPRSUs that are not converted into a Cash Award shall be cancelled.

(i)     Performance Pro Rata. The Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the first day of the Performance Period until the earlier of the closing date of the Triggering Event or the last day of the Performance Period divided by the number of days in the Performance Period (“Elapsed Target Shares”). The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from the first day of the Performance Period until the closing date of the Triggering Event shall be applied to the Elapsed Target Shares to determine the “performance pro rata” number of Shares.

(ii)    Target Pro Rata. The Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the day following the closing date of the Triggering Event until the last day of the Performance Period (but not less than zero) divided by the number of days in the Performance Period to determine the “target pro rata” number of Shares.

3.    Effect of Termination of Service or Leave of Absence.

(a)    For purposes of this Agreement, “Service” shall mean the performance of services for the Company (or any Related Entity) in the capacity of an Employee and shall be considered terminated on the last day the Participant is on payroll. In the event of termination of the Participant’s Service by the Participant or by the Company or a Related Entity for any reason, excluding Participant’s death or Disability before the mPRSUs have vested, the unvested mPRSUs shall be cancelled by the Company (subject to the terms of any applicable Employment or Change in Control Agreement).

(b)    In the event of termination of the Participant’s Service due to death prior to the Performance Vesting Date, a portion of the mPRSUs granted to the Participant shall vest on the date of death. To determine the applicable number of Shares, the Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the first day of the Performance Period until the earlier of the date of death or the last day of the Performance Period, divided by the number of days in the Performance Period to determine the “death pro rata” target number of Shares. The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from the first day of the Performance Period until the earlier of the date of death or the last day of the Performance Period shall be applied to the greater of: (i) the “death pro rata” target number of Shares or (ii) 50% of the original Target Number of mPRSUs (as set forth in the attached Exhibit A), to determine the number of Shares which shall vest on the date of death (the “Death Vesting Date”). Any remaining unvested portion of the mPRSUs shall be cancelled.

(c)    In the event of termination of the Participant’s Service due to Disability prior to the Performance Vesting Date, a portion of the mPRSUs granted to the Participant shall vest on the date the Disability is incurred. To determine the applicable number of Shares, the Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total

number of days from the first day of the Performance Period until the earlier of the date the Disability is incurred or the last day of the Performance Period, divided by the number of days in the Performance Period to determine the “disability pro rata” target number of Shares. The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from the first day of the Performance Period until the earlier of the date the Disability is incurred or the last day of the Performance Period shall be applied to the greater of: (i) the “disability pro rata” target number of Shares or (ii) 50% of the original Target Number of mPRSUs (as set forth in the attached Exhibit A) to determine the number of Shares which shall vest on the date the Disability is incurred (the “Disability Vesting Date”, and collectively with “Performance Vesting Date”, and the “Death Vesting Date”, the “Vesting Date”). Any remaining unvested portion of the mPRSUs shall be cancelled.

(d)    Vesting of the mPRSUs will be suspended and vesting credit will no longer accrue as of the day of the Leave of Absence as set forth in Exhibit A, unless otherwise determined by the Administrator or required by contract or statute. If the Participant returns to Service immediately after the end of an approved Leave of Absence, vesting credit shall continue to accrue from that date of continued Service.

4.    Form and Timing of Payment.

(a)    Subject to Section 5 of this Agreement and provided that the Participant has satisfied the vesting requirements of Section 2 or 3 of this Agreement, on each Vesting Date, as applicable, the mPRSUs shall automatically be converted into unrestricted Shares. Such Shares will be issued to the Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) on the applicable Vesting Date (or as soon as practicable), but in any event, within the period ending on the later to occur of the date that is 2 ½ months after the end of (i) the Participant’s tax year that includes the applicable Vesting Date, or (ii) the Company’s tax year that includes the applicable Vesting Date.

(b)    Shares issued in respect of mPRSUs shall be deemed to be issued in consideration of past services actually rendered by the Participant to the Company or a Related Entity or for its benefit for which the Participant has not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value of the Shares subject to the mPRSUs.

5.    Tax Withholding Obligations. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the mPRSUs, including the grant of the mPRSUs, the vesting of the mPRSUs, or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends; and (ii) do

not commit to structure the terms of the grant or any aspect of the mPRSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.

Prior to the issuance of Shares upon vesting of the mPRSUs (or any other tax or withholding event), the Participant shall pay, or make arrangements satisfactory to the Company (in the Company’s sole discretion) to satisfy all withholding obligations. In those cases where a prior arrangement has not been made (or where the amount of money provided under the prior arrangement is insufficient to satisfy the obligations for Tax-Related Items), the Company shall withhold a number of whole Shares otherwise deliverable at vesting having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting consequences) of the Participant’s estimated obligations for Tax-Related Items applicable to the mPRSUs; such withholding will result in the issuance to the participant of a lower number of Shares.

The Company and/or the Employer may also, in lieu of or in addition to the foregoing, at the Company’s sole discretion, as authorized herein by the Participant, withhold all applicable Tax-Related Items legally payable by the Participant from the Participant’s wages or other cash compensation or to withhold in one of the following ways, as determined by the Company: (i) require the Participant to deposit with the Company an amount of cash sufficient to meet his or her obligation for Tax-Related Items, and/or (ii) sell or arrange for the sale of Shares to be issued on the vesting of the mPRSUs to satisfy the withholding obligation. If the Participant’s obligation for Tax-Related Items is satisfied as described in (ii) of this section, the Company will endeavor to sell only the number of Shares required to satisfy the Participant’s obligations for Tax-Related Items; however, the Participant agrees that the Company may sell more Shares than necessary to cover the Tax-Related Items and that in such event, the Company will reimburse the Participant for the excess amount withheld, in cash and without interest. The Participant shall pay to the Employer any amount of Tax-Related Items that the Employer may be required to withhold as a result of the Participant’s receipt of the mPRSUs, the vesting of the mPRSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with his or her obligation in connection with the Tax-Related Items as described herein. The Participant hereby consents to any action reasonably taken by the Company and/or the Employer to meet his or her obligation for Tax-Related Items.

Further, in consideration of the grant of the mPRSUs, no claim or entitlement to compensation or damages arises if, in satisfying the Participant’s (and/or the Employer’s) obligation for Tax-Related Items, the Company and/or the Employer withholds an amount in excess of the amount legally required to be withheld, the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim or damages.

6.    Restriction on Transferability. Prior to vesting and delivery of the Shares, neither the mPRSUs, nor the Shares or any beneficial interest therein, may be sold, transferred, pledged,

assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above, distribution can be made pursuant to will, the laws of descent and distribution, and if provided by the Administrator, intra-family transfer instruments, or to an inter vivos trust, or as otherwise provided by the Administrator. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

7.    Requirements of Law. The issuance of Shares upon vesting of the mPRSUs is subject to Sections 9 and 14(b) of the Plan, which generally provides that any such issuance shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Shares may be listed for trading at the time of such issuance. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance of any Shares hereby shall relieve the Company of any liability with respect to the non-issuance of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its reasonable efforts to obtain all such approvals.

8.    Rights as Stockholder. The Participant shall not have voting, dividend or any other rights as a stockholder of the Company with respect to the mPRSUs. Upon settlement of the Participant’s mPRSUs into Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), the Participant will obtain full voting, dividend and other rights as a stockholder of the Company.

9.    No Compensation Deferrals. Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). If, notwithstanding the parties’ intent in this regard, at the time of the Participant’s termination of Service, he or she is determined to be a “specified employee” as defined in Code Section 409A, and one or more of the payments or benefits received or to be received by the Participant pursuant to the mPRSUs would constitute deferred compensation subject to Code Section 409A, no such payment or benefit will be provided under the mPRSUs until the earliest of (A) the date which is six (6) months after the Participant’s “separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of the Participant’s death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code), or (C) the effective date of a “change in the ownership or effective control” or a “change in ownership of a substantial portion of the assets” of the Company (as such terms are used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 9 shall only apply to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Code Section 409A or any regulations or U.S. Department of the Treasury (“Treasury”) guidance promulgated thereunder. In addition, if any provision of the mPRSUs would cause the Participant to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to conform it to the maximum extent practicable to the original intent of the applicable provision without violating the provisions of Code Section 409A, including

without limitation to limit payment or distribution of any amount of benefit hereunder in connection with a Triggering Event to a transaction meeting the definitions referred to in clause (C) above, or in connection with any disability to a “disability” as referred to in (B) above; provided however that the Company makes no representation that these Performance Restricted Stock Units are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to these mPRSUs. In addition, to the extent the Company determines it appropriate to accelerate any vesting conditions applicable to this award, then to the extent necessary to avoid the Participant’s incurring any additional tax or interest as a result of such vesting acceleration under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, and notwithstanding Section 4 above, the Company may as a condition to extending such acceleration benefits provide for the Shares to be issued upon settlement of the mPRSUs to be issued on the earliest date (the “Permitted Distribution Date”) that would obviate application of such additional tax or interest rather than issuing them upon the date on which such vesting is effective as would otherwise be required under Section 2 (or as soon as practicable after such Permitted Distribution Date and in no event later than that last day of the grace period following such date permitted under Code Section 409A).

10.    Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Participant, the Company, and all other interested persons. No Administrator shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

11.    Effect on Other Employee Benefit Plans. The value of the mPRSUs granted pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by the Company or any Related Entity, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Related Entity’s employee benefit plans.

12.    No Employment Rights. The award of the mPRSUs pursuant to this Agreement shall not give the Participant any right to continued Service with the Company or a Related Entity and shall not interfere with the ability of the Employer to terminate the Participant’s Service with the Company at any time with or without cause.

13.    Nature of the Grant. In accepting the mPRSUs, the Participant acknowledges that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;

(b)the grant of mPRSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of mPRSUs, or benefits in lieu of mPRSUs even if mPRSUs have been awarded repeatedly in the past;

(c)all decisions with respect to future grants of mPRSUs, if any, will be at the sole discretion of the Company;

(d)the Participant’s participation in the Plan is voluntary;

(e)the mPRSUs are outside the scope of the Participant’s employment contract, if any;

(f)the mPRSUs are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculation of any overtime, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g)in the event that the Participant is not an employee of the Company, the grant of the mPRSUs will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of the mPRSUs will not be interpreted to form an employment contract with the Employer or any Related Entity;

(h)the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(i)if the Participant receives Shares upon vesting of the mPRSUs, the value of such Shares may increase or decrease in value;

(j)in consideration of the grant of the mPRSUs, no claim or entitlement to compensation or damages arises from termination of the mPRSUs or diminution in value of the mPRSUs or Shares received upon vesting of mPRSUs resulting from termination of the Participant’s Service to the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

14.    Amendment of Agreement. This Agreement may be amended only by a writing which specifically states that it amends this Agreement. Notwithstanding the foregoing, this Agreement may be amended unilaterally by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affects the rights of the Participant. Limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the mPRSUs or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or

regulations or any future law, regulation, ruling, or judicial decision, or, to the extent permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

15.    Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Stock Administrator. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

16.    Severability. The provisions of this Agreement are severable and if all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

17.    Construction. The mPRSUs are being issued pursuant to the Plan and are subject to the terms of the Plan. A copy of the Plan is available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with a provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

18.    Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the mPRSUs granted under the Plan and participation in the Plan or future mPRSUs that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.    Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

20.    Miscellaneous.

(a)    The Company has established the Plan voluntarily, it is discretionary in nature and the Board may terminate, amend, or modify the Plan at any time; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval unless such termination, amendment, or modification of the Plan is necessary in order to comply with any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision or as otherwise permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

(b)    All obligations of the Company under the Plan and this Agreement in a Triggering Event shall be governed by the Plan and this Agreement, other than as set forth in Section 3(a) above.

(c)By signing this Agreement, the Participant acknowledges that his or her personal employment or Service information regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing this Agreement, the Participant consents to such transmission of personal data as the Company believes is appropriate to administer the Plan.

(d)    To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to its principles of conflict of laws.

21.    Acceptance of Terms and Conditions. The Participant agrees to abide by all of the governing terms and provisions of the Plan and this Agreement unless the Participant declines the award electronically with the Company sponsored broker by the first vest date. Additionally, the Participant acknowledges having read and understood the terms and conditions of the Plan and this Agreement and has had an opportunity to obtain the advice of counsel prior to accepting this Agreement. In addition, the transfer or sale of the shares obtained at vesting by the Participant shall be considered an additional acknowledgment of the terms and conditions contained in the Plan and Agreement.

* * * * *

PARTICIPANT SIGNATURE	[Electronic Signature]
PRINTED NAME	[Participant Name]
DATE	[Acceptance Date]

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan

Market-Based Performance Restricted Stock Unit Award Agreement

EXHIBIT A

([___________] Vesting)

Participant (Name & Employee Number):

Grant Date:

Target Number of mPRSUs:

Performance Vesting Date:

Payout Range: 0% to 150% of Target Number of mPRSUs

Performance Period: to .

Performance Criteria:

• Index

PHLX Semiconductor Sector Index, a global index traded on the NASDAQ OMX PHLX with a trading symbol of “SOX”

• Vesting Formula

Target Number of mPRSUs x (100% + ((LRCX TSR % - Index TSR %) x 2)) = mPRSUs vested (subject to the maximum in the Payout Range)

◦ Target Number of mPRSUs is vested if the LRCX TSR % equals the Index TSR %

◦ Number of mPRSUs vested increases by 2% of target for each 1% that the LRCX TSR % exceeds the Index TSR %

◦ Number of mPRSUs vested decreases by 2% of target for each 1% that the LRCX TSR % trails the Index TSR %

◦ The result of the Vesting Formula is rounded down to the nearest whole number

• LRCX TSR %

(LRCX 50-trading day average closing price as of the last trading day of the Performance Period - LRCX 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) ÷ (LRCX 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) x 100

• Index TSR %

(Index 50-trading day average closing price as of the last trading day of the Performance Period - Index 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) ÷ (Index 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) x 100

• Notes:

▪ The LRCX TSR % calculation excludes any dividends paid on the Company’s common stock.

▪ All Index TSR % calculations are based on the companies traded on the Index as of the applicable dates

◦ E.g., The Index is used as of the applicable dates even if companies are added / removed from the Index during the Performance Period.

▪ The Company’s relative performance is determined using calculations based on the 50-trading day average closing price methodology for all TSR calculations.

▪ In the event of a Triggering Event, the closing price of the Company’s common stock as of the closing date of the Triggering Event is used to convert the sum of the “performance pro rata” and “target pro rata” number of Shares into the Cash Award.

▪ If the Index is no longer traded / calculated, the Company’s relative performance is determined using calculations based on the companies included in the Index at the time trading / calculation last occurred. The Compensation Committee will calculate the Index TSR % in the manner that most closely approximates the Index in its sole discretion.

Leave of Absence: 31st day (or 91st day if reemployment guaranteed by statute or contract)

EX-10.5

Exhibit 10.5

LAM RESEARCH CORPORATION
2015 Stock Incentive Plan

Market-Based Performance Restricted Stock Unit Award Agreement

(International Participants)

Pursuant to the terms of the 2015 Stock Incentive Plan (the “Plan”) Lam Research Corporation, a Delaware corporation (the “Company”), hereby awards market-based performance restricted stock units (“mPRSUs”) to the Grantee (the “Participant”) on the terms and conditions as set forth in this Market-Based Performance Restricted Stock Unit Award Agreement (including the attached Exhibit A) (the “Agreement”) and the Plan. Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan. This Agreement is effective as of the Grant Date.

NOW, THEREFORE, it is hereby agreed as follows:

1.Award of mPRSUs. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Participant a Target Number of mPRSUs as set forth in Exhibit A. Subject to the Company’s attainment of the relative performance set forth in the attached Exhibit A (the “Performance Criteria”), the Participant may vest in the mPRSUs in a designated Payout Range as set forth in Exhibit A. The mPRSUs represent an unfunded, unsecured promise by the Company to deliver Shares subject to the terms and conditions of this Agreement.

2.    Vesting.

(a)     Subject to the terms and conditions of this Agreement, the mPRSUs shall vest and become payable in Shares on the Performance Vesting Date set forth in the attached Exhibit A. The number of mPRSUs that vest shall be determined by the Company’s performance under the Vesting Formula during the Performance Period, as set forth in the attached Exhibit A. Except as otherwise provided herein, the Participant’s right to receive Shares subject to the mPRSUs is contingent upon the Participant continuing to provide Service (as defined in Section 3 below) to the Company (or any Related Entity) through the Performance Vesting Date.

(b)    Notwithstanding the provisions above, in the event of a Corporate Transaction or a Change in Control (defined hereinafter as “Triggering Event”) prior to the Performance Vesting Date in Section 2(a), a portion of the mPRSUs shall convert into a cash award (the “Cash Award”). The number of mPRSUs that convert into a Cash Award shall be the sum of the “performance pro rata” number of Shares and the “target pro rata” number of Shares. This sum shall be multiplied by the closing price of the Company’s common stock as of the closing date of the Triggering Event to determine the dollar amount of the Cash Award. The Cash Award will vest on the Performance Vesting Date, contingent upon the Participant continuing to provide Service (as defined in Section 3 below) to the Company (or any Affiliate) through the Performance Vesting Date. Any remaining portion of the mPRSUs that are not converted into a Cash Award shall be cancelled.

(i)    Performance Pro Rata. The Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the first day of the Performance Period until the earlier of the closing date of the Triggering Event or the last day of the Performance Period divided by the number of days in the Performance Period (“Elapsed Target Shares”). The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from the first day of the Performance Period until the closing date of the Triggering Event shall be applied to the Elapsed Target Shares to determine the “performance pro rata” number of Shares.

(ii)    Target Pro Rata. The Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the day following the closing date of the Triggering Event until the last day of the Performance Period (but not less than zero) divided by the number of days in the Performance Period to determine the “target pro rata” number of Shares.

3.    Effect of Termination of Service or Leave of Absence.

(a)    For purposes of this Agreement, “Service” shall mean the performance of services for the Company (or any Related Entity) in the capacity of an Employee and shall be considered terminated on the last day the Participant is on payroll. In the event of termination of the Participant’s Service by the Participant or by the Company or a Related Entity for any reason, excluding Participant’s death or Disability before the mPRSUs have vested, the unvested mPRSUs shall be cancelled by the Company (subject to the terms of any applicable Employment or Change in Control Agreement).

(b)    In the event of termination of the Participant’s Service due to death prior to the Performance Vesting Date, a portion of the mPRSUs granted to the Participant shall vest on the date of death. To determine the applicable number of Shares, the Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the first day of the Performance Period until the earlier of the date of death or the last day of the Performance Period, divided by the number of days in the Performance Period to determine the “death pro rata” target number of Shares. The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from the first day of the Performance Period until the earlier of the date of death or the last day of the Performance Period shall be applied to the greater of: (i) the “death pro rata” target number of Shares or (ii) 50% of the original Target Number of mPRSUs (as set forth in the attached Exhibit A), to determine the number of Shares which shall vest on the date of death (the “Death Vesting Date”). Any remaining unvested portion of the mPRSUs shall be cancelled.

(c)    In the event of termination of the Participant’s Service due to Disability prior to the Performance Vesting Date, a portion of the mPRSUs granted to the Participant shall vest on the date the Disability is incurred. To determine the applicable number of Shares, the Target Number of mPRSUs (as set forth in the attached Exhibit A) shall be multiplied by the total number of days from the first day of the Performance Period until the earlier of the date the Disability is incurred or the last day of the Performance Period, divided by the number of days in the Performance Period to determine the “disability pro rata” target number of Shares. The Company’s performance under the Vesting Formula (as set forth in the attached Exhibit A) from

the first day of the Performance Period until the earlier of the date the Disability is incurred or the last day of the Performance Period shall be applied to the greater of: (i) the “disability pro rata” target number of Shares or (ii) 50% of the original Target Number of mPRSUs (as set forth in the attached Exhibit A) to determine the number of Shares which shall vest on the date the Disability is incurred (the “Disability Vesting Date”, and collectively with “Performance Vesting Date”, and the “Death Vesting Date”, the “Vesting Date”). Any remaining unvested portion of the mPRSUs shall be cancelled.

(d)    Vesting of the mPRSUs will be suspended and vesting credit will no longer accrue as of the day of the Leave of Absence as set forth in Exhibit A, unless otherwise determined by the Administrator or required by contract, statute or applicable local law. If the Participant returns to Service immediately after the end of an approved Leave of Absence, vesting credit shall continue to accrue from that date of continued Service.

4.    Form and Timing of Payment.

(a)    Subject to Section 5 of this Agreement and provided that the Participant has satisfied the vesting requirements of Section 2 or 3 of this Agreement, on each Vesting Date, as applicable, the mPRSUs shall automatically be converted into unrestricted Shares. Such Shares will be issued to the Participant (as evidenced by the appropriate entry in the books of the Company or a duly authorized transfer agent of the Company) on the applicable Vesting Date (or as soon as practicable), but in any event, within the period ending on the later to occur of the date that is 2 ½ months after the end of (i) the Participant’s tax year that includes the applicable Vesting Date, or (ii) the Company’s tax year that includes the applicable Vesting Date.

(b)    Shares issued in respect of mPRSUs shall be deemed to be issued in consideration of past services actually rendered by the Participant to the Company or a Related Entity or for its benefit for which the Participant has not previously been compensated or for future services to be rendered, as the case may be, which the Company deems to have a value at least equal to the aggregate par value of the Shares subject to the mPRSUs.

5.Tax Withholding Obligations. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the mPRSUs, including the grant of the mPRSUs, the vesting of the mPRSUs, or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the mPRSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.

Prior to the issuance of Shares upon vesting of the mPRSUs (or any other tax or withholding event), the Participant shall pay, or make arrangements satisfactory to the Company

(in the Company’s sole discretion) to satisfy all withholding (and payment on account, where applicable) obligations. In those cases where a prior arrangement has not been made (or where the amount of money provided under the prior arrangement is insufficient to satisfy the obligations for Tax-Related Items), the Company shall withhold a number of whole Shares otherwise deliverable at vesting having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting consequences) of the Participant’s estimated obligations for Tax-Related Items applicable to the mPRSUs; such withholding will result in the issuance to the participant of a lower number of Shares.

The Company and/or the Employer may also, in lieu of or in addition to the foregoing, at the Company’s sole discretion as authorized herein by the Participant, withhold all applicable Tax-Related Items legally payable by the Participant from the Participant’s wages or other cash compensation or to withhold in one of the following ways, as determined by the Company: (i) require the Participant to deposit with the Company an amount of cash sufficient to meet his or her obligation for Tax-Related Items, and/or (ii) sell or arrange for the sale of Shares to be issued on the vesting of the mPRSUs to satisfy the withholding (or payment on account, when applicable) obligation. If the Participant’s obligation for Tax-Related Items is satisfied as described in (ii) of this section, the Company will endeavor to sell only the number of Shares required to satisfy the Participant’s obligations for Tax-Related Items; however, the Participant agrees that the Company may sell more Shares than necessary to cover the Tax-Related Items and that in such event, the Company will reimburse the Participant for the excess amount withheld, in cash and without interest. The Participant shall pay to the Employer any amount of Tax-Related Items that the Employer may be required to withhold as a result of the Participant’s receipt of the mPRSUs, the vesting of the mPRSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with his or her obligation in connection with the Tax-Related Items as described herein. The Participant hereby consents to any action reasonably taken by the Company and/or the Employer to meet his or her obligation for Tax-Related Items.

Further, in consideration of the grant of the mPRSUs, no claim or entitlement to compensation or damages arises if, in satisfying the Participant’s (and/or the Employer’s) obligation for Tax-Related Items, the Company and/or the Employer withholds an amount in excess of the amount legally required to be withheld, the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim or damages.

6.Restriction on Transferability. Prior to vesting and delivery of the Shares, neither the mPRSUs, nor the Shares or any beneficial interest therein, may be sold, transferred, pledged, assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above, distribution can be made pursuant to will, the laws of descent and distribution, and if provided by the Administrator, intra-family transfer instruments, or to an inter vivos trust, or as otherwise provided by the Administrator.

The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

7.Requirements of Law. The issuance of Shares upon vesting of the mPRSUs is subject to Sections 9 and 14(b) of the Plan, which generally provides that any such issuance shall be subject to compliance by the Company and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Shares may be listed for trading at the time of such issuance. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance of any Shares hereby shall relieve the Company of any liability with respect to the non-issuance of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its reasonable efforts to obtain all such approvals.

8.Rights as Stockholder. The Participant shall not have voting, dividend or any other rights as a stockholder of the Company with respect to the mPRSUs. Upon settlement of the Participant’s mPRSUs into Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), the Participant will obtain full voting, dividend and other rights as a stockholder of the Company.

9.No Compensation Deferrals. Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). If, notwithstanding the parties’ intent in this regard, at the time of the Participant’s termination of Service, he or she is determined to be a “specified employee” as defined in Code Section 409A, and one or more of the payments or benefits received or to be received by the Participant pursuant to the mPRSUs would constitute deferred compensation subject to Code Section 409A, no such payment or benefit will be provided under the mPRSUs until the earliest of (A) the date which is six (6) months after the Participant’s “separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of the Participant’s death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code), or (C) the effective date of a “change in the ownership or effective control” or a “change in ownership of a substantial portion of the assets” of the Company (as such terms are used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 9 shall only apply to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Code Section 409A or any regulations or U.S. Department of the Treasury (“Treasury”) guidance promulgated thereunder. In addition, if any provision of the mPRSUs would cause the Participant to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to conform it to the maximum extent practicable to the original intent of the applicable provision without violating the provisions of Code Section 409A, including without limitation to limit payment or distribution of any amount of benefit hereunder in connection with a Triggering Event to a transaction meeting the definitions referred to in clause (C) above, or in connection with any disability to a “disability” as referred to in (B) above; provided however that the Company makes no representation that these Performance Restricted

Stock Units are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to these mPRSUs. In addition, to the extent the Company determines it appropriate to accelerate any vesting conditions applicable to this award, then to the extent necessary to avoid the Participant’s incurring any additional tax or interest as a result of such vesting acceleration under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, and notwithstanding Section 4 above, the Company may as a condition to extending such acceleration benefits provide for the Shares to be issued upon settlement of the mPRSUs to be issued on the earliest date (the “Permitted Distribution Date”) that would obviate application of such additional tax or interest rather than issuing them upon the date on which such vesting is effective as would otherwise be required under Section 2 (or as soon as practicable after such Permitted Distribution Date and in no event later than that last day of the grace period following such date permitted under Code Section 409A).

10.Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding upon the Participant, the Company, and all other interested persons. No Administrator shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

11.Effect on Other Employee Benefit Plans. The value of the mPRSUs granted pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by the Company or any Related Entity, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Related Entity’s employee benefit plans.

12.No Employment Rights. The award of the mPRSUs pursuant to this Agreement shall not give the Participant any right to continued Service with the Company or a Related Entity and shall not interfere with the ability of the Employer to terminate the Participant’s Service with the Company at any time with or without cause.

13.Nature of the Grant. In accepting the mPRSUs, the Participant acknowledges that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;

(b)the grant of mPRSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of mPRSUs, or benefits in lieu of mPRSUs even if mPRSUs have been awarded repeatedly in the past;

(c)all decisions with respect to future grants of mPRSUs, if any, will be at the sole discretion of the Company;

(d)the Participant’s participation in the Plan is voluntary;

(e)the mPRSUs are outside the scope of the Participant’s employment contract, if any;

(f)the mPRSUs are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculation of any overtime, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g)in the event that the Participant is not an employee of the Company, the grant of the mPRSUs will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of the mPRSUs will not be interpreted to form an employment contract with the Employer or any Related Entity;

(h)the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(i)if the Participant receives Shares upon vesting of the mPRSUs, the value of such Shares may increase or decrease in value;

(j)in consideration of the grant of the mPRSUs, no claim or entitlement to compensation or damages arises from termination of the mPRSUs or diminution in value of the mPRSUs or Shares received upon vesting of mPRSUs resulting from termination of the Participant’s Service to the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

14.Data Privacy Notice and Consent. The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement by and among, as applicable, the Employer, the Company and its Related Entities for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.

The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all mPRSUs or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).

The Participant understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing his or her participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares received upon vesting of the mPRSUs may be deposited. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Participant understands, however, that refusal or withdrawal of consent may affect his or her ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.

15.Amendment of Agreement. This Agreement may be amended only by a writing which specifically states that it amends this Agreement. Notwithstanding the foregoing, this Agreement may be amended unilaterally by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Participant, and provided that no such amendment adversely affects the rights of the Participant. Limiting the foregoing, the Committee reserves the right to change, by written notice to the Participant, the provisions of the mPRSUs or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, or, to the extent permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

16.Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Stock Administrator. Any notice to be given to the Participant shall be addressed to the Participant at the address listed in the Employer’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

17.Severability. The provisions of this Agreement are severable and if all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

18.Construction. The mPRSUs are being issued pursuant to the Plan and are subject to the terms of the Plan. A copy of the Plan is available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with a provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

19.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the mPRSUs granted under the Plan and participation in the Plan or future mPRSUs that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

20.Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the Company and the Participant with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

21.Language. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

22.Miscellaneous.

(a)The Company has established the Plan voluntarily, it is discretionary in nature and the Board may terminate, amend, or modify the Plan at any time; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval unless such termination, amendment, or modification of the Plan is necessary in order to comply with any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision or as otherwise permissible under the Plan (including, but not limited to, Sections 10, 11 and 13 of the Plan).

(b)All obligations of the Company under the Plan and this Agreement in a Triggering Event shall be governed by the Plan and this Agreement, other than as set forth in Section 3(a) above.

(c)    To the extent not preempted by United States federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to its principles of conflict of laws.

23.Country Specific Terms. Appendix A contains additional terms and conditions of the Agreement applicable to Participants residing in those countries. In addition, Appendix A also contains information and notices of exchange control and certain other issues of which the Participant should be aware.

24.Acceptance of Terms and Conditions. The Participant agrees to abide by all of the governing terms and provisions of the Plan and this Agreement unless the Participant declines the award electronically with the Company sponsored broker by the first vest date. Additionally, the Participant acknowledges having read and understood the terms and conditions of the Plan and this Agreement and has had an opportunity to obtain the advice of counsel prior to accepting this Agreement. In addition, the transfer or sale of the shares obtained at vesting by the Participant shall be considered an additional acknowledgment of the terms and conditions contained in the Plan and Agreement.

* * * * *

PARTICIPANT SIGNATURE	[Electronic Signature]
PRINTED NAME	[Participant Name]
DATE	[Acceptance Date]

APPENDIX A

TERMS AND CONDITIONS

This Appendix A, which is part of the Agreement, contains additional terms and conditions of the Agreement that will apply to the Participant if he or she resides in one of the countries listed below. Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan and/or the Agreement.

NOTIFICATIONS

This Appendix A also includes information regarding exchange control and certain other issues of which the Participant should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of November 2015. Such laws are often complex and change frequently. The Company therefore strongly recommends that the Participant not rely on the information as the only source of information relating to the consequences of his or her participation in the Plan because such information may be outdated when the Participant vests in the mPRSUs and/or sells any Shares acquired pursuant to the mPRSUs.

AUSTRIA

Exchange Control Information. If the Participant holds Shares acquired under the Plan outside of Austria, the Participant must submit a report to the Austrian National Bank. An exemption applies if the value of the Shares as of any given quarter does not exceed €30,000,000 or as of December 31 does not exceed €5,000,000. If the former threshold is exceeded, quarterly obligations are imposed; whereas, if the latter threshold is exceeded, annual reports must be provided. The annual reporting date is December 31 and the deadline for filing the annual report is March 31 of the following year.

When the Participant sells Shares acquired under the Plan, there may be exchange control obligations if the cash proceeds are held outside of Austria. If the transaction volume of all accounts abroad exceeds €3,000,000 the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the fifteenth day of the following month.

BELGIUM

Tax Reporting Information. You are required to report any bank accounts opened and maintained outside Belgium on your annual tax return. As a Belgian tax resident, Participant is required to inform the Central Point of Contact (CPC) of the National Bank of Belgium of overseas income (which includes any Shares received in connection with participation in the Plan) by registering any foreign accounts with the CPC before filing Participant’s annual tax return with the Belgian tax authorities. If Participant has previously reported overseas income, Participant will receive a letter from the tax authorities about this requirement and will have two

months from the receipt of such letter to report the accounts to the CPC. If Participant has not previously reported overseas income, Participant will not receive a letter and must proactively report the required information to the CPC.

CHINA (PRC)

Exchange Control Restrictions. The Participant agrees to comply with any requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China. These requirements may include, but are not limited to, immediate repatriation to China of the sale proceeds, an immediate sale of the mPRSUs at vesting, and/or repatriation of the cash proceeds through a special exchange control account.

FRANCE

Exchange Control Information. If the Participant imports or exports cash (e.g., sales proceeds received under the Plan) with a value equal to or exceeding €10,000 and does not use a financial institution to do so, he or she must submit a report to the customs and excise authorities. If the Participant maintains a foreign bank account, he or she is required to report such account to the French tax authorities when filing his or her annual tax return.

GERMANY

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If the Participant uses a German bank to transfer a cross-border payment in excess of €12,500 under the Plan, the bank will make the report for the Participant. In addition, the Participant must report any receivables or payables or debts in foreign currency exceeding an amount of €5,000,000 on a monthly basis.

IRELAND

Director Notification Requirement. If the Participant is a director, shadow director or secretary of an Irish Subsidiary or Related Entity of the Company who owns more than a 1% interest in the Company, pursuant to Section 53 of the Irish Company Act 1990, he or she must notify the Irish Subsidiary or Related Entity of the Company in writing within five (5) business days of receiving or disposing of an interest in the Company (e.g., mPRSUs, Shares, etc.), or within five (5) business days of becoming aware of the event giving rise to the notification requirement, or within five (5) days of becoming a director, shadow director or secretary if such an interest exists at that time. This notification requirement also applies with respect to the interests of a spouse or minor child, whose interests will be attributed to the director, shadow director or secretary.

ISRAEL

No additional provisions apply.

ITALY

Plan Document Acknowledgment. By accepting the terms and conditions of the mPRSUs, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement and

has reviewed the Plan and the Agreement, including this Appendix A, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement.

Data Privacy. In addition to the data privacy provision that is set forth in the Agreement, the Participant also consents to the following additional data privacy-related terms:

I am aware that providing the Company and my Employer with Data is necessary for participation in the Plan and that my refusal to provide such Data may affect my ability to participate in the Plan. The Controller of personal data processing is the Company with registered offices at 4650 Cushing Parkway, Fremont, California, 94538, United States and, pursuant to D.lgs 196/2003, its representatives in Italy are Lam Research S.r.l., with registered offices in Centro Direzionale Colleoni, Palazzo Sirio 3-Ing, 20041 Agrate Brianza-MI, Italy.

I understand that I may at any time exercise the rights acknowledged by Section 7 of Legislative Decree June 30, 2003 n.196, including, but not limited to, the right to access, delete, update, request the rectification of my Data and cease, for legitimate reasons, the data processing. Furthermore, I am aware that my Data will not be used for direct marketing purposes.

Exchange Control Information. By September 30th of each year, Participants are required to report on their annual tax return (Form RW) any foreign investments (including proceeds from the sale of Shares) held outside of Italy if the investment may give rise to income in Italy. However, deposits and bank accounts held outside of Italy only need to be disclosed if the value of the assets exceeds €10,000 during any part of the tax year.

With respect to Shares received, the Participants must report (i) the value of the Shares at the beginning of the year or on the day the Participant acquired the Shares, whichever is later; and (ii) the value of the Shares when sold, or if the Participant still owns the Shares at the end of the year, the value of the Shares at the end of the year. The value to be reported is the fair market value of the Shares on the applicable dates mentioned above.

JAPAN

Exchange Control Information. If the Participant acquired Shares valued at more than ¥100,000,000 in a single transaction, the Participant must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of Shares.In addition, Japanese permanent residents will be required to report, by March 15 of each year, overseas assets that exceed ¥50,000,000 (approximately US$500,000) at year end.

KOREA

Exchange Control Information. If the Participant receives US$500,000 or more from the sale of Shares, Korean exchange control laws require the Participant to repatriate the proceeds to Korea within 36 months of the sale.

MALAYSIA

Director Notification Requirement. If the Participant is a Director of the local Subsidiary, he or she must notify the local Subsidiary of the grant and also provide notice of any change in his or her interest in the mPRSUs (e.g. vesting or the sale of Shares).

Exchange Control Information. Because exchange control regulations change frequently and without notice, you should consult your legal advisor before selling shares to ensure compliance with current regulations. It is Participant’s responsibility to comply with exchange control laws in Malaysia, and neither the Company nor your employer will be liable for any fines or penalties resulting from a failure to comply with applicable laws. For purposes of compiling balance of payment statistics on the inflow and outflow of funds from Malaysia, the Bank Negara Malaysia must be notified of any remittance of funds between residents and non-residents of an amount equal to RM200,001 or greater from Malaysia.

NETHERLANDS

Insider-Trading Notification. The Participant should be aware of the Dutch insider-trading rules, which may impact the sale of Shares acquired at vesting of the mPRSUs. In particular, the Participant may be prohibited from effectuating certain transactions involving Shares if the Participant has inside information about the Company. If the Participant is uncertain whether the insider-trading rules apply to him or her, the Participant should consult his or her personal legal advisor. By accepting the Agreement and participating in the Plan, the Participant acknowledges having read and understood this notification and acknowledges that it is the Participant’s responsibility to comply with the following Dutch insider-trading rules.

SINGAPORE

Director Notification Obligation. Directors of a Singapore Subsidiary or Affiliate are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singapore Subsidiary or Affiliate in writing of an interest (e.g., Shares, etc.) in the Company or any related companies within two (2) days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.

Securities Law Information. The grant is being made on a private basis and is, therefore, exempt from registration in Singapore.

SLOVAKIA

Exchange Control Information. It is the Participant’s obligation to comply with exchange control requirements in the Slovakia Republic, including any notification requirements applicable to opening or maintaining any foreign bank or brokerage accounts.

SLOVENIA

No additional provisions apply.

SWITZERLAND

Securities Law Information. The offer of the mPRSUs is considered a private offering in Switzerland and is therefore not subject to securities registration in Switzerland.

TAIWAN

Exchange Control Information. The Participant may acquire and remit foreign currency (including funds for the purchase of Shares and proceeds from the sale of Shares) up to US$5,000,000 per year without prior approval.

If the transaction amount is NTD500,000 or more in a single transaction, the Participant must submit a Foreign Exchange Transaction Form. If the transaction amount is US$500,000 or more in a single transaction, the Participant must also provide supporting documentation to the satisfaction of the remitting bank.

UNITED KINGDOM

Securities Requirement. Due to legal requirements, all mPRSUs at the time of vesting will be settled in Shares.

LAM RESEARCH CORPORATION

2015 Stock Incentive Plan

Market-Based Performance Restricted Stock Unit Award Agreement

EXHIBIT A

([___________] Vesting)

Participant (Name & Employee Number):

Grant Date:

Target Number of mPRSUs:

Performance Vesting Date:

Payout Range: 0% to 150% of Target Number of mPRSUs

Performance Period: to .

Performance Criteria:

• Index

PHLX Semiconductor Sector Index, a global index traded on the NASDAQ OMX PHLX with a trading symbol of “SOX”

• Vesting Formula

Target Number of mPRSUs x (100% + ((LRCX TSR % - Index TSR %) x 2)) = mPRSUs vested (subject to the maximum in the Payout Range)

◦ Target Number of mPRSUs is vested if the LRCX TSR % equals the Index TSR %

◦ Number of mPRSUs vested increases by 2% of target for each 1% that the LRCX TSR % exceeds the Index TSR %

◦ Number of mPRSUs vested decreases by 2% of target for each 1% that the LRCX TSR % trails the Index TSR %

◦ The result of the Vesting Formula is rounded down to the nearest whole number

• LRCX TSR %

(LRCX 50-trading day average closing price as of the last trading day of the Performance Period - LRCX 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) ÷ (LRCX 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) x 100

• Index TSR %

(Index 50-trading day average closing price as of the last trading day of the Performance Period - Index 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) ÷ (Index 50-trading day average closing price on the trading day immediately prior to the beginning of the Performance Period) x 100

• Notes:

▪ The LRCX TSR % calculation excludes any dividends paid on the Company’s common stock.

▪ All Index TSR % calculations are based on the companies traded on the Index as of the applicable dates

◦ E.g., The Index is used as of the applicable dates even if companies are added / removed from the Index during the Performance Period.

▪ The Company’s relative performance is determined using calculations based on the 50-trading day average closing price methodology for all TSR calculations.

▪ In the event of a Triggering Event, the closing price of the Company’s common stock as of the closing date of the Triggering Event is used to convert the sum of the “performance pro rata” and “target pro rata” number of Shares into the Cash Award.

▪ If the Index is no longer traded / calculated, the Company’s relative performance is determined using calculations based on the companies included in the Index at the time trading / calculation last occurred. The Compensation Committee will calculate the Index TSR % in the manner that most closely approximates the Index in its sole discretion.

Leave of Absence: 31st day (or 91st day if reemployment guaranteed by statute or contract)

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION (PRINCIPAL EXECUTIVE OFFICER)

I, Timothy M. Archer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lam Research Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 30, 2019

/s/ Timothy M. Archer

Timothy M. Archer

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION (PRINCIPAL FINANCIAL OFFICER)

I, Douglas R. Bettinger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lam Research Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 30, 2019

/s/ Douglas R. Bettinger

Douglas R. Bettinger

Executive Vice President, Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION (PRINCIPAL EXECUTIVE OFFICER)

In connection with the Quarterly Report of Lam Research Corporation (the “Company”) on Form 10-Q for the fiscal period ending March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy M. Archer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 30, 2019

/s/ Timothy M. Archer

Timothy M. Archer

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section. Such certification will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION (PRINCIPAL FINANCIAL OFFICER)

In connection with the Quarterly Report of Lam Research Corporation (the “Company”) on Form 10-Q for the fiscal period ending March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas R. Bettinger, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 30, 2019

/s/ Douglas R. Bettinger

Douglas R. Bettinger

Executive Vice President, Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section. Such certification will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2019	Apr. 26, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Trading Symbol	LRCX
Entity Registrant Name	LAM RESEARCH CORP
Entity Central Index Key	0000707549
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		149,926,529

XML

Condensed Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Income Statement [Abstract]
Revenue	$ 2,439,048	$ 2,892,115	$ 7,292,412	$ 7,951,070
Cost of goods sold	1,364,711	1,561,401	4,014,844	4,265,446
Gross margin	1,074,337	1,330,714	3,277,568	3,685,624
Research and development	318,514	305,412	895,742	861,801
Selling, general, and administrative	190,306	197,791	534,179	565,719
Total operating expenses	508,820	503,203	1,429,921	1,427,520
Operating income	565,517	827,511	1,847,647	2,258,104
Other income (expense), net	20,532	(55,810)	(10,494)	(64,464)
Income before income taxes	586,049	771,701	1,837,153	2,193,640
Income tax (expense) benefit	(38,659)	7,099	(187,548)	(834,105)
Net income	$ 547,390	$ 778,800	$ 1,649,605	$ 1,359,535
Net income per share:
Basic (usd per share)	$ 3.62	$ 4.80	$ 10.72	$ 8.40
Diluted (usd per share)	$ 3.47	$ 4.33	$ 10.20	$ 7.45
Number of shares used in per share calculations:
Basic (shares)	151,201	162,378	153,891	161,885
Diluted (shares)	157,849	179,779	161,683	182,565

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 547,390	$ 778,800	$ 1,649,605	$ 1,359,535
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	6,684	12,197	(6,845)	25,305
Cash flow hedges:
Net unrealized (losses) gains during the period	(7,950)		4,038
Net unrealized (losses) gains during the period		(36,616)		(26,624)
Net losses (gains) reclassified into earnings	2,086		(2,492)
Net losses (gains) reclassified into earnings		5,290		2,019
Net change	(5,864)		1,546
Net change		(31,326)		(24,605)
Available-for-sale investments:
Net unrealized gains (losses) during the period	1,143	(25,406)	1,441	(45,472)
Net (gains) losses reclassified into earnings	(147)	43,109	(201)	43,070
Net change	996	17,703	1,240	(2,402)
Defined benefit plans, net change in unrealized component	216	155	(1,152)	(2,029)
Other comprehensive income (loss), net of tax	2,032	(1,271)	(5,211)	(3,731)
Comprehensive income	$ 549,422	$ 777,529	$ 1,644,394	$ 1,355,804

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018	[1]
ASSETS
Cash and cash equivalents	$ 4,931,611	$ 4,512,257
Investments	1,209,315	437,338
Accounts receivable, less allowance for doubtful accounts of $4,952 as of March 31, 2019, and $5,343 as of June 24, 2018	1,522,273	2,176,936
Inventories	1,622,242	1,876,162
Prepaid expenses and other current assets	156,800	147,218
Total current assets	9,442,241	9,149,911
Property and equipment, net	1,040,329	902,547
Restricted cash and investments	255,774	256,301
Goodwill	1,484,908	1,484,904
Intangible assets, net	223,022	317,836
Other assets	448,988	367,979
Total assets	12,895,262	12,479,478
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable	416,187	510,983
Accrued expenses and other current liabilities	1,046,938	1,309,209
Deferred profit	378,396	720,086
Current portion of convertible notes, capital leases, and commercial paper	964,107	610,030
Total current liabilities	2,805,628	3,150,308
Long-term debt and capital leases, less current portion	3,801,514	1,806,562
Income taxes payable	863,155	851,936
Other long-term liabilities	83,986	90,629
Total liabilities	7,554,283	5,899,435
Commitments and contingencies
Temporary equity, convertible notes	49,783	78,192
Stockholders’ equity:
Preferred stock, at par value of $0.001 per share; authorized, 5,000 shares, none outstanding	0	0
Common stock, at par value of $0.001 per share; authorized, 400,000 shares; issued and outstanding, 149,886 shares at March 31,2019, and 156,892 shares at June 24, 2018	150	157
Additional paid-in capital	6,315,495	6,144,425
Treasury stock, at cost; 135,045 shares at March 31, 2019, and 119,679 shares at June 24, 2018	(10,509,750)	(7,846,476)
Accumulated other comprehensive loss	(62,660)	(57,449)
Retained earnings	9,547,961	8,261,194
Total stockholders’ equity	5,291,196	6,501,851
Total liabilities and stockholders’ equity	$ 12,895,262	$ 12,479,478

[1] Derived from audited financial statements

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 4,952	$ 5,343
Preferred stock, par value (usd per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value (usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	149,886,000	156,892,000
Common stock, shares outstanding	149,886,000	156,892,000
Treasury stock, shares	135,045,000	119,679,000

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,649,605	$ 1,359,535
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	243,873	241,276
Deferred income taxes	(75,105)	(209,214)
Equity-based compensation expense	142,389	125,002
Amortization of note discounts and issuance costs	5,137	13,469
Impairment of investment	0	42,456
Other, net	(646)	23,327
Changes in operating assets and liabilities	330,273	341,538
Net cash provided by operating activities	2,295,526	1,937,389
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets	(237,543)	(193,814)
Business acquisition, net of cash acquired	0	(115,697)
Purchases of available-for-sale securities	(1,975,688)	(2,377,459)
Maturities of available-for-sales securities	395,569	549,539
Sales of available-for-sale securities	809,379	3,639,331
Other, net	(5,288)	(14,358)
Net cash (used for) provided by investing activities	(1,013,571)	1,487,542
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt	(116,496)	(577,415)
Net (repayments) proceeds from issuance of commercial paper	(61,754)	997,971
Proceeds from borrowings on revolving credit facility	0	750,000
Repayments of borrowings on revolving credit facility	0	(750,000)
Proceeds from issuance of long-term debt, net of issuance costs	2,476,720	0
Treasury stock purchases	(2,672,051)	(1,346,940)
Dividends paid	(513,475)	(225,604)
Reissuance of treasury stock related to employee stock purchase plan	32,920	34,057
Proceeds from issuance of common stock	5,119	6,632
Other, net	(13,207)	11
Net cash used for financing activities	(862,224)	(1,111,288)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(904)	8,200
Net increase in cash, cash equivalents, and restricted cash	418,827	2,321,843
Cash, cash equivalents, and restricted cash at beginning of period	4,768,558	2,633,739
Cash, cash equivalents, and restricted cash at end of period	5,187,385	4,955,582
Schedule of non-cash transactions:
Accrued payables for stock repurchases	1,637	2,165
Accrued payables for capital expenditures	27,283	32,610
Transfers of inventory to property and equipment, net	42,519	38,878
Reconciliation of cash, cash equivalents, and restricted cash
Total Cash, cash equivalents, and restricted cash	$ 4,768,558	$ 2,633,739

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total		Common Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Loss		Retained Earnings
Beginning balance (shares) at Jun. 25, 2017			161,723
Beginning balance at Jun. 25, 2017	$ 6,817,451		$ 162	$ 5,845,485	$ (5,216,187)	$ (61,700)		$ 6,249,691
Increase (Decrease) in Stockholders' Equity
Sale of common stock (shares)			1,833
Sale of common stock	6,632		$ 1	6,631
Purchase of treasury stock (shares)			(7,067)
Purchase of treasury stock	(1,349,105)		$ (7)		(1,349,098)
Reissuance of treasury stock (shares)			413
Reissuance of treasury stock	34,057			20,402	13,655
Equity-based compensation expense	125,002			125,002
Effect of conversion of convertible notes (shares)			10,053
Effect of conversion of convertible notes	(80,854)		$ 10	(80,864)
Effect of bond hedge, cash in lieu of shares (shares)			(2,855)
Effect of bond hedge, cash in lieu of shares	11		$ (2)	13
Reclassification from temporary to permanent equity	88,888			88,888
Net income	1,359,535							1,359,535
Other comprehensive loss	(3,731)					(3,731)
Cash dividends declared	(234,896)							(234,896)
Ending balance (shares) at Mar. 25, 2018			164,100
Ending balance at Mar. 25, 2018	6,803,055		$ 164	6,005,557	(6,551,630)	(65,431)		7,414,395
Beginning balance (shares) at Dec. 24, 2017			159,451
Beginning balance at Dec. 24, 2017	6,143,131		$ 159	5,959,945	(6,470,434)	(64,160)		6,717,621
Increase (Decrease) in Stockholders' Equity
Sale of common stock (shares)			1,367
Sale of common stock	2,517		$ 1	2,516
Purchase of treasury stock (shares)			(1,470)
Purchase of treasury stock	(81,197)		$ (1)		(81,196)
Equity-based compensation expense	41,095			41,095
Effect of conversion of convertible notes (shares)			5,147
Effect of conversion of convertible notes	(47,453)		$ 5	(47,458)
Effect of bond hedge, cash in lieu of shares (shares)			(395)
Effect of bond hedge, cash in lieu of shares	7			7
Reclassification from temporary to permanent equity	49,452			49,452
Net income	778,800							778,800
Other comprehensive loss	(1,271)					(1,271)
Cash dividends declared	(82,026)							(82,026)
Ending balance (shares) at Mar. 25, 2018			164,100
Ending balance at Mar. 25, 2018	6,803,055		$ 164	6,005,557	(6,551,630)	(65,431)		7,414,395
Increase (Decrease) in Stockholders' Equity
Effects of ASU adoption | Adoption of ASU 2016-09	40,065							40,065
Beginning balance (shares) at Jun. 24, 2018			156,892
Beginning balance at Jun. 24, 2018	6,501,851	[1]	$ 157	6,144,425	(7,846,476)	(57,449)		8,261,194
Beginning balance (shares) at Jun. 24, 2018			156,892
Beginning balance at Jun. 24, 2018	6,501,851	[1]	$ 157	6,144,425	(7,846,476)	(57,449)		8,261,194
Increase (Decrease) in Stockholders' Equity
Sale of common stock (shares)			1,026
Sale of common stock	5,119		$ 1	5,118
Purchase of treasury stock (shares)			(15,193)
Purchase of treasury stock	(2,673,572)		$ (15)		(2,673,557)
Reissuance of treasury stock (shares)			273
Reissuance of treasury stock	32,920			22,637	10,283
Equity-based compensation expense	142,389			142,389
Effect of conversion of convertible notes (shares)			2,783
Effect of conversion of convertible notes	(27,467)		$ 3	(27,470)
Exercise of warrants (shares)			4,105
Exercise of warrants	(8)		$ 4	(12)
Reclassification from temporary to permanent equity	28,408			28,408
Effects of ASU 2018-02 adoption	(2,227)					(2,227)	[2]	2,227	[2]
Net income	1,649,605							1,649,605
Other comprehensive loss	(2,984)					(2,984)
Other comprehensive loss	(5,211)
Cash dividends declared	(503,977)							(503,977)
Ending balance (shares) at Mar. 31, 2019			149,886
Ending balance at Mar. 31, 2019	5,291,196		$ 150	6,315,495	(10,509,750)	(62,660)		9,547,961
Increase (Decrease) in Stockholders' Equity
Effects of ASU adoption | Adoption of ASU 2016-16								(400)
Ending balance (shares) at Dec. 23, 2018			153,961
Ending balance at Dec. 23, 2018	5,784,363		$ 154	6,256,942	(9,573,486)	(64,692)		9,165,445
Increase (Decrease) in Stockholders' Equity
Sale of common stock (shares)			947
Sale of common stock	5,010		$ 1	5,009
Purchase of treasury stock (shares)			(5,702)
Purchase of treasury stock	(936,270)		$ (6)		(936,264)
Equity-based compensation expense	53,240			53,240
Effect of conversion of convertible notes (shares)			680
Effect of conversion of convertible notes	(6,920)		$ 1	(6,921)
Reclassification from temporary to permanent equity	7,225			7,225
Net income	547,390							547,390
Other comprehensive loss	2,032					2,032
Other comprehensive loss	2,032
Cash dividends declared	(164,874)							(164,874)
Ending balance (shares) at Mar. 31, 2019			149,886
Ending balance at Mar. 31, 2019	$ 5,291,196		$ 150	$ 6,315,495	$ (10,509,750)	$ (62,660)		$ 9,547,961

[1] Derived from audited financial statements

[2] Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.

XML

Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Statement of Stockholders' Equity [Abstract]
Dividends declared per share (usd per share)	$ 1.10	$ 0.5	$ 3.3	$ 1.45

XML

BASIS OF PRESENTATION

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 24, 2018, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 24, 2018 (the “2018 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov. The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com. The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.

The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2019 and includes 53 weeks. The quarters ended March 31, 2019 (the “March 2019 quarter”) and March 25, 2018 (the “March 2018 quarter”) included 14 weeks and 13 weeks, respectively.

XML

RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Mar. 31, 2019

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In conjunction with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 3 - Revenue for a description of the amendments.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

	June 24, 2018					June 25, 2018
	As reported		Adjustments			As Adjusted
	(In thousands)
Total assets	$	12,479,478	$	12,955		$	12,492,433
Deferred profit	$	720,086	$	(160,695	)	$	559,391
Total liabilities	$	5,899,435	$	(126,400	)	$	5,773,035
Stockholders' equity	$	6,501,851	$	139,355		$	6,641,206

Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:

	Three months ended						Nine Months Ended
	March 31, 2019						March 31, 2019
	As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)		As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
	(In thousands)
Revenue	$	2,439,048	$	2,203,034	$	236,014	$	7,292,412	$	6,691,212	$	601,200
Cost of goods sold	$	1,364,711	$	1,213,852	$	150,859	$	4,014,844	$	3,705,203	$	309,641
							March 31, 2019
							As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
							(In thousands)
Deferred profit							$	378,396	$	809,712	$	(431,316	)
Retained earnings							$	9,547,961	$	9,116,645	$	431,316

Except as disclosed above, the adoption of ASC 606 did not have a significant impact on the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended March 31, 2019.

In January 2016, the FASB released ASU 2016-01, “Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities.” The FASB issued a subsequent amendment to the initial guidance in February 2018 within ASU 2018-03. These amendments change the accounting for and financial statement presentation of equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee. The amendments provide clarity on the measurement methodology to be used for the required disclosure of fair value of financial instruments measured at amortized cost on the balance sheet and clarifies that an entity should evaluate the need for a valuation allowance on deferred tax assets related to available-for-sale securities in combination with the entity’s other deferred tax assets, among other changes. The Company’s adoption of this standard in the first quarter of fiscal year 2019 did not have a material impact on its Condensed Consolidated Financial Statements.

In August 2016, the FASB released ASU 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.” The amendment provides and clarifies guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice. The Company adopted this standard update in the first quarter of fiscal year 2019 using a retrospective transition method. The Company’s adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In October 2016, the FASB released ASU 2016-16, “Income Tax – Intra-Entity Transfers of Assets Other than Inventory.” This standard update improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The Company’s adoption of this standard resulted in a $0.4 million decrease to retained earnings and a corresponding $0.4 million increase to other assets on its Condensed Consolidated Financial Statements.

In November 2016, the FASB released ASU 2016-18, “Statement of Cash Flows – Restricted Cash.” This standard update requires that restricted cash and restricted cash equivalents be included in cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2019, using a retrospective transition method to each period presented. The adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In February 2018, the FASB released ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S Tax Reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The adoption of this standard resulted in a $2.2 million increase to retained earnings, with a corresponding $2.2 million decrease to other comprehensive income.

In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to eliminate, integrate, update or modify certain of its disclosure requirements. The amendments are part of the SEC’s efforts to improve disclosure effectiveness and were focused on eliminating disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. The Company adopted these amendments in the first quarter of fiscal Year 2019 and as a result the Company has included a Condensed Consolidated Statement of Stockholders’ Equity to this quarterly report on Form 10-Q. The Company expects that the Company’s 2019 annual report on Form 10-K will omit a number of disclosures previously required in Part II. Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, as well as other minor changes.

Updates Not Yet Effective

In January 2016, the FASB released ASU 2016-02, “Leases.” The FASB issued a subsequent amendment to the initial guidance in January 2018 within ASU 2018-01. The core principle of the standard requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The amendment offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company is required to adopt these standards starting in the first quarter of fiscal year 2020. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides companies an optional adoption method to ASU 2016-02 whereby a company does not have to adjust comparative period financial statements for the new standard. The Company currently believes the most significant impact upon adoption will be the recognition of right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets for those leases currently classified as operating leases. As part of the Company’s assessment and implementation plan, the Company is evaluating and implementing changes to its systems, procedures, and controls.

In June 2016, the FASB released ASU 2016-13, “Financial Instruments – Credit Losses.” The amendment revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including but not limited to, available for sale debt securities and accounts receivable. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021 using a modified-retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its Condensed Consolidated Financial Statements.

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808).” The amendment clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account. The amendment also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021. The standard should be applied retrospectively to the period when the Company initially adopted ASC 606. The Company is currently evaluating the impact of adoptions on its Condensed Consolidated Financial Statements.

XML

REVENUE

9 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Revenue Recognition

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

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

Identify the performance obligations in the contract. Performance obligations include sales of systems, spare parts, and services; as well as, installation and training services included in customer contracts, both of which have been deemed immaterial in the context of the contract.

Determine the transaction price. The transaction price for the Company’s contracts with its customers consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage which are based on contractual terms outlined in volume purchase agreements and other factors known at the time. The Company generally invoices customers at shipment and for professional services either as provided or upon meeting certain milestones. Customer invoices are generally due within 30 to 90 days after issuance. The Company’s contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.

Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.

Recognize revenue when or as the Company satisfies a performance obligation. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

Deferred Revenue

Revenue of $126.9 million and $539.6 million included in deferred revenue at June 25, 2018 was recognized during the three and nine months ended March 31, 2019, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of March 31, 2019 and when the Company expects to recognize the amounts as revenue:

	Less than 1 Year		1-3 Years			More than 3 Years		Total
	(In thousands)
Deferred revenue	$	386,170	$	54,774	(1)	$	—	$	440,944

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

Disaggregation of Revenue

The Company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. The Company’s material operating segments qualify for aggregation due to their customer base and similarities in economic characteristics, nature of products and services, and processes for procurement, manufacturing, and distribution.

The Company operates in seven geographic regions: United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan. For geographical reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. The Company serves three primary markets: memory, foundry, logic/integrated device manufacturing.

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(In thousands)
Korea	$	609,892	$	1,038,376	$	1,621,165	$	2,750,710
Taiwan	570,300		352,191		1,275,883		1,083,904
China	415,999		499,061		1,371,612		1,120,319
Japan	403,592		391,673		1,765,449		1,308,122
United States	230,636		226,623		486,436		674,618
Southeast Asia	120,363		227,558		483,703		616,337
Europe	88,266		156,633		288,164		397,060
	$	2,439,048	$	2,892,115	$	7,292,412	$	7,951,070

The following table presents the percentages of system revenues to each of the primary markets we serve:

	Three Months Ended		Nine Months Ended
	March 31, 2019		March 31, 2019
Memory	61	%	72	%
Foundry	27	%	19	%
Logic/integrated device manufacturing	12	%	9	%

XML

EQUITY-BASED COMPENSATION PLANS

9 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY-BASED COMPENSATION PLANS

EQUITY-BASED COMPENSATION PLANS

The Lam Research Corporation 2015 Stock Incentive Plan, as amended (the “2015 Plan”), provides for the grant of non-qualified equity-based awards of the Company’s Common Stock to eligible employees and non-employee directors, including stock options, restricted stock units (“RSUs”), and market-based performance RSUs (“market-based PRSUs”). An option is a right to purchase Common Stock at a set price. An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting. The Company’s market-based PRSUs contain both a market condition and a service condition. The Company’s options, RSU, and market-based PRSU awards typically vest over a period of three years. The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions.

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Equity-based compensation expense	$	53,240	$	41,095	$	142,389	$	125,002
Income tax benefit recognized related to equity-based compensation expense	$	28,337	$	46,366	$	42,204	$	77,842

Stock Options

The fair value of the Company’s stock options granted during the nine months ended March 31, 2019 was estimated using a Black-Scholes options valuation model, which requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award.

The following table summarizes stock option activity: 

	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price
June 24, 2018	482,928		$	86.53
Granted	181,450		164.54
Exercised	(69,948	)	73.18
Expired or forfeited	(59,068	)	126.05
March 31, 2019	535,362		$	110.35

Restricted Stock

During the nine months ended March 31, 2019, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the grant date, discounted for dividends. The fair value of the Company’s market-based PRSUs was calculated using a Monte Carlo simulation model at the date of the grant. Market-based PRSUs generally vest three years from the grant date if certain performance criteria are achieved and require continued employment. Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s Common Stock price performance compared to the market price performance of the Philadelphia Semiconductor Sector Index (“SOX”), ranging from 0% to 150% of target. The stock price performance or market price performance is measured using the closing price for the 50-trading days prior to the dates the performance period begins and ends. The target number of shares represented by the market-based PRSUs is increased by 2% of target for each 1% that Common Stock price performance exceeds the market price performance of the SOX index. The result of the vesting formula is rounded down to the nearest whole number.

The following table summarizes restricted stock activity:

	Service-based RSUs Outstanding				Market-based PRSUs Outstanding
	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
June 24, 2018	2,193,088		$	134.34	693,726		$	104.59
Granted	873,769		161.34		163,529		165.78
Vested	(1,101,015	)	114.64		(301,622	)	70.58
Expired or Forfeited	(126,148	)	138.44		(117,851	)	104.52
March 31, 2019	1,839,694		$	158.65	437,782		$	144.35

XML

OTHER INCOME (EXPENSE), NET

9 Months Ended

Mar. 31, 2019

Other Income and Expenses [Abstract]

OTHER INCOME (EXPENSE), NET

OTHER INCOME (EXPENSE), NET

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Interest income	$	26,966		$	21,761		$	63,709		$	62,548
Interest expense	(30,263		)	(25,734		)	(71,835		)	(72,956		)
Gains (losses) on deferred compensation plan-related assets, net	21,395			(1,995		)	4,235			7,532
Loss on impairment of investments	—			(42,456		)	—			(42,456		)
Foreign exchange gains (losses), net	720			(1,065		)	3,352			(2,869		)
Other, net	1,714			(6,321		)	(9,955		)	(16,263		)
	$	20,532		$	(55,810	)	$	(10,494	)	$	(64,464	)

XML

INCOME TAX EXPENSE

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAX EXPENSE

INCOME TAX EXPENSE

On December 22, 2017, the “Tax Cuts & Jobs Act” (hereafter referred to as “U.S. tax reform”) was signed into law and was effective for the Company starting in the quarter ended December 24, 2017. U.S. tax reform reduced the U.S. federal statutory tax rate from 35% to 21%, mandated payment of a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. The impact on income taxes due to change in legislation is required under the authoritative guidance of Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted. In conjunction, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which allowed for the recording of provisional amounts related to U.S. tax reform and subsequent adjustments related to U.S. tax reform during an up to one-year measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded what it believed to be reasonable estimates during the SAB 118 measurement period. During the December 2018 quarter, the Company finalized the accounting of the income tax effects of U.S. tax reform. Although the SAB 118 measurement period has ended, there may be some aspects of U.S. tax reform that remain subject to future regulations and/or notices which may further clarify certain provisions of U.S. tax reform. The Company may need to adjust its previously recorded amounts to reflect the recognition and measurement of its tax accounting positions in accordance with ASC 740; such adjustments could be material.

The Company recorded an income tax expense of $38.7 million and $187.5 million for the three and nine months ended March 31, 2019, which yielded an effective tax rate of approximately 6.6% and 10.2%, respectively.

The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate for the three and nine months ended March 31, 2019 is primarily due to the impact of U.S. tax reform, outlined below, and income in lower tax jurisdictions.

The computation of the one-time transition tax on accumulated unrepatriated foreign earnings was recorded on a provisional basis in the fiscal year ended June 24, 2018, as permitted under SAB 118. The Company recorded a subsequent provisional adjustment of $36.5 million, as a result of incorporating new information into the estimate, in the Condensed Consolidated Financial Statements in the three months ended September 23, 2018. The Company finalized the computation of the transition tax liability during the December 2018 quarter. The final adjustment resulted in a tax benefit of $51.2 million, which was recorded in the Company’s Condensed Consolidated Financial Statements in the three months ended December 23, 2018. The final balance of total transition tax is $868.4 million. The one-time transition tax is based on the Company’s total post-1986 earnings and profits (“E&P”) that was previously deferred from U.S. income taxes. The Company had previously accrued deferred taxes on a portion of this E&P. The Company has completed the calculation of total post-1986 E&P and related income tax pools for its foreign subsidiaries. The Company elected to pay the one-time transition tax over a period of eight years.

Beginning in fiscal year 2019, the Company is subject to the impact of the “Global Intangible Low-Taxed Income” (“GILTI”) provision of U.S. tax reform. The GILTI provision imposes taxes on foreign earnings in excess of a deemed return on tangible assets. The Company has calculated the impact of the GILTI provision on current year earnings and has included the impact in the effective tax rate. In addition, the Company evaluated whether deferred taxes should be recorded in relation to the GILTI provision or if the tax should be recorded in the period in which it occurs. Based on current interpretation, the Company could choose either method as an accounting policy election. The Company made an accounting policy election in the September 2018 quarter to record deferred taxes in relation to the GILTI provision, and recorded a provisional tax benefit of $48.0 million

in the Condensed Consolidated Financial Statements in the three months ended September 23, 2018, under SAB 118. The Company finalized the computation of the accounting policy election during the December 2018 quarter. The final adjustment resulted in a tax expense of $0.4 million, which was recorded in the Company’s Condensed Consolidated Financial Statements in the three months ended December 23, 2018. The final tax benefit of the election is $47.6 million.

The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its unrecognized tax benefits as a result of tax examinations or lapses of statute of limitations. The change in unrecognized tax benefits may range up to $14.0 million.

XML

NET INCOME PER SHARE

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

NET INCOME PER SHARE

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the treasury stock method, for dilutive stock options, restricted stock units, convertible notes, and warrants. Dilutive shares outstanding include the effect of the convertible notes. Refer to Note 12 - Long-term Debt and Other Borrowings for additional information regarding the Company’s convertible notes. The following table reconciles the numerators and denominators of the basic and diluted computations for net income per share. 

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands, except per share data)
Numerator:
Net income	$	547,390	$	778,800	$	1,649,605	$	1,359,535
Denominator:
Basic average shares outstanding	151,201		162,378		153,891		161,885
Effect of potential dilutive securities:
Employee stock plans	1,413		2,367		1,461		2,546
Convertible notes	5,235		10,279		5,663		13,618
Warrants	—		4,755		668		4,516
Diluted average shares outstanding	157,849		179,779		161,683		182,565
Net income per share - basic	$	3.62	$	4.80	$	10.72	$	8.40
Net income per share - diluted	$	3.47	$	4.33	$	10.20	$	7.45

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

	Three Months Ended		Nine Months Ended
	March 31, 2019	March 25, 2018	March 31, 2019	March 25, 2018
	(in thousands)
Options and RSUs	640	19	717	6

Diluted shares outstanding do not include any effect resulting from note hedges associated with the Company’s 2018 Notes as their impact would have been anti-dilutive.

XML

FINANCIAL INSTRUMENTS

9 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

The Company maintains an investment portfolio of various holdings, types, and maturities. The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as other income (expense) in the Condensed Consolidated Statements of Operations. All of the Company’s other investments are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income (loss), net of tax.

Fair Value

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities with sufficient volume and frequency of transactions.

Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data, for substantially the full term of the assets or liabilities.

Level 3: Valuations based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities and based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data.

The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and capital leases, and foreign currency related derivative instruments. The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of capital lease obligations approximate their carrying value as the substantial majority of these obligations have interest rates that adjust to market rates on a periodic basis. Refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes and convertible senior notes.

The following table sets forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of March 31, 2019, and June 24, 2018:

	March 31, 2019
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	577,420	$	—	$	—		$	577,420	$	571,673	$	—	$	5,747	$	—
Time deposit	1,872,626		—		—			1,872,626		1,622,599		—		250,027		—
Level 1:
Money market funds	2,024,322		—		—			2,024,322		2,024,322		—		—		—
U.S. Treasury and agencies	668,405		74		(69		)	668,410		380,623		287,787		—		—
Mutual funds	77,127		1,025		(183		)	77,969		—		—		—		77,969
Level 1 Total	2,769,854		1,099		(252		)	2,770,701		2,404,945		287,787		—		77,969
Level 2:
Government-sponsored enterprises	11,029		—		(97		)	10,932		—		10,932		—		—
Foreign government bonds	10,111		4		—			10,115		—		10,115		—		—
Corporate notes and bonds	1,176,117		523		(426		)	1,176,214		324,951		851,263		—		—
Mortgage backed securities — residential	17,397		2		—			17,399		7,443		9,956		—		—
Mortgage backed securities — commercial	39,236		40		(14		)	39,262		—		39,262		—		—
Level 2 Total	1,253,890		569		(537		)	1,253,922		332,394		921,528		—		—
Total	$	6,473,790	$	1,668	$	(789	)	$	6,474,669	$	4,931,611	$	1,209,315	$	255,774	$	77,969

	June 24, 2018
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	708,364	$	—	$	—		$	708,364	$	702,090	$	—	$	6,274	$	—
Time deposit	999,666		—		—			999,666		749,639		—		250,027		—
Level 1:
Money market funds	2,341,807		—		—			2,341,807		2,341,807		—		—		—
U.S. Treasury and agencies	356,679		—		(170		)	356,509		333,721		22,788		—		—
Mutual funds	68,568		516		(142		)	68,942		—		—		—		68,942
Level 1 Total	2,767,054		516		(312		)	2,767,258		2,675,528		22,788		—		68,942
Level 2:
Municipal notes and bonds	152,378		37		(279		)	152,136		—		152,136		—		—
Government-sponsored enterprises	110,963		—		(201		)	110,762		99,934		10,828		—		—
Foreign government bonds	19,986		—		(1		)	19,985		19,985		—		—		—
Corporate notes and bonds	516,955		95		(1,184		)	515,866		265,081		250,785		—		—
Mortgage backed securities — residential	804		—		(3		)	801		—		801		—		—
Level 2 Total	801,086		132		(1,668		)	799,550		385,000		414,550		—		—
Total	$	5,276,170	$	648	$	(1,980	)	$	5,274,838	$	4,512,257	$	437,338	$	256,301	$	68,942

The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company also considers whether changes in the credit ratings of the issuer could impact the assessment of fair value. Additionally, the Company also considers factors such as the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

The Company did not recognize any losses on investments due to other-than-temporary impairments during the three and nine months ended March 31, 2019. During the three and nine months ended March 25, 2018, the Company recorded a $42.5 million other-than-temporary impairment charge on a portion of its available-for-sale investments as a result of a decision to sell selected investments held in foreign jurisdictions in conjunction with our cash repatriation strategy following the U.S. tax reform legislation. Gross realized gains/(losses) from sales of investments were insignificant in the three and nine months ended March 31, 2019 and March 25, 2018, other than the March 2018 impairment discussed above.

The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions:

	March 31, 2019
	Unrealized Losses Less than 12 Months					Unrealized Losses 12 Months or Greater					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(in thousands)
U.S. Treasury and agencies	$	179,766	$	(2	)	$	8,121	$	(67	)	$	187,887	$	(69	)
Mutual funds	—		—			6,563		(183		)	6,563		(183		)
Government-sponsored enterprises	—		—			10,895		(97		)	10,895		(97		)
Corporate notes and bonds	365,003		(161		)	46,939		(265		)	411,942		(426		)
Mortgage backed securities — commercial	15,406		(14		)	—		—			15,406		(14		)
	$	560,175	$	(177	)	$	72,518	$	(612	)	$	632,693	$	(789	)

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of March 31, 2019:

	Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	5,391,453	$	5,391,323
Due after one year through five years	380,219		380,361
Due in more than five years	47,571		47,596
	$	5,819,243	$	5,819,280

The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Condensed Consolidated Balance Sheets.

Derivative Instruments and Hedging

The Company carries derivative financial instruments (“derivatives”) on its Condensed Consolidated Balance Sheets at their fair values. The Company enters into foreign currency forward contracts and foreign currency options with financial institutions with the primary objective of reducing volatility of earnings and cash flows related to foreign currency exchange rate fluctuations. In addition, the Company enters into interest rate swap arrangements to manage interest rate risk. The counterparties to these derivatives are large global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material.

Cash Flow Hedges

The Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations on non-U.S. dollar transactions or cash flows, primarily from Japanese yen-denominated revenues and euro- denominated and Korean won-denominated expenses. The Company’s policy is to mitigate the foreign exchange risk arising from the fluctuations in the value of these non-U.S. dollar denominated transactions or cash flows through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that generally expire within 12 months and no later than 24 months. These hedge contracts are designated as cash flow hedges and are carried on the Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in revenue/expense in the same period the hedged items are recognized.

In addition, the Company has entered into interest rate swap agreements to hedge against the variability of cash flows due to changes in certain benchmark interest rates on fixed rate debt. These instruments are designated as cash flow hedges at inception and are settled in conjunction with the issuance of debt. The effective portion of the contracts’ gains or losses is included in accumulated other comprehensive income (loss) and is amortized into income as the hedged item impacts earnings.

At inception and at each quarter-end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis. Changes in the fair value of foreign exchange contracts due to changes in time value are included in the assessment of effectiveness. To qualify for hedge accounting, the hedge relationship must meet criteria relating to both the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured. There were no material gains or losses during the three or nine months ended March 31, 2019 and March 25, 2018 associated with forecasted transactions that failed to occur.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. When derivative instruments are designated and qualify as effective cash flow hedges, the Company recognizes effective changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that the underlying hedged forecasted transactions will occur, the Company may not be able to account for its derivative instruments as cash flow hedges. If this were to occur, future changes in the fair values of the Company’s derivative instruments would be recognized in earnings. Additionally, related amounts previously recorded in other comprehensive income would be reclassified to income immediately. As of March 31, 2019, the Company had a net loss of $0.4 million accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges which it expects to reclassify from other comprehensive income into earnings over the next 12 months. Additionally, as of March 31, 2019, the

Company had a net loss of $2.1 million accumulated in other comprehensive income, net of tax, related to interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 6.0 years.

Fair Value Hedges

The Company has interest rate contracts whereby the Company receives fixed rates and pays variable rates based on certain benchmark interest rates, resulting in a net increase or decrease to interest expense, a component of other expense, net in our Condensed Consolidated Statement of Operations. These interest rate contracts are designated as fair value hedges and hedge against changes in the fair value of our debt portfolio. The Company concluded that these interest rate contracts meet the criteria necessary to qualify for the short-cut method of hedge accounting, and as such an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swap. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized.

Balance Sheet Hedges

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. These forward contracts are not designated for hedge accounting treatment. Therefore, the change in fair value of these derivatives is recorded as a component of other income (expense) and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in other income (expense).

As of March 31, 2019, the Company had the following outstanding foreign currency contracts that were entered into under its cash flow and balance sheet hedge programs:

	Notional Value
	Derivatives Designated as Hedging Instruments:				Derivatives Not Designated as Hedging Instruments:
	(in thousands)
Foreign currency forward contracts
	Buy Contracts		Sell Contracts		Buy Contracts		Sell Contracts
Japanese yen	$	—	$	171,192	$	35,801	$	129,820
Euro	71,946		—		50,752		—
Korean won	23,234		—		23,817		—
British pound sterling	—		—		39,687		—
Taiwan dollar	—		—		25,953		—
Swiss franc	—		—		22,180		—
Chinese renminbi	—		—		13,213		—
Singapore dollar	—		—		5,904		—
Indian rupee	—		—		8,521		—
	$	95,180	$	171,192	$	225,828	$	129,820
Foreign currency option contracts
	Buy Put		Sell Call		Buy Put		Sell Call
Japanese yen (1)	$	—	$	—	$	8,849	$	9,403

⁽¹⁾ The local currency notional amounts of these foreign currency option contracts are equal to each other.

The fair value of derivative instruments in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2019, and June 24, 2018 were as follows:

	March 31, 2019						June 24, 2018
	Fair Value of Derivative Instruments (Level 2)						Fair Value of Derivative Instruments (Level 2)
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	$	1,730	Accrued expenses and other current liabilities	$	2,897	Prepaid expense and other assets	$	7,581	Accrued expenses and other current liabilities	$	8,866
Interest rate contracts, short-term		—		Accrued expenses and other current liabilities	3,551			—		Accrued expenses and other current liabilities	7,468
Interest rate contracts, long-term		—		Other long-term liabilities	11,366			—		Other long-term liabilities	23,720
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	752		Accrued expenses and other current liabilities	354		Prepaid expense and other assets	111		Accrued expenses and other current liabilities	32
Total Derivatives		$	2,482		$	18,168		$	7,692		$	40,086

Under the master netting agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. However, the Company has elected to present the derivative assets and derivative liabilities on a gross basis on its balance sheet. As of March 31, 2019, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be an offset to assets and liabilities by $1.3 million, resulting in a net derivative asset of $1.2 million and net derivative liability of $16.9 million. As of June 24, 2018, the potential effect of rights of offset associated with the above foreign exchange contracts would be an offset to both assets and liabilities by $5.6 million, resulting in a net derivative asset of $2.1 million and a net derivative liability of $34.4 million. The Company is not required to pledge, nor is the Company entitled to receive, cash collateral for these derivative transactions.

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

		Three Months Ended March 31, 2019						Nine Months Ended March 31, 2019
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(7,203	)	$	206		$	9,467		$	8,693
Foreign Exchange Contracts	Cost of goods sold	(1,395		)	(2,097		)	(3,484		)	(4,505		)
Foreign Exchange Contracts	Selling, general, and administrative	(475		)	(600		)	(1,353		)	(1,778		)
Interest Rate Contracts	Other expense, net	—			(34		)	—			(100		)
		$	(9,073	)	$	(2,525	)	$	4,630		$	2,310

		Three Months Ended March 25, 2018						Nine Months Ended March 25, 2018
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income			(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(44,399	)	$	(7,375	)	$	(36,214	)	$	(7,410	)
Foreign Exchange Contracts	Cost of goods sold	2,735			1,084			4,928			3,556
Foreign Exchange Contracts	Selling, general, and administrative	690			501			1,840			2,227
Interest Rate Contracts	Other expense, net	—			(32		)	—			(94		)
		$	(40,974	)	$	(5,822	)	$	(29,446	)	$	(1,721	)

The effect of derivative instruments not designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations was as follows:

		Three Months Ended					Nine Months Ended
		March 31, 2019			March 25, 2018		March 31, 2019		March 25, 2018
Derivatives Not Designated as Hedging Instruments:	Location  of Gain (Loss) Recognized  in Income	Loss Recognized in Income			Gain Recognized in Income		Gain Recognized in Income		Gain Recognized in Income
		(in thousands)
Foreign Exchange Contracts	Other income	$	(6,747	)	$	1,198	$	4,142	$	6,482

The following table presents the effect of the fair value cash flow hedge accounting on the Statement of Financial Performance as well as presents the location and amount of gain/(loss) recognized in Income on fair value and cash flow hedging relationships:

	Three Months Ended											Nine Months Ended
	March 31, 2019											March 31, 2019
	Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)			Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)
	(in thousands)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded:
	$	2,439,048	$1,364,711			$	190,306		$	20,532		$	7,292,412	$	4,014,844		$	534,179		$	(10,494	)
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20:
Interest contracts:
Hedged items	$	—	$	—		$	—		$	(10,395	)	$	—	$	—		$	—		$	(16,272	)
Derivatives designated as hedging instruments	$	—	$	—		$	—		$	10,395		$	—	$	—		$	—		$	16,272
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	206	$	(2,097	)	$	(600	)	$	—		$	8,693	$	(4,505	)	$	(1,778	)	$	—
Interest rate contracts:
Amount of loss reclassified from accumulated other comprehensive income into income	$	—	$	—		$	—		$	(34	)	$	—	$	—		$	—		$	(100	)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit at large global financial institutions. Such deposits may be in excess of insured limits. Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances.

The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services. To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer.

The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements. These counterparties are large global financial institutions and, to date, no such counterparty has failed to meet its financial obligations to the Company.

Credit risk evaluations, including trade references, bank references, and Dun & Bradstreet ratings, are performed on all new customers and the Company monitors its customers’ financial condition and payment performance. In general, the Company does not require collateral on sales.

XML

INVENTORIES

9 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. System shipments to customers in Japan, for which title does not transfer until customer acceptance, are classified as finished goods inventory and carried at cost until title transfers. Inventories consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Raw materials	$	1,034,636	$	916,438
Work-in-process	206,245		222,921
Finished goods	381,361		736,803
	$	1,622,242	$	1,876,162

XML

GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The balance of goodwill is approximately $1.5 billion as of March 31, 2019 and June 24, 2018, respectively. As of March 31, 2019, $61.1 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Intangible Assets

The following table provides the Company’s intangible assets:

	March 31, 2019							June 24, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	630,220	$	(470,760	)	$	159,460	$	630,220	$	(433,309	)	$	196,911
Existing technology	669,521		(644,423		)	25,098		669,520		(576,844		)	92,676
Patents and other intangible assets	114,335		(75,871		)	38,464		99,767		(71,518		)	28,249
Total intangible assets	$	1,414,076	$	(1,191,054	)	$	223,022	$	1,399,507	$	(1,081,671	)	$	317,836

The Company recognized $36.6 million and $40.8 million in intangible asset amortization expense during the three months ended March 31, 2019 and March 25, 2018. During the nine months ended March 31, 2019 and March 25, 2018, the Company recognized $109.4 million and $120.9 million, respectively, in intangible asset amortization expense.

The estimated future amortization expense of intangible assets as of March 31, 2019, was as follows:

Fiscal Year	Amount
	(in thousands)
2019 (remaining 3 months)	$	17,910
2020	64,302
2021	61,612
2022	57,352
2023	12,805
Thereafter	9,041
	$	223,022

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

9 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Accrued compensation	$	408,088	$	506,471
Warranty reserves	159,321		192,480
Income and other taxes payable	89,259		185,384
Dividend payable	164,874		174,372
Other	225,396		250,502
	$	1,046,938	$	1,309,209

XML

LONG-TERM DEBT AND OTHER BORROWINGS

9 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

LONG-TERM DEBT AND OTHER BORROWINGS

LONG-TERM DEBT AND OTHER BORROWINGS

As of March 31, 2019, and June 24, 2018, the Company’s outstanding debt consisted of the following:

	March 31, 2019							June 24, 2018
	Amount (in thousands)				Effective Interest Rate			Amount (in thousands)				Effective Interest Rate
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes")	$	500,000			2.88	%		$	500,000			2.88	%
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes")	800,000				2.95	%		800,000				2.95	%
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes")	500,000				3.87	%		500,000				3.87	%
Fixed-rate 3.75% Senior Notes Due March 15, 2026 ("2026 Notes")	750,000				3.86	%		—				—
Fixed-rate 4.00% Senior Notes Due March 15, 2029 ("2029 Notes")	1,000,000				4.09	%		—				—
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes")	212,352			(1)	4.28	%		326,953			(1)	4.28	%
Fixed-rate 4.875% Senior Notes Due March 15, 2049 ("2049 Notes")	750,000				4.93	%		—				—
Commercial paper	300,000				3.00	%	(2)	360,000				2.33	%	(2)
Total debt outstanding, at par	4,812,352							2,486,953
Unamortized discount	(74,987		)					(85,196		)
Fair value adjustment - interest rate contracts	(14,917		)					(31,189		)
Unamortized bond issuance costs	(5,993		)					(1,820		)
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748
Reported as:
Current portion of long-term debt, and commercial paper	$	961,154						$	608,532
Long-term debt	3,755,301							1,760,216
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748

____________________________

⁽¹⁾ As of the report date, these notes were convertible at the option of the bondholder. This is a result of the following condition being met: the market value of the Company’s Common Stock was greater than 130% of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end. As a result, the 2041 Notes were classified in current liabilities and a portion of the equity component, associated with the convertible notes representing the unamortized discount, was classified in temporary equity on the Company’s Consolidated Balance Sheets. Upon closure of the conversion period, the notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity.

⁽²⁾ Represents the weighted average effective interest rate for all outstanding balances as of the report date.

Convertible Senior Notes

In June 2012, with the acquisition of Novellus Systems, Inc., the Company assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 15, 2041 (the “2041 Notes,”). The Company pays cash interest at an annual rate of 2.625%, on a semi-annual basis on May 15 and November 15 of each year. The 2041 Notes also have a contingent interest payment provision that may require the Company to pay additional interest, up to 0.60% per year, based on certain thresholds, beginning with the semi-annual interest payment on May 15, 2021, and upon the occurrence of certain events, as outlined in the indenture governing the 2041 Notes.

The Company separately accounts for the liability and equity components of the 2041 Notes. The initial debt components of the 2041 Notes were valued based on the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without the conversion feature, which equals the effective interest rate on the liability component disclosed in the table below, respectively. The equity component was initially valued equal to the principle value of the notes, less the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without a conversion feature, which equated to the initial debt discount.

The 2041 Notes may be redeemed on or after May 21, 2021 at a price equal to outstanding principal plus accrued and unpaid interest if the last reported sales price of common shares has been equal to or more than 150% of the then applicable conversion price for at least 20 trading days during the 30 consecutive trading days prior to the redemption notice date.

Under certain circumstances, the 2041 Notes may be converted into shares of the Company’s Common Stock. The number of shares each debenture is convertible into is based on conversion rates, disclosed in the table below. The principal value of the 2041 Note conversions in the three and nine months ended March 31, 2019, was approximately $29.2 million and $114.6 million, respectively.

Selected additional information regarding the 2041 Notes outstanding as of March 31, 2019, and June 24, 2018, is as follows:

	March 31, 2019		June 24, 2018
	2041 Notes		2041 Notes
	(in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax	$	160,261	$	159,120
Carrying amount of temporary equity component, net of tax	$	49,783	$	78,192
Remaining amortization period (years)	22.1		22.9
Fair Value of Notes (Level 2)	$	1,166,900
Conversion rate (shares of common stock per $1,000 principal amount of notes)	30.7418
Conversion price (per share of common stock)	$	32.53
If-converted value in excess of par value	$	956,238
Estimated share dilution using average quarterly stock price $164.19 per share	5,235

Convertible Warrants

During the fiscal year 2019, the Company had warrants outstanding in connection with its 2018 convertible notes that matured in May 2018. The 7.6 million warrants were fully exercised during the first half of fiscal year 2019 resulting in the issuance of approximately 4.1 million shares of the Company's Common Stock.

Senior Notes

On March 4, 2019, the company completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”). The Company will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year beginning September 15, 2019.

On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 Notes”). The Company pays interest at an annual rate of 2.75% and 3.80%, on the 2020 Notes and 2025 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. During the year ended June 26, 2016, the Company entered into a series of interest rate contracts hedging the fair value of a portion of the 2025 Notes par value, whereby the Company receives a fixed rate and pays a variable rate based on a certain benchmark interest rate. Refer to Note 8 - Financial Instruments for additional information regarding these interest rate contracts.

On June 7, 2016, the Company completed a public offering of $800 million aggregate principal amount of Senior Notes due June 15, 2021 (the “2021 Notes”). The Company pays interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.

The Company may redeem the 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively the “Senior Notes”) at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024 for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.

Selected additional information regarding the Senior Notes outstanding as of March 31, 2019, is as follows: 

	Remaining Amortization period	Fair Value of Notes (Level 2)
	(years)	(in thousands)
2020 Notes	1.0	$	499,720
2021 Notes	2.2	$	798,880
2025 Notes	6.0	$	515,335
2026 Notes	7.0	$	764,295
2029 Notes	10.0	$	1,021,010
2049 Notes	30.0	$	791,888

Commercial Paper Program

On November 13, 2017, the Company established a commercial paper program (“the CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $1.25 billion. The net proceeds from the commercial paper program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time under the Company’s stock repurchase program. Amounts available under the CP Program may be re-borrowed. The CP Program is backstopped by the Company’s Revolving Credit Arrangement. As of March 31, 2019, borrowings under the CP Program totaled $300.0 million, with a weighted-average interest rate of 3.00% and maturities of 90 days or less.

Revolving Credit Facility

On March 12, 2014, the Company established an unsecured Credit Agreement; this agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the 2nd Amendment”), and February 25, 2019 (the “3rd Amendment”). Under the Amended and Restated Credit Agreement (as amended by the 2nd and 3rd Amendment), the Company has a revolving credit facility of $1.25 billion with a syndicate of lenders with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600 million, for a potential total commitment of $1.85 billion. The facility matures on October 13, 2022.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) one-month LIBOR plus 1.0%, plus a spread of 0.0% to 0.5%, or (2) LIBOR multiplied by the statutory rate, plus a spread of 0.9% to 1.50% in each case as the applicable spread is determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating. The Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants and events of default. As of March 31, 2019, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

Interest Cost

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the three and nine months ended March 31, 2019 and March 25, 2018.

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Contractual interest coupon	$	24,837	$	20,663	$	58,814	$	57,246
Amortization of interest discount	956		2,860		2,743		10,374
Amortization of issuance costs	355		561		1,013		1,590
Effect of interest rate contracts, net	1,558		51		3,088		(552		)
Total interest cost recognized	$	27,706	$	24,135	$	65,658	$	68,658

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Operating Leases and Related Guarantees

The Company leases the majority of its administrative, research and development (“R&D”) and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable operating leases. Certain of the Company’s facility leases for buildings located at its Fremont, California headquarters, Tualatin, Oregon campus, and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities. Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation.

The Company has operating leases regarding certain improved properties in Fremont and Livermore, California (the “Operating Leases”). The Company was required to maintain cash collateral in an aggregate of approximately $250.0 million in separate interest-bearing accounts as security for the Company’s obligations. These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2019.

During the term of the Operating Leases and when the terms of the Operating Leases expire, the property subject to those Operating Leases may be remarketed. The Company has guaranteed to the lessor that each property will have a certain minimum residual value. The aggregate guarantee made by the Company under the Operating Leases is generally no more than approximately $220.4 million; however, under certain default circumstances, the guarantee with regard to an Operating Lease may be 100% of the lessor’s aggregate investment in the applicable property, which in no case will exceed $250.0 million, in the aggregate.

Other Guarantees

The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements. The Company has entered into certain insurance contracts that are intended to limit its exposure to such indemnifications. As of March 31, 2019, the Company had not recorded any liability in connection with these indemnifications, as it does not believe that it is probable that any amounts will be paid under these guarantees.

Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third party intellectual property rights by the Company’s products or services. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services subject to its indemnification obligations. The Company does not believe that it is probable that any material amounts will be paid under these guarantees.

The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business. As of March 31, 2019, the maximum potential amount of future payments that it could be required to make under these arrangements and letters of credit was $27.2 million. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid.

In addition, the Company has entered into indemnification agreements with its officers and directors, consistent with its Bylaws and Articles of Incorporation; and under California law, the Company is required to provide indemnification to all its employees for actions within the scope of their employment. Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be

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

Warranties

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

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Balance at beginning of period	$	166,906		$	179,680		$	192,480		$	161,981
Warranties issued during the period	62,853			70,176			190,250			176,664
Settlements made during the period	(74,432		)	(50,118		)	(237,310		)	(138,518		)
Changes in liability for pre-existing warranties	3,994			340			13,901			(49		)
Balance at end of period	$	159,321		$	200,078		$	159,321		$	200,078

Legal proceedings

While the Company is not currently a party to any legal proceedings that it believes are material, the Company is either a defendant or plaintiff in various actions that have arisen from time to time in the normal course of business, including intellectual property claims. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. Based on current information, the Company does not believe that a material loss from known matters is probable and therefore has not recorded an accrual of any material amount for litigation or other contingencies related to existing legal proceedings.

XML

STOCK REPURCHASE PROGRAM

9 Months Ended

Mar. 31, 2019

Equity [Abstract]

STOCK REPURCHASE PROGRAM

STOCK REPURCHASE PROGRAM

In November 2018, the Board of Directors authorized the Company to repurchase up to an additional $5.0 billion of Common Stock. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. Funding for this repurchase program may be through a combination of cash on hand, cash generation, and borrowings.

Repurchases under the repurchase program were as follows during the periods indicated:

Period	Total Number of Shares Repurchased		Total Cost of Repurchase		Average Price Paid Per Share (1)		Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 24, 2018							$	1,733,638
Quarter ended September 23, 2018	7,807		$	1,733,530	$	183.55	$	108
Board authorization, $5.0 billion, November 2018	—		$	—	$	—	$	5,000,000
Quarter ended December 23, 2018	1,683	(2)	$	—	$	—	$	5,000,000
Quarter ended March 31, 2019	5,702	(2)	$	861,506	$	168.78	$	4,138,494

(1) Average price paid per share excludes effect of accelerated share repurchases; see additional disclosure below regarding the Company’s accelerated share repurchase activity during the fiscal year.

(2) Includes shares received at final settlement of accelerated share repurchase agreements; see additional disclosures below regarding the Company’s accelerated share repurchase activity during the fiscal year.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and nine months ended March 31, 2019, the Company acquired 423 thousand shares at a total cost of $74.8 million and 447 thousand shares at a total cost of $78.5 million, respectively, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation

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

Accelerated Share Repurchase Agreements

On January 31, 2019, the Company entered into two separate accelerated share repurchase agreements (collectively, the "January 2019 ASR") with two financial institutions to repurchase a total of $760 million of Common Stock. The Company took an initial delivery of approximately 3.3 million shares, which represented 75% of the prepayment amount divided by the Company’s closing stock price on January 30, 2019. The total number of shares received under the January 2019 ASR will be based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the January 2019 ASR is anticipated to occur no later than June 5, 2019.

On August 15, 2018, the Company entered into four separate accelerated share repurchase agreements (collectively, the "August 2018 ASR") with two financial institutions to repurchase a total of $1.4 billion of Common Stock. The Company took an initial delivery of approximately 5.8 million shares, which represented 75% of the prepayment amount divided by the Company’s closing stock price on August 14, 2018. The total number of shares received under the August 2018 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of two of the agreements occurred during the quarter ended December 23, 2018. Approximately 1.7 million shares were received at final settlement, which resulted in a weighted-average share price of approximately $148.72 for the transaction period. The remaining two agreements settled during the quarter ended March 31, 2019, resulting in the receipt of approximately 1.8 million additional shares, which yielded a weighted-average share price of approximately $146.00 for the transaction period.

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Mar. 31, 2019

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive income (loss), net of tax at March 31, 2019, as well as the activity for the nine months ending March 31, 2019, were as follows:

	Accumulated Foreign Currency Translation Adjustment			Accumulated Unrealized  Gain or Loss on Cash flow hedges				Accumulated Unrealized  Holding Gain or Loss on Available-For-Sale Investments				Accumulated Unrealized  Components of Defined  Benefit Plans			Total
	(in thousands)
Balance at June 24, 2018	$	(32,722	)	$	(4,042	)		$	(1,190	)		$	(19,495	)	$	(57,449	)
Other comprehensive (loss) income before reclassifications	(8,081		)	4,437				1,441				676			(1,527		)
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income	1,236			(2,492		)	(1)	(201		)	(2)	—			(1,457		)
Effects of ASU 2018-02 adoption	—			(399		)		—				(1,828		)	(2,227		)
Net current-period other comprehensive (loss) income	(6,845		)	1,546				1,240				(1,152		)	(5,211		)
Balance at March 31, 2019	$	(39,567	)	$	(2,496	)		$	50			$	(20,647	)	$	(62,660	)

(1) Amount of after tax gain reclassified from AOCI into net income located in revenue: $7,727 gain; cost of goods sold: $3,819 loss; selling, general, and administrative expenses: $1,339 loss; and other income and expense: $77 loss.

(2) Amount of after tax gain reclassified from accumulated other comprehensive income into net income located in other expense, net.

XML

BASIS OF PRESENTATION (Policies)

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Consolidation

The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Fiscal Period

The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2019 and includes 53 weeks.

Recent Accounting Pronouncements

Recently Adopted

In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In conjunction with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 3 - Revenue for a description of the amendments.

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

	June 24, 2018					June 25, 2018
	As reported		Adjustments			As Adjusted
	(In thousands)
Total assets	$	12,479,478	$	12,955		$	12,492,433
Deferred profit	$	720,086	$	(160,695	)	$	559,391
Total liabilities	$	5,899,435	$	(126,400	)	$	5,773,035
Stockholders' equity	$	6,501,851	$	139,355		$	6,641,206

Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:

	Three months ended						Nine Months Ended
	March 31, 2019						March 31, 2019
	As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)		As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
	(In thousands)
Revenue	$	2,439,048	$	2,203,034	$	236,014	$	7,292,412	$	6,691,212	$	601,200
Cost of goods sold	$	1,364,711	$	1,213,852	$	150,859	$	4,014,844	$	3,705,203	$	309,641
							March 31, 2019
							As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
							(In thousands)
Deferred profit							$	378,396	$	809,712	$	(431,316	)
Retained earnings							$	9,547,961	$	9,116,645	$	431,316

Except as disclosed above, the adoption of ASC 606 did not have a significant impact on the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended March 31, 2019.

In January 2016, the FASB released ASU 2016-01, “Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities.” The FASB issued a subsequent amendment to the initial guidance in February 2018 within ASU 2018-03. These amendments change the accounting for and financial statement presentation of equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee. The amendments provide clarity on the measurement methodology to be used for the required disclosure of fair value of financial instruments measured at amortized cost on the balance sheet and clarifies that an entity should evaluate the need for a valuation allowance on deferred tax assets related to available-for-sale securities in combination with the entity’s other deferred tax assets, among other changes. The Company’s adoption of this standard in the first quarter of fiscal year 2019 did not have a material impact on its Condensed Consolidated Financial Statements.

In August 2016, the FASB released ASU 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments.” The amendment provides and clarifies guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice. The Company adopted this standard update in the first quarter of fiscal year 2019 using a retrospective transition method. The Company’s adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In October 2016, the FASB released ASU 2016-16, “Income Tax – Intra-Entity Transfers of Assets Other than Inventory.” This standard update improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The Company’s adoption of this standard resulted in a $0.4 million decrease to retained earnings and a corresponding $0.4 million increase to other assets on its Condensed Consolidated Financial Statements.

In November 2016, the FASB released ASU 2016-18, “Statement of Cash Flows – Restricted Cash.” This standard update requires that restricted cash and restricted cash equivalents be included in cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2019, using a retrospective transition method to each period presented. The adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements.

In February 2018, the FASB released ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S Tax Reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The adoption of this standard resulted in a $2.2 million increase to retained earnings, with a corresponding $2.2 million decrease to other comprehensive income.

In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to eliminate, integrate, update or modify certain of its disclosure requirements. The amendments are part of the SEC’s efforts to improve disclosure effectiveness and were focused on eliminating disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. The Company adopted these amendments in the first quarter of fiscal Year 2019 and as a result the Company has included a Condensed Consolidated Statement of Stockholders’ Equity to this quarterly report on Form 10-Q. The Company expects that the Company’s 2019 annual report on Form 10-K will omit a number of disclosures previously required in Part II. Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, as well as other minor changes.

Updates Not Yet Effective

In January 2016, the FASB released ASU 2016-02, “Leases.” The FASB issued a subsequent amendment to the initial guidance in January 2018 within ASU 2018-01. The core principle of the standard requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The amendment offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The Company is required to adopt these standards starting in the first quarter of fiscal year 2020. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides companies an optional adoption method to ASU 2016-02 whereby a company does not have to adjust comparative period financial statements for the new standard. The Company currently believes the most significant impact upon adoption will be the recognition of right-of-use assets and lease liabilities on the Company's Condensed Consolidated Balance Sheets for those leases currently classified as operating leases. As part of the Company’s assessment and implementation plan, the Company is evaluating and implementing changes to its systems, procedures, and controls.

In June 2016, the FASB released ASU 2016-13, “Financial Instruments – Credit Losses.” The amendment revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including but not limited to, available for sale debt securities and accounts receivable. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021 using a modified-retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its Condensed Consolidated Financial Statements.

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808).” The amendment clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account. The amendment also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021. The standard should be applied retrospectively to the period when the Company initially adopted ASC 606. The Company is currently evaluating the impact of adoptions on its Condensed Consolidated Financial Statements.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. System shipments to customers in Japan, for which title does not transfer until customer acceptance, are classified as finished goods inventory and carried at cost until title transfers.

Warranties

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

XML

RECENT ACCOUNTING PRONOUNCEMENTS (Tables)

9 Months Ended

Mar. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:

	Three months ended						Nine Months Ended
	March 31, 2019						March 31, 2019
	As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)		As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
	(In thousands)
Revenue	$	2,439,048	$	2,203,034	$	236,014	$	7,292,412	$	6,691,212	$	601,200
Cost of goods sold	$	1,364,711	$	1,213,852	$	150,859	$	4,014,844	$	3,705,203	$	309,641
							March 31, 2019
							As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
							(In thousands)
Deferred profit							$	378,396	$	809,712	$	(431,316	)
Retained earnings							$	9,547,961	$	9,116,645	$	431,316

The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

	June 24, 2018					June 25, 2018
	As reported		Adjustments			As Adjusted
	(In thousands)
Total assets	$	12,479,478	$	12,955		$	12,492,433
Deferred profit	$	720,086	$	(160,695	)	$	559,391
Total liabilities	$	5,899,435	$	(126,400	)	$	5,773,035
Stockholders' equity	$	6,501,851	$	139,355		$	6,641,206

XML

REVENUE (Tables)

9 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Summary of Contract Transaction Price not yet Recognized as Revenue

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of March 31, 2019 and when the Company expects to recognize the amounts as revenue:

	Less than 1 Year		1-3 Years			More than 3 Years		Total
	(In thousands)
Deferred revenue	$	386,170	$	54,774	(1)	$	—	$	440,944

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

Disaggregation of Revenue

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(In thousands)
Korea	$	609,892	$	1,038,376	$	1,621,165	$	2,750,710
Taiwan	570,300		352,191		1,275,883		1,083,904
China	415,999		499,061		1,371,612		1,120,319
Japan	403,592		391,673		1,765,449		1,308,122
United States	230,636		226,623		486,436		674,618
Southeast Asia	120,363		227,558		483,703		616,337
Europe	88,266		156,633		288,164		397,060
	$	2,439,048	$	2,892,115	$	7,292,412	$	7,951,070

Schedule of System Revenues of Primary Markets

The following table presents the percentages of system revenues to each of the primary markets we serve:

	Three Months Ended		Nine Months Ended
	March 31, 2019		March 31, 2019
Memory	61	%	72	%
Foundry	27	%	19	%
Logic/integrated device manufacturing	12	%	9	%

XML

EQUITY-BASED COMPENSATION PLANS (Tables)

9 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Recognized Equity Based Compensation Expense and Related Income Tax Benefit

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

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Equity-based compensation expense	$	53,240	$	41,095	$	142,389	$	125,002
Income tax benefit recognized related to equity-based compensation expense	$	28,337	$	46,366	$	42,204	$	77,842

Summary of Stock Plan Transactions

The following table summarizes stock option activity: 

	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price
June 24, 2018	482,928		$	86.53
Granted	181,450		164.54
Exercised	(69,948	)	73.18
Expired or forfeited	(59,068	)	126.05
March 31, 2019	535,362		$	110.35

The following table summarizes restricted stock activity:

	Service-based RSUs Outstanding				Market-based PRSUs Outstanding
	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
June 24, 2018	2,193,088		$	134.34	693,726		$	104.59
Granted	873,769		161.34		163,529		165.78
Vested	(1,101,015	)	114.64		(301,622	)	70.58
Expired or Forfeited	(126,148	)	138.44		(117,851	)	104.52
March 31, 2019	1,839,694		$	158.65	437,782		$	144.35

XML

OTHER INCOME (EXPENSE), NET (Tables)

9 Months Ended

Mar. 31, 2019

Other Income and Expenses [Abstract]

Components of Other Income (Expense), Net

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Interest income	$	26,966		$	21,761		$	63,709		$	62,548
Interest expense	(30,263		)	(25,734		)	(71,835		)	(72,956		)
Gains (losses) on deferred compensation plan-related assets, net	21,395			(1,995		)	4,235			7,532
Loss on impairment of investments	—			(42,456		)	—			(42,456		)
Foreign exchange gains (losses), net	720			(1,065		)	3,352			(2,869		)
Other, net	1,714			(6,321		)	(9,955		)	(16,263		)
	$	20,532		$	(55,810	)	$	(10,494	)	$	(64,464	)

XML

NET INCOME PER SHARE (Tables)

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Numerators and Denominators of Basic and Diluted Computations for Net Income Per Share

The following table reconciles the numerators and denominators of the basic and diluted computations for net income per share. 

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands, except per share data)
Numerator:
Net income	$	547,390	$	778,800	$	1,649,605	$	1,359,535
Denominator:
Basic average shares outstanding	151,201		162,378		153,891		161,885
Effect of potential dilutive securities:
Employee stock plans	1,413		2,367		1,461		2,546
Convertible notes	5,235		10,279		5,663		13,618
Warrants	—		4,755		668		4,516
Diluted average shares outstanding	157,849		179,779		161,683		182,565
Net income per share - basic	$	3.62	$	4.80	$	10.72	$	8.40
Net income per share - diluted	$	3.47	$	4.33	$	10.20	$	7.45

Schedule of Potentially Dilutive Securities Excluded from EPS Calculations

The following potentially dilutive securities were excluded:

	Three Months Ended		Nine Months Ended
	March 31, 2019	March 25, 2018	March 31, 2019	March 25, 2018
	(in thousands)
Options and RSUs	640	19	717	6

XML

FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Cash, Cash Equivalents, Investments, Restricted Cash and Investments and Other Assets Measured at Fair Value on Recurring Basis

The following table sets forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of March 31, 2019, and June 24, 2018:

	March 31, 2019
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	577,420	$	—	$	—		$	577,420	$	571,673	$	—	$	5,747	$	—
Time deposit	1,872,626		—		—			1,872,626		1,622,599		—		250,027		—
Level 1:
Money market funds	2,024,322		—		—			2,024,322		2,024,322		—		—		—
U.S. Treasury and agencies	668,405		74		(69		)	668,410		380,623		287,787		—		—
Mutual funds	77,127		1,025		(183		)	77,969		—		—		—		77,969
Level 1 Total	2,769,854		1,099		(252		)	2,770,701		2,404,945		287,787		—		77,969
Level 2:
Government-sponsored enterprises	11,029		—		(97		)	10,932		—		10,932		—		—
Foreign government bonds	10,111		4		—			10,115		—		10,115		—		—
Corporate notes and bonds	1,176,117		523		(426		)	1,176,214		324,951		851,263		—		—
Mortgage backed securities — residential	17,397		2		—			17,399		7,443		9,956		—		—
Mortgage backed securities — commercial	39,236		40		(14		)	39,262		—		39,262		—		—
Level 2 Total	1,253,890		569		(537		)	1,253,922		332,394		921,528		—		—
Total	$	6,473,790	$	1,668	$	(789	)	$	6,474,669	$	4,931,611	$	1,209,315	$	255,774	$	77,969

	June 24, 2018
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	708,364	$	—	$	—		$	708,364	$	702,090	$	—	$	6,274	$	—
Time deposit	999,666		—		—			999,666		749,639		—		250,027		—
Level 1:
Money market funds	2,341,807		—		—			2,341,807		2,341,807		—		—		—
U.S. Treasury and agencies	356,679		—		(170		)	356,509		333,721		22,788		—		—
Mutual funds	68,568		516		(142		)	68,942		—		—		—		68,942
Level 1 Total	2,767,054		516		(312		)	2,767,258		2,675,528		22,788		—		68,942
Level 2:
Municipal notes and bonds	152,378		37		(279		)	152,136		—		152,136		—		—
Government-sponsored enterprises	110,963		—		(201		)	110,762		99,934		10,828		—		—
Foreign government bonds	19,986		—		(1		)	19,985		19,985		—		—		—
Corporate notes and bonds	516,955		95		(1,184		)	515,866		265,081		250,785		—		—
Mortgage backed securities — residential	804		—		(3		)	801		—		801		—		—
Level 2 Total	801,086		132		(1,668		)	799,550		385,000		414,550		—		—
Total	$	5,276,170	$	648	$	(1,980	)	$	5,274,838	$	4,512,257	$	437,338	$	256,301	$	68,942

Schedule of Cash, Cash Equivalents, Investments and Restricted Cash and Investments in Unrealized Loss Positions

The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions:

	March 31, 2019
	Unrealized Losses Less than 12 Months					Unrealized Losses 12 Months or Greater					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(in thousands)
U.S. Treasury and agencies	$	179,766	$	(2	)	$	8,121	$	(67	)	$	187,887	$	(69	)
Mutual funds	—		—			6,563		(183		)	6,563		(183		)
Government-sponsored enterprises	—		—			10,895		(97		)	10,895		(97		)
Corporate notes and bonds	365,003		(161		)	46,939		(265		)	411,942		(426		)
Mortgage backed securities — commercial	15,406		(14		)	—		—			15,406		(14		)
	$	560,175	$	(177	)	$	72,518	$	(612	)	$	632,693	$	(789	)

Schedule of Amortized Cost and Fair Value of Cash Equivalents, Investments, Restricted Cash and Investments with Contractual Maturities

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of March 31, 2019:

	Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	5,391,453	$	5,391,323
Due after one year through five years	380,219		380,361
Due in more than five years	47,571		47,596
	$	5,819,243	$	5,819,280

Schedule of Outstanding Foreign Currency Forward Contracts

As of March 31, 2019, the Company had the following outstanding foreign currency contracts that were entered into under its cash flow and balance sheet hedge programs:

	Notional Value
	Derivatives Designated as Hedging Instruments:				Derivatives Not Designated as Hedging Instruments:
	(in thousands)
Foreign currency forward contracts
	Buy Contracts		Sell Contracts		Buy Contracts		Sell Contracts
Japanese yen	$	—	$	171,192	$	35,801	$	129,820
Euro	71,946		—		50,752		—
Korean won	23,234		—		23,817		—
British pound sterling	—		—		39,687		—
Taiwan dollar	—		—		25,953		—
Swiss franc	—		—		22,180		—
Chinese renminbi	—		—		13,213		—
Singapore dollar	—		—		5,904		—
Indian rupee	—		—		8,521		—
	$	95,180	$	171,192	$	225,828	$	129,820
Foreign currency option contracts
	Buy Put		Sell Call		Buy Put		Sell Call
Japanese yen (1)	$	—	$	—	$	8,849	$	9,403

⁽¹⁾ The local currency notional amounts of these foreign currency option contracts are equal to each other.

Schedule of Fair Value of Derivatives Instruments

The fair value of derivative instruments in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2019, and June 24, 2018 were as follows:

	March 31, 2019						June 24, 2018
	Fair Value of Derivative Instruments (Level 2)						Fair Value of Derivative Instruments (Level 2)
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	$	1,730	Accrued expenses and other current liabilities	$	2,897	Prepaid expense and other assets	$	7,581	Accrued expenses and other current liabilities	$	8,866
Interest rate contracts, short-term		—		Accrued expenses and other current liabilities	3,551			—		Accrued expenses and other current liabilities	7,468
Interest rate contracts, long-term		—		Other long-term liabilities	11,366			—		Other long-term liabilities	23,720
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	752		Accrued expenses and other current liabilities	354		Prepaid expense and other assets	111		Accrued expenses and other current liabilities	32
Total Derivatives		$	2,482		$	18,168		$	7,692		$	40,086

Schedule of Derivative Instruments Designated as Cash Flow Hedges in Statements of Operations

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

		Three Months Ended March 31, 2019						Nine Months Ended March 31, 2019
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(7,203	)	$	206		$	9,467		$	8,693
Foreign Exchange Contracts	Cost of goods sold	(1,395		)	(2,097		)	(3,484		)	(4,505		)
Foreign Exchange Contracts	Selling, general, and administrative	(475		)	(600		)	(1,353		)	(1,778		)
Interest Rate Contracts	Other expense, net	—			(34		)	—			(100		)
		$	(9,073	)	$	(2,525	)	$	4,630		$	2,310

		Three Months Ended March 25, 2018						Nine Months Ended March 25, 2018
	Location of  Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income			(Loss) Gain Recognized in AOCI			(Loss) Gain Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(44,399	)	$	(7,375	)	$	(36,214	)	$	(7,410	)
Foreign Exchange Contracts	Cost of goods sold	2,735			1,084			4,928			3,556
Foreign Exchange Contracts	Selling, general, and administrative	690			501			1,840			2,227
Interest Rate Contracts	Other expense, net	—			(32		)	—			(94		)
		$	(40,974	)	$	(5,822	)	$	(29,446	)	$	(1,721	)

The effect of derivative instruments not designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations was as follows:

		Three Months Ended					Nine Months Ended
		March 31, 2019			March 25, 2018		March 31, 2019		March 25, 2018
Derivatives Not Designated as Hedging Instruments:	Location  of Gain (Loss) Recognized  in Income	Loss Recognized in Income			Gain Recognized in Income		Gain Recognized in Income		Gain Recognized in Income
		(in thousands)
Foreign Exchange Contracts	Other income	$	(6,747	)	$	1,198	$	4,142	$	6,482

The following table presents the effect of the fair value cash flow hedge accounting on the Statement of Financial Performance as well as presents the location and amount of gain/(loss) recognized in Income on fair value and cash flow hedging relationships:

	Three Months Ended											Nine Months Ended
	March 31, 2019											March 31, 2019
	Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)			Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other Income (Expense)
	(in thousands)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded:
	$	2,439,048	$1,364,711			$	190,306		$	20,532		$	7,292,412	$	4,014,844		$	534,179		$	(10,494	)
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20:
Interest contracts:
Hedged items	$	—	$	—		$	—		$	(10,395	)	$	—	$	—		$	—		$	(16,272	)
Derivatives designated as hedging instruments	$	—	$	—		$	—		$	10,395		$	—	$	—		$	—		$	16,272
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	206	$	(2,097	)	$	(600	)	$	—		$	8,693	$	(4,505	)	$	(1,778	)	$	—
Interest rate contracts:
Amount of loss reclassified from accumulated other comprehensive income into income	$	—	$	—		$	—		$	(34	)	$	—	$	—		$	—		$	(100	)

XML

INVENTORIES (Tables)

9 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Raw materials	$	1,034,636	$	916,438
Work-in-process	206,245		222,921
Finished goods	381,361		736,803
	$	1,622,242	$	1,876,162

XML

GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

The following table provides the Company’s intangible assets:

	March 31, 2019							June 24, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	630,220	$	(470,760	)	$	159,460	$	630,220	$	(433,309	)	$	196,911
Existing technology	669,521		(644,423		)	25,098		669,520		(576,844		)	92,676
Patents and other intangible assets	114,335		(75,871		)	38,464		99,767		(71,518		)	28,249
Total intangible assets	$	1,414,076	$	(1,191,054	)	$	223,022	$	1,399,507	$	(1,081,671	)	$	317,836

Estimated Future Amortization Expense of Intangible Assets

The estimated future amortization expense of intangible assets as of March 31, 2019, was as follows:

Fiscal Year	Amount
	(in thousands)
2019 (remaining 3 months)	$	17,910
2020	64,302
2021	61,612
2022	57,352
2023	12,805
Thereafter	9,041
	$	223,022

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	March 31, 2019		June 24, 2018
	(in thousands)
Accrued compensation	$	408,088	$	506,471
Warranty reserves	159,321		192,480
Income and other taxes payable	89,259		185,384
Dividend payable	164,874		174,372
Other	225,396		250,502
	$	1,046,938	$	1,309,209

XML

LONG-TERM DEBT AND OTHER BORROWINGS (Tables)

9 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Outstanding Debt

As of March 31, 2019, and June 24, 2018, the Company’s outstanding debt consisted of the following:

	March 31, 2019							June 24, 2018
	Amount (in thousands)				Effective Interest Rate			Amount (in thousands)				Effective Interest Rate
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes")	$	500,000			2.88	%		$	500,000			2.88	%
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes")	800,000				2.95	%		800,000				2.95	%
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes")	500,000				3.87	%		500,000				3.87	%
Fixed-rate 3.75% Senior Notes Due March 15, 2026 ("2026 Notes")	750,000				3.86	%		—				—
Fixed-rate 4.00% Senior Notes Due March 15, 2029 ("2029 Notes")	1,000,000				4.09	%		—				—
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes")	212,352			(1)	4.28	%		326,953			(1)	4.28	%
Fixed-rate 4.875% Senior Notes Due March 15, 2049 ("2049 Notes")	750,000				4.93	%		—				—
Commercial paper	300,000				3.00	%	(2)	360,000				2.33	%	(2)
Total debt outstanding, at par	4,812,352							2,486,953
Unamortized discount	(74,987		)					(85,196		)
Fair value adjustment - interest rate contracts	(14,917		)					(31,189		)
Unamortized bond issuance costs	(5,993		)					(1,820		)
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748
Reported as:
Current portion of long-term debt, and commercial paper	$	961,154						$	608,532
Long-term debt	3,755,301							1,760,216
Total debt outstanding, at carrying value	$	4,716,455						$	2,368,748

____________________________

⁽¹⁾ As of the report date, these notes were convertible at the option of the bondholder. This is a result of the following condition being met: the market value of the Company’s Common Stock was greater than 130% of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end. As a result, the 2041 Notes were classified in current liabilities and a portion of the equity component, associated with the convertible notes representing the unamortized discount, was classified in temporary equity on the Company’s Consolidated Balance Sheets. Upon closure of the conversion period, the notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity.

⁽²⁾ Represents the weighted average effective interest rate for all outstanding balances as of the report date.

Components of Convertible Notes

Selected additional information regarding the 2041 Notes outstanding as of March 31, 2019, and June 24, 2018, is as follows:

	March 31, 2019		June 24, 2018
	2041 Notes		2041 Notes
	(in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax	$	160,261	$	159,120
Carrying amount of temporary equity component, net of tax	$	49,783	$	78,192
Remaining amortization period (years)	22.1		22.9
Fair Value of Notes (Level 2)	$	1,166,900
Conversion rate (shares of common stock per $1,000 principal amount of notes)	30.7418
Conversion price (per share of common stock)	$	32.53
If-converted value in excess of par value	$	956,238
Estimated share dilution using average quarterly stock price $164.19 per share	5,235

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

Selected additional information regarding the Senior Notes outstanding as of March 31, 2019, is as follows: 

	Remaining Amortization period	Fair Value of Notes (Level 2)
	(years)	(in thousands)
2020 Notes	1.0	$	499,720
2021 Notes	2.2	$	798,880
2025 Notes	6.0	$	515,335
2026 Notes	7.0	$	764,295
2029 Notes	10.0	$	1,021,010
2049 Notes	30.0	$	791,888

Schedule of Recognized Interest Cost Relating to Both Contractual Interest Coupon and Amortization of Discount on Liability Component of Notes

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the three and nine months ended March 31, 2019 and March 25, 2018.

	Three Months Ended				Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018
	(in thousands)
Contractual interest coupon	$	24,837	$	20,663	$	58,814	$	57,246
Amortization of interest discount	956		2,860		2,743		10,374
Amortization of issuance costs	355		561		1,013		1,590
Effect of interest rate contracts, net	1,558		51		3,088		(552		)
Total interest cost recognized	$	27,706	$	24,135	$	65,658	$	68,658

XML

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Warranties

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

	Three Months Ended						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
	(in thousands)
Balance at beginning of period	$	166,906		$	179,680		$	192,480		$	161,981
Warranties issued during the period	62,853			70,176			190,250			176,664
Settlements made during the period	(74,432		)	(50,118		)	(237,310		)	(138,518		)
Changes in liability for pre-existing warranties	3,994			340			13,901			(49		)
Balance at end of period	$	159,321		$	200,078		$	159,321		$	200,078

XML

STOCK REPURCHASE PROGRAM (Tables)

9 Months Ended

Mar. 31, 2019

Equity [Abstract]

Repurchases Under the Repurchase Program

Repurchases under the repurchase program were as follows during the periods indicated:

Period	Total Number of Shares Repurchased		Total Cost of Repurchase		Average Price Paid Per Share (1)		Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 24, 2018							$	1,733,638
Quarter ended September 23, 2018	7,807		$	1,733,530	$	183.55	$	108
Board authorization, $5.0 billion, November 2018	—		$	—	$	—	$	5,000,000
Quarter ended December 23, 2018	1,683	(2)	$	—	$	—	$	5,000,000
Quarter ended March 31, 2019	5,702	(2)	$	861,506	$	168.78	$	4,138,494

(1) Average price paid per share excludes effect of accelerated share repurchases; see additional disclosure below regarding the Company’s accelerated share repurchase activity during the fiscal year.

(2) Includes shares received at final settlement of accelerated share repurchase agreements; see additional disclosures below regarding the Company’s accelerated share repurchase activity during the fiscal year.

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Mar. 31, 2019

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax at March 31, 2019, as well as the activity for the nine months ending March 31, 2019, were as follows:

	Accumulated Foreign Currency Translation Adjustment			Accumulated Unrealized  Gain or Loss on Cash flow hedges				Accumulated Unrealized  Holding Gain or Loss on Available-For-Sale Investments				Accumulated Unrealized  Components of Defined  Benefit Plans			Total
	(in thousands)
Balance at June 24, 2018	$	(32,722	)	$	(4,042	)		$	(1,190	)		$	(19,495	)	$	(57,449	)
Other comprehensive (loss) income before reclassifications	(8,081		)	4,437				1,441				676			(1,527		)
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income	1,236			(2,492		)	(1)	(201		)	(2)	—			(1,457		)
Effects of ASU 2018-02 adoption	—			(399		)		—				(1,828		)	(2,227		)
Net current-period other comprehensive (loss) income	(6,845		)	1,546				1,240				(1,152		)	(5,211		)
Balance at March 31, 2019	$	(39,567	)	$	(2,496	)		$	50			$	(20,647	)	$	(62,660	)

(1) Amount of after tax gain reclassified from AOCI into net income located in revenue: $7,727 gain; cost of goods sold: $3,819 loss; selling, general, and administrative expenses: $1,339 loss; and other income and expense: $77 loss.

(2) Amount of after tax gain reclassified from accumulated other comprehensive income into net income located in other expense, net.

XML

RECENT ACCOUNTING PRONOUNCEMENTS - Cumulative Effect of Changes Due to Adoption of Topic 606 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018	Dec. 23, 2018	Jun. 25, 2018	Jun. 24, 2018		Dec. 24, 2017	Jun. 25, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets	$ 12,895,262		$ 12,895,262			$ 12,492,433	$ 12,479,478	[1]
Deferred profit	378,396		378,396			559,391	720,086	[1]
Total liabilities	7,554,283		7,554,283			5,773,035	5,899,435	[1]
Stockholders' equity	5,291,196	$ 6,803,055	5,291,196	$ 6,803,055	$ 5,784,363	$ 6,641,206	6,501,851	[1]	$ 6,143,131	$ 6,817,451
Revenue	2,439,048	2,892,115	7,292,412	7,951,070
Cost of goods sold	1,364,711	$ 1,561,401	4,014,844	$ 4,265,446
Retained earnings	9,547,961		9,547,961				8,261,194	[1]
Without adoption of ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets							12,479,478
Deferred profit	809,712		809,712				720,086
Total liabilities							5,899,435
Stockholders' equity							6,501,851
Revenue	2,203,034		6,691,212
Cost of goods sold	1,213,852		3,705,203
Retained earnings	9,116,645		9,116,645
Effect of Change Higher/(Lower) | ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets							12,955
Deferred profit	(431,316)		(431,316)				(160,695)
Total liabilities							(126,400)
Stockholders' equity							$ 139,355
Revenue	236,014		601,200
Cost of goods sold	150,859		309,641
Retained earnings	$ 431,316		$ 431,316

[1] Derived from audited financial statements

XML

RECENT ACCOUNTING PRONOUNCEMENTS - Additional Information (Details) - USD ($) $ in Thousands		Jun. 25, 2018	Mar. 31, 2019	Jan. 01, 2019		Sep. 23, 2018	Jun. 24, 2018	[1]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other assets			$ 448,988				$ 367,979
ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings	[2]			$ 139,355
ASU 2014-09 | Retained earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings	[2]			139,355
ASU 2016-16
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings	[2]			(443)
Other assets						$ 400
ASU 2016-16 | Retained earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings				$ (443)	[2]	(400)
ASU 2018-02 | Retained earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings						2,200
ASU 2018-02 | Other comprehensive income
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative-effect adjustment to retained earnings						$ (2,200)
Effect of Change Higher/(Lower) | ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment, net of tax adjustment		$ 139,400
Cumulative effect on retained earnings, tax		$ 21,000

[1] Derived from audited financial statements

[2] Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.

XML

REVENUE - Additional Information (Details) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2019 USD ($) region segment market
Revenue from Contract with Customer [Abstract]
Invoice payment description		The Company generally invoices customers at shipment and for professional services either as provided or upon meeting certain milestones. Customer invoices are generally due within 30 to 90 days after issuance. The Company's contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.
Revenue recognized | $	$ 126.9	$ 539.6
Number reportable business segment | segment		1
Number of operating geographic regions | region		7
Number of primary markets | market		3

XML

REVENUE - Summary of Contract Transaction Price not yet Recognized as Revenue (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 440,944
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-09-24
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 386,170
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenue, expected timing of satisfaction	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 54,774
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-06-28
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-06-29
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenue, expected timing of satisfaction

XML

REVENUE - Revenues Disaggregated by Geographic Region and Primary Markets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 2,439,048	$ 2,892,115	$ 7,292,412	$ 7,951,070
Korea
Disaggregation of Revenue [Line Items]
Revenue	609,892	1,038,376	1,621,165	2,750,710
Taiwan
Disaggregation of Revenue [Line Items]
Revenue	570,300	352,191	1,275,883	1,083,904
China
Disaggregation of Revenue [Line Items]
Revenue	415,999	499,061	1,371,612	1,120,319
Japan
Disaggregation of Revenue [Line Items]
Revenue	403,592	391,673	1,765,449	1,308,122
United States
Disaggregation of Revenue [Line Items]
Revenue	230,636	226,623	486,436	674,618
Southeast Asia
Disaggregation of Revenue [Line Items]
Revenue	120,363	227,558	483,703	616,337
Europe
Disaggregation of Revenue [Line Items]
Revenue	$ 88,266	$ 156,633	$ 288,164	$ 397,060

XML

REVENUE - Schedule of System Revenues of Primary Markets (Details) - Systems revenue	3 Months Ended	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2019
Memory
Concentration Risk [Line Items]
Primary market revenue, percent	61.00%	72.00%
Foundry
Concentration Risk [Line Items]
Primary market revenue, percent	27.00%	19.00%
Logic/integrated device manufacturing
Concentration Risk [Line Items]
Primary market revenue, percent	12.00%	9.00%

XML

EQUITY-BASED COMPENSATION PLANS - Additional Information (Details)	9 Months Ended
	Mar. 31, 2019 d
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (years)	3 years
Stock price performance measurement period	50
Common stock to be issued, vesting percentage	2.00%
Percentage increase in common stock price exceeding market price performance	1.00%
Market-based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (years)	3 years
Minimum | Market-based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock to be issued, vesting percentage	0.00%
Maximum | Market-based PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock to be issued, vesting percentage	150.00%

XML

EQUITY-BASED COMPENSATION PLANS - Recognized Equity Based Compensation Expenses and Related Income Tax Benefit (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Equity-based compensation expense	$ 53,240	$ 41,095	$ 142,389	$ 125,002
Income tax benefit recognized related to equity-based compensation expense	$ 28,337	$ 46,366	$ 42,204	$ 77,842

XML

EQUITY-BASED COMPENSATION PLANS - Summary of Stock Plan Activity (Details)	9 Months Ended
	Mar. 31, 2019 $ / shares shares
Options Outstanding, Number of Shares
Beginning balance (shares) | shares	482,928
Granted (shares) | shares	181,450
Exercised (shares) | shares	(69,948)
Expired or forfeited (shares) | shares	(59,068)
Ending balance (shares) | shares	535,362
Options Outstanding, Weighted-Average Exercise Price
Beginning balance (usd per share) | $ / shares	$ 86.53
Granted (usd per share) | $ / shares	164.54
Exercised (usd per share) | $ / shares	73.18
Expired or forfeited (usd per share) | $ / shares	126.05
Ending balance (usd per share) | $ / shares	$ 110.35

XML

EQUITY-BASED COMPENSATION PLANS - Summary of Restricted Stock Activity (Details)	9 Months Ended
	Mar. 31, 2019 $ / shares shares
Service-based RSUs
Number of Shares
Beginning balance (shares) | shares	2,193,088
Granted (shares) | shares	873,769
Vested (shares) | shares	(1,101,015)
Forfeited (shares) | shares	(126,148)
Ending balance (shares) | shares	1,839,694
Weighted- Average Grant Date Fair Value
Beginning balance (usd per share) | $ / shares	$ 134.34
Granted (usd per share) | $ / shares	161.34
Vested (usd per share) | $ / shares	114.64
Forfeited (usd per share) | $ / shares	138.44
Ending balance (usd per share) | $ / shares	$ 158.65
Market-based PRSUs
Number of Shares
Beginning balance (shares) | shares	693,726
Granted (shares) | shares	163,529
Vested (shares) | shares	(301,622)
Forfeited (shares) | shares	(117,851)
Ending balance (shares) | shares	437,782
Weighted- Average Grant Date Fair Value
Beginning balance (usd per share) | $ / shares	$ 104.59
Granted (usd per share) | $ / shares	165.78
Vested (usd per share) | $ / shares	70.58
Forfeited (usd per share) | $ / shares	104.52
Ending balance (usd per share) | $ / shares	$ 144.35

XML

OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Other Income and Expenses [Abstract]
Interest income	$ 26,966	$ 21,761	$ 63,709	$ 62,548
Interest expense	(30,263)	(25,734)	(71,835)	(72,956)
Gains (losses) on deferred compensation plan-related assets, net	21,395	(1,995)	4,235	7,532
Loss on impairment of investments	0	(42,456)	0	(42,456)
Foreign exchange gains (losses), net	720	(1,065)	3,352	(2,869)
Other, net	1,714	(6,321)	(9,955)	(16,263)
Other expense, net	$ 20,532	$ (55,810)	$ (10,494)	$ (64,464)

XML

INCOME TAX EXPENSE (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Mar. 31, 2019	Sep. 23, 2018	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Income Tax Disclosure [Abstract]
Income tax expense	$ 38,659		$ (7,099)	$ 187,548	$ 834,105
Effective income tax rate	6.60%			10.20%
Provisional amount for transition tax		$ 36,500
Final adjustment				$ 51,200
Total transition tax				868,400
Release of previously accrued deferred taxes		$ 48,000
Final adjustment tax expense				(400)
Final tax benefit				47,600
Tax examinations or lapses of statute of limitation
Income Tax Contingency [Line Items]
Estimated unrecognized tax benefits reduction	$ 14,000			$ 14,000

XML

NET INCOME PER SHARE - Schedule of Numerators and Denominators of Basic and Diluted Computations for Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Numerator:
Net income	$ 547,390	$ 778,800	$ 1,649,605	$ 1,359,535
Denominator:
Basic average shares outstanding (shares)	151,201	162,378	153,891	161,885
Effect of potential dilutive securities:
Employee stock plans (shares)	1,413	2,367	1,461	2,546
Convertible notes (shares)	5,235	10,279	5,663	13,618
Warrants (shares)	0	4,755	668	4,516
Diluted average shares outstanding (shares)	157,849	179,779	161,683	182,565
Net income per share - basic (usd per share)	$ 3.62	$ 4.80	$ 10.72	$ 8.40
Net income per share - diluted (usd per share)	$ 3.47	$ 4.33	$ 10.20	$ 7.45

XML

NET INCOME PER SHARE - Schedule of Potentially Dilutive Securities Excluded from EPS Calculations (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Options and RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of potentially dilutive securities (shares)	640	19	717	6

XML

FINANCIAL INSTRUMENTS - Cash, Cash Equivalents, Investments, Restricted Cash and Investments and Other Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018		Mar. 25, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	$ 5,819,243
Total Cost	6,473,790	$ 5,276,170
Total, Unrealized Gain	1,668	648
Total Unrealized (Loss)	(789)	(1,980)
Total Fair Value	6,474,669	5,274,838
Cash and Cash Equivalents	4,931,611	4,512,257	[1]	$ 4,698,995
Investments	1,209,315	437,338	[1]
Restricted cash and investments	255,774	256,301	[1]
Other Assets	77,969	68,942
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Cost	2,769,854	2,767,054
Total, Unrealized Gain	1,099	516
Total Unrealized (Loss)	(252)	(312)
Total Fair Value	2,770,701	2,767,258
Cash and Cash Equivalents	2,404,945	2,675,528
Investments	287,787	22,788
Restricted cash and investments	0	0
Other Assets	77,969	68,942
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Cost	1,253,890	801,086
Total, Unrealized Gain	569	132
Total Unrealized (Loss)	(537)	(1,668)
Total Fair Value	1,253,922	799,550
Cash and Cash Equivalents	332,394	385,000
Investments	921,528	414,550
Restricted cash and investments	0	0
Other Assets	0	0
Cash
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents	577,420	708,364
Cash and Cash Equivalents	571,673	702,090
Investments	0	0
Restricted cash and investments	5,747	6,274
Other Assets	0	0
Time deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents	1,872,626	999,666
Cash and Cash Equivalents	1,622,599	749,639
Investments	0	0
Restricted cash and investments	250,027	250,027
Other Assets	0	0
Money market funds | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	2,024,322	2,341,807
Debt securities, Unrealized Gain	0	0
Debt securities, Unrealized (Loss)	0	0
Debt securities, Fair Value	2,024,322	2,341,807
Cash and Cash Equivalents	2,024,322	2,341,807
Investments	0	0
Restricted cash and investments	0	0
Other Assets	0	0
U.S. Treasury and agencies | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	668,405	356,679
Debt securities, Unrealized Gain	74	0
Debt securities, Unrealized (Loss)	(69)	(170)
Debt securities, Fair Value	668,410	356,509
Cash and Cash Equivalents	380,623	333,721
Investments	287,787	22,788
Restricted cash and investments	0	0
Other Assets	0	0
Mutual funds | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities, Cost	77,127	68,568
Trading securities, Unrealized Gain	1,025	516
Trading securities, Unrealized (Loss)	(183)	(142)
Trading securities, Fair Value	77,969	68,942
Cash and Cash Equivalents	0	0
Investments	0	0
Restricted cash and investments	0	0
Other Assets	77,969	68,942
Municipal notes and bonds | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost		152,378
Debt securities, Unrealized Gain		37
Debt securities, Unrealized (Loss)		(279)
Debt securities, Fair Value		152,136
Cash and Cash Equivalents		0
Investments		152,136
Restricted cash and investments		0
Other Assets		0
Government-sponsored enterprises | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	11,029	110,963
Debt securities, Unrealized Gain	0	0
Debt securities, Unrealized (Loss)	(97)	(201)
Debt securities, Fair Value	10,932	110,762
Cash and Cash Equivalents	0	99,934
Investments	10,932	10,828
Restricted cash and investments	0	0
Other Assets	0	0
Foreign government bonds | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	10,111	19,986
Debt securities, Unrealized Gain	4	0
Debt securities, Unrealized (Loss)	0	(1)
Debt securities, Fair Value	10,115	19,985
Cash and Cash Equivalents	0	19,985
Investments	10,115	0
Restricted cash and investments	0	0
Other Assets	0	0
Corporate notes and bonds | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	1,176,117	516,955
Debt securities, Unrealized Gain	523	95
Debt securities, Unrealized (Loss)	(426)	(1,184)
Debt securities, Fair Value	1,176,214	515,866
Cash and Cash Equivalents	324,951	265,081
Investments	851,263	250,785
Restricted cash and investments	0	0
Other Assets	0	0
Mortgage backed securities — residential | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	17,397	804
Debt securities, Unrealized Gain	2	0
Debt securities, Unrealized (Loss)	0	(3)
Debt securities, Fair Value	17,399	801
Cash and Cash Equivalents	7,443	0
Investments	9,956	801
Restricted cash and investments	0	0
Other Assets	0	$ 0
Mortgage backed securities — commercial | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities, Cost	39,236
Debt securities, Unrealized Gain	40
Debt securities, Unrealized (Loss)	(14)
Debt securities, Fair Value	39,262
Cash and Cash Equivalents	0
Investments	39,262
Restricted cash and investments	0
Other Assets	$ 0

[1] Derived from audited financial statements

XML

FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018	Jun. 24, 2018
Fair Value Disclosures [Abstract]
Other than temporary impairment included in net realized gains (losses)	$ 0	$ 42,500,000	$ 0	$ 42,500,000
Foreign exchange and interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts amount of offset, assets	1,300,000		1,300,000
Foreign exchange contracts amount of offset, liabilities	0		0		$ 5,600,000
Net derivative asset from master netting agreements	1,200,000		1,200,000
Net derivative liability from master netting agreements	$ 16,900,000		$ 16,900,000
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange contracts amount of offset, assets					5,600,000
Net derivative asset from master netting agreements					2,100,000
Net derivative liability from master netting agreements					$ 34,400,000
Cash Flow Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency cash flow hedge, expiration period			12 months
Gain reclassification from AOCI to income, in the next 12 months			$ (400,000)
Losses accumulated in other comprehensive income expected to reclassify from other comprehensive income into earnings			$ (2,100,000)
Gains (losses) accumulated in other comprehensive income expected to reclassify from other comprehensive income into earnings, estimate of time to transfer			6 years
Minimum | Cash Flow Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency cash flow hedge, expiration period			12 months
Maximum | Cash Flow Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency cash flow hedge, expiration period			24 months

XML

FINANCIAL INSTRUMENTS - Schedule of Cash, Cash Equivalents, Investments and Restricted Cash and Investments Unrealized Loss Positions (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Fair Value
Unrealized Losses Less than 12 Months	$ 560,175
Unrealized Losses 12 Months or Greater	72,518
Total	632,693
Gross Unrealized Loss
Unrealized Losses Less than 12 Months	(177)
Unrealized Losses 12 Months or Greater	(612)
Total	(789)
U.S. Treasury and agencies
Fair Value
Unrealized Losses Less than 12 Months, available for sale	179,766
Unrealized Losses 12 Months or Greater, available for sale	8,121
Total, available for sale	187,887
Gross Unrealized Loss
Unrealized Losses Less than 12 Months, available for sale	(2)
Unrealized Losses 12 Months or Greater, available for sale	(67)
Total, available for sale	(69)
Mutual funds
Fair Value
Unrealized Losses Less than 12 Months, trading	0
Unrealized Losses 12 Months or Greater, trading	6,563
Total, trading	6,563
Gross Unrealized Loss
Unrealized Losses Less than 12 Months, trading	0
Unrealized Losses 12 Months or Greater, trading	(183)
Total, trading	(183)
Government-sponsored enterprises
Fair Value
Unrealized Losses Less than 12 Months, available for sale	0
Unrealized Losses 12 Months or Greater, available for sale	10,895
Total, available for sale	10,895
Gross Unrealized Loss
Unrealized Losses Less than 12 Months, available for sale	0
Unrealized Losses 12 Months or Greater, available for sale	(97)
Total, available for sale	(97)
Corporate notes and bonds
Fair Value
Unrealized Losses Less than 12 Months, available for sale	365,003
Unrealized Losses 12 Months or Greater, available for sale	46,939
Total, available for sale	411,942
Gross Unrealized Loss
Unrealized Losses Less than 12 Months, available for sale	(161)
Unrealized Losses 12 Months or Greater, available for sale	(265)
Total, available for sale	(426)
Mortgage backed securities — commercial
Fair Value
Unrealized Losses Less than 12 Months, available for sale	15,406
Unrealized Losses 12 Months or Greater, available for sale	0
Total, available for sale	15,406
Gross Unrealized Loss
Unrealized Losses Less than 12 Months, available for sale	(14)
Unrealized Losses 12 Months or Greater, available for sale	0
Total, available for sale	$ (14)

XML

FINANCIAL INSTRUMENTS - Schedule of Amortized Cost and Fair Value of Cash Equivalents, Investments, and Restricted Cash and Investments with Contractual Maturities (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Cost
Due in one year or less	$ 5,391,453
Due after one year through five years	380,219
Due in more than five years	47,571
Debt securities, Cost	5,819,243
Estimated Fair Value
Due in one year or less	5,391,323
Due after one year through five years	380,361
Due in more than five years	47,596
Total	$ 5,819,280

XML

FINANCIAL INSTRUMENTS - Schedule of Outstanding Foreign Currency Forward Contracts (Details) - Foreign exchange contracts $ in Thousands	Mar. 31, 2019 USD ($)
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Derivative notional amount	$ 95,180
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Euro
Derivative [Line Items]
Derivative notional amount	71,946
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Korean won
Derivative [Line Items]
Derivative notional amount	23,234
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | British pound sterling
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Taiwan dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Swiss franc
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Chinese renminbi
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Singapore dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives Designated as Hedging Instruments | Indian rupee
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments
Derivative [Line Items]
Derivative notional amount	225,828
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	35,801
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Euro
Derivative [Line Items]
Derivative notional amount	50,752
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Korean won
Derivative [Line Items]
Derivative notional amount	23,817
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | British pound sterling
Derivative [Line Items]
Derivative notional amount	39,687
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Taiwan dollar
Derivative [Line Items]
Derivative notional amount	25,953
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Swiss franc
Derivative [Line Items]
Derivative notional amount	22,180
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Chinese renminbi
Derivative [Line Items]
Derivative notional amount	13,213
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Singapore dollar
Derivative [Line Items]
Derivative notional amount	5,904
Foreign currency forward contracts | Buy | Derivatives not designated as hedging instruments | Indian rupee
Derivative [Line Items]
Derivative notional amount	8,521
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Derivative notional amount	171,192
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	171,192
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Euro
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Korean won
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | British pound sterling
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Taiwan dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Swiss franc
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Chinese renminbi
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Singapore dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives Designated as Hedging Instruments | Indian rupee
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments
Derivative [Line Items]
Derivative notional amount	129,820
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	129,820
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Euro
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Korean won
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | British pound sterling
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Taiwan dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Swiss franc
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Chinese renminbi
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Singapore dollar
Derivative [Line Items]
Derivative notional amount	0
Foreign currency forward contracts | Sell | Derivatives not designated as hedging instruments | Indian rupee
Derivative [Line Items]
Derivative notional amount	0
Foreign currency option contracts | Buy | Derivatives Designated as Hedging Instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	0
Foreign currency option contracts | Buy | Derivatives not designated as hedging instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	8,849
Foreign currency option contracts | Sell | Derivatives Designated as Hedging Instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	0
Foreign currency option contracts | Sell | Derivatives not designated as hedging instruments | Japanese yen
Derivative [Line Items]
Derivative notional amount	$ 9,403

XML

FINANCIAL INSTRUMENTS - Schedule of Fair Value of Derivative Instruments (Details) - Fair Value of Derivative Instruments (Level 2) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Assets	$ 2,482	$ 7,692
Derivative Liabilities	18,168	40,086
Derivatives designated as hedging instruments | Prepaid expense and other assets | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Assets	1,730	7,581
Derivatives designated as hedging instruments | Accrued expenses and other current liabilities | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liabilities	2,897	8,866
Derivatives designated as hedging instruments | Accrued expenses and other current liabilities | Interest rate contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liabilities	3,551	7,468
Derivatives designated as hedging instruments | Other long-term liabilities | Interest rate contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liabilities	11,366	23,720
Derivatives not designated as hedging instruments | Prepaid expense and other assets | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Assets	752	111
Derivatives not designated as hedging instruments | Accrued expenses and other current liabilities | Foreign exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liabilities	$ 354	$ 32

XML

FINANCIAL INSTRUMENTS - Schedule of Derivative Instruments Designated as Cash Flow Hedges in Statements of Operations Including Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Revenue	$ 2,439,048	$ 2,892,115	$ 7,292,412	$ 7,951,070
Cost of goods sold	1,364,711	1,561,401	4,014,844	4,265,446
Selling, general, and administrative	190,306	197,791	534,179	565,719
Other income (expense), net	20,532	(55,810)	(10,494)	(64,464)
Foreign Exchange Contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Loss) Gain Recognized in AOCI	(9,073)	(40,974)	4,630	(29,446)
Foreign Exchange Contracts | Revenue
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Loss) Gain Recognized in AOCI	(7,203)	(44,399)	9,467	(36,214)
Foreign Exchange Contracts | Revenue | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	206		8,693
Foreign Exchange Contracts | Cost of goods sold
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Loss) Gain Recognized in AOCI	(1,395)	2,735	(3,484)	4,928
Foreign Exchange Contracts | Cost of goods sold | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	(2,097)		(4,505)
Foreign Exchange Contracts | Selling, general, and administrative
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Loss) Gain Recognized in AOCI	(475)	690	(1,353)	1,840
Foreign Exchange Contracts | Selling, general, and administrative | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	(600)		(1,778)
Foreign Exchange Contracts | Other expense, net | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	0		0
Foreign Exchange Contracts | Other income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) derivative instruments not designated as cash flow hedges	(6,747)	1,198	4,142	6,482
Foreign Exchange Contracts | Reclassified from accumulated other comprehensive income
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Reclassified from AOCI into Income	(2,525)	(5,822)	2,310	(1,721)
Foreign Exchange Contracts | Reclassified from accumulated other comprehensive income | Revenue
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Reclassified from AOCI into Income	206	(7,375)	8,693	(7,410)
Foreign Exchange Contracts | Reclassified from accumulated other comprehensive income | Cost of goods sold
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Reclassified from AOCI into Income	(2,097)	1,084	(4,505)	3,556
Foreign Exchange Contracts | Reclassified from accumulated other comprehensive income | Selling, general, and administrative
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Reclassified from AOCI into Income	(600)	501	(1,778)	2,227
Interest Rate Contracts | Revenue | Fair value hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Revenue | Fair value hedging | Derivatives designated as hedging instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Revenue | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Cost of goods sold | Fair value hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Cost of goods sold | Fair value hedging | Derivatives designated as hedging instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Cost of goods sold | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Selling, general, and administrative | Fair value hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Selling, general, and administrative | Fair value hedging | Derivatives designated as hedging instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Selling, general, and administrative | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	0		0
Interest Rate Contracts | Other expense, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Loss) Gain Recognized in AOCI	0	0	0	0
Interest Rate Contracts | Other expense, net | Fair value hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	(10,395)		(16,272)
Interest Rate Contracts | Other expense, net | Fair value hedging | Derivatives designated as hedging instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on fair value hedging relationships in Subtopic 815-20	10,395		16,272
Interest Rate Contracts | Other expense, net | Cash flow hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20	(34)		(100)
Interest Rate Contracts | Reclassified from accumulated other comprehensive income | Other expense, net
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Reclassified from AOCI into Income	$ (34)	$ (32)	$ (100)	$ (94)

XML

INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 1,034,636	$ 916,438
Work-in-process	206,245	222,921
Finished goods	381,361	736,803
Total inventories	$ 1,622,242	$ 1,876,162	[1]

[1] Derived from audited financial statements

XML

GOODWILL AND INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018	Jun. 24, 2018	[1]
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 1,484,908		$ 1,484,908		$ 1,484,904
Tax deductible goodwill	61,100		61,100
Intangible asset amortization expense	$ 36,600	$ 40,800	$ 109,400	$ 120,900

[1] Derived from audited financial statements

XML

GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Finite-Lived Intangible Assets [Line Items]
Gross	$ 1,414,076	$ 1,399,507
Accumulated Amortization	(1,191,054)	(1,081,671)
Net	223,022	317,836
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross	630,220	630,220
Accumulated Amortization	(470,760)	(433,309)
Net	159,460	196,911
Existing technology
Finite-Lived Intangible Assets [Line Items]
Gross	669,521	669,520
Accumulated Amortization	(644,423)	(576,844)
Net	25,098	92,676
Patents and other intangible assets
Finite-Lived Intangible Assets [Line Items]
Gross	114,335	99,767
Accumulated Amortization	(75,871)	(71,518)
Net	$ 38,464	$ 28,249

XML

GOODWILL AND INTANGIBLE ASSETS - Estimated Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Fiscal Year
2019 (remaining 3 months)	$ 17,910
2020	64,302
2021	61,612
2022	57,352
2023	12,805
Thereafter	9,041
Net	$ 223,022	$ 317,836

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 24, 2018
Payables and Accruals [Abstract]
Accrued compensation	$ 408,088	$ 506,471
Warranty reserves	159,321	192,480
Income and other taxes payable	89,259	185,384
Dividend payable	164,874	174,372
Other	225,396	250,502
Accrued expenses and other current liabilities	$ 1,046,938	$ 1,309,209	[1]

[1] Derived from audited financial statements

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Schedule of Outstanding Debt (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2019 USD ($) d	Mar. 04, 2019	Jun. 24, 2018 USD ($)	Jun. 07, 2016	Mar. 12, 2015	Jun. 30, 2012
Debt Instrument [Line Items]
Total debt outstanding, at par	$ 4,812,352		$ 2,486,953
Unamortized discount	(74,987)		(85,196)
Fair value adjustment - interest rate contracts	(14,917)		(31,189)
Unamortized bond issuance costs	(5,993)		(1,820)
Total debt outstanding, at carrying value	4,716,455		2,368,748
Current portion of long-term debt, and commercial paper	961,154		608,532
Long-term debt	$ 3,755,301		$ 1,760,216
Commercial paper
Debt Instrument [Line Items]
Effective Interest Rate	3.00%		2.33%
Commercial paper	$ 300,000		$ 360,000
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 (2041 Notes)
Debt Instrument [Line Items]
Senior notes interest rate						2.625%
Senior notes | Fixed-rate 2.75% Senior Notes Due March 15, 2020 (2020 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	2.75%				2.75%
Effective Interest Rate	2.88%		2.88%
Amount	$ 500,000		$ 500,000
Senior notes | Fixed-rate 2.80% Senior Notes Due June 15, 2021 (2021 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	2.80%			2.80%
Effective Interest Rate	2.95%		2.95%
Amount	$ 800,000		$ 800,000
Senior notes | Fixed-rate 3.80% Senior Notes Due March 15, 2025 (2025 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	3.80%				3.80%
Effective Interest Rate	3.87%		3.87%
Amount	$ 500,000		$ 500,000
Senior notes | Fixed-rate 3.75% Senior Notes Due March 15, 2026 (2026 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	3.75%	3.75%
Effective Interest Rate	3.86%		0.00%
Amount	$ 750,000		$ 0
Senior notes | Fixed-rate 4.00% Senior Notes Due March 15, 2029 (2029 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	4.00%	4.00%
Effective Interest Rate	4.09%		0.00%
Amount	$ 1,000,000		$ 0
Senior notes | Fixed-rate 4.875% Senior Notes Due March 15, 2049 (2049 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	4.875%	4.875%
Effective Interest Rate	4.93%		0.00%
Amount	$ 750,000		$ 0
Convertible debt | Fixed-rate 2.625% Convertible Notes Due May 15, 2041 (2041 Notes)
Debt Instrument [Line Items]
Senior notes interest rate	2.625%
Effective Interest Rate	4.28%		4.28%
Amount	$ 212,352		$ 326,953
Stock price percentage of conversion price	130.00%
Number of days on which common stock sale price was greater than or equal to 130% of conversion price, in a period of 30 consecutive trading days ending on the last trading day of the preceding the quarter | d	20
Number of consecutive trading days period required | d	30

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Convertible Senior Notes (Details) - Fixed-rate 2.625% Convertible Notes Due May 15, 2041 (2041 Notes)	1 Months Ended	3 Months Ended	9 Months Ended
	Jun. 30, 2012 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2019 USD ($) d
Debt Instrument [Line Items]
Principal amount | $	$ 700,000,000
Senior notes interest rate	2.625%
Convertible debt
Debt Instrument [Line Items]
Senior notes interest rate		2.625%	2.625%
Stock price percentage of conversion price			130.00%
Number of days on which common stock sale price was greater than or equal to 130% of conversion price, in a period of 30 consecutive trading days ending on the last trading day of the preceding the quarter			20
Number of consecutive trading days period required			30
Conversion of notes | $		$ 29,200,000	$ 114,600,000
Convertible debt | Redeemable
Debt Instrument [Line Items]
Stock price percentage of conversion price			150.00%
Number of days on which common stock sale price was greater than or equal to 130% of conversion price, in a period of 30 consecutive trading days ending on the last trading day of the preceding the quarter			20
Number of consecutive trading days period required			30
Maximum
Debt Instrument [Line Items]
Maximum amount of contingent interest rate	0.60%

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Components of Convertible Senior Notes (Details) - 2041 Notes $ / shares in Units, shares in Thousands	9 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares	Jun. 24, 2018 USD ($)
Debt Instrument [Line Items]
Remaining amortization period (years)	22 years 1 month 6 days	22 years 10 months 24 days
Fair Value of Notes (Level 2)	$ 1,166,900,000
Conversion rate (shares of common stock per $1,000 principal amount of notes)	0.0307418
Conversion rate (shares of common stock per $1,000 principal amount of notes)	$ 1,000
Conversion price (per share of common stock) | $ / shares	$ 32.53
If-converted value in excess of par value	$ 956,238,000
Estimated share dilution using average quarterly stock price $164.19 per share | shares	5,235
Share price (usd per share) | $ / shares	$ 164.19
Permanent Equity
Debt Instrument [Line Items]
Carrying amount of equity component, net of tax	$ 160,261,000	$ 159,120,000
Temporary Equity
Debt Instrument [Line Items]
Carrying amount of equity component, net of tax	$ 49,783,000	$ 78,192,000

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Convertible Warrants (Details) - Convertible debt - 2018 Notes shares in Millions	6 Months Ended
	Dec. 23, 2018 shares
Class of Warrant or Right [Line Items]
Warrants exercised	7.6
Shares issued during conversion of warrants	4.1

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Senior Notes (Details) - Senior notes - USD ($)		9 Months Ended
	Mar. 12, 2015	Mar. 31, 2019	Mar. 04, 2019	Jun. 07, 2016
Debt Instrument [Line Items]
Debt instrument, redemption price percent	100.00%
2026 Notes
Debt Instrument [Line Items]
Principal amount			$ 750,000,000
Senior notes interest rate		3.75%	3.75%
2029 Notes
Debt Instrument [Line Items]
Principal amount			$ 1,000,000,000.0
Senior notes interest rate		4.00%	4.00%
2049 Notes
Debt Instrument [Line Items]
Principal amount			$ 750,000,000
Senior notes interest rate		4.875%	4.875%
2020 Notes
Debt Instrument [Line Items]
Principal amount	$ 500,000,000
Senior notes interest rate	2.75%	2.75%
2025 Notes
Debt Instrument [Line Items]
Principal amount	$ 500,000,000
Senior notes interest rate	3.80%	3.80%
2021 Notes
Debt Instrument [Line Items]
Principal amount				$ 800,000,000
Senior notes interest rate		2.80%		2.80%
Debt instrument, redemption price upon occurrence of certain events, percent		101.00%

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Schedule of Additional Senior Notes Information (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2019 USD ($)
2020 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	1 year
2020 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 499,720
2021 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	2 years 2 months 12 days
2021 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 798,880
2025 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	6 years
2025 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 515,335
2026 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	7 years
2026 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 764,295
2029 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	10 years
2029 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 1,021,010
2049 Notes
Debt Instrument [Line Items]
Carrying amount of temporary equity component, net of tax	30 years
2049 Notes | Level 2
Debt Instrument [Line Items]
Fair Value of Notes (Level 2)	$ 791,888

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Commercial Paper Program (Details) - USD ($)	9 Months Ended
	Mar. 31, 2019	Jun. 24, 2018	Nov. 13, 2017
Commercial paper
Line of Credit Facility [Line Items]
Borrowings outstanding	$ 300,000,000	$ 360,000,000
Weighted average interest rate	3.00%
Maturity term	90 days
Commercial paper
Line of Credit Facility [Line Items]
Unsecured private placement commercial paper notes, maximum aggregate principal			$ 1,250,000,000

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Revolving Credit Facility (Details) - Revolving credit facility - USD ($)	Oct. 13, 2017	Mar. 31, 2019
Extinguishment of Debt [Line Items]
Revolving unsecured credit facility	$ 1,250,000,000
Additional increase in the facility, available expansion	600,000,000
Revolving unsecured credit facility, available expansion	$ 1,850,000,000
Borrowings outstanding		$ 0
Federal Funds Rate
Extinguishment of Debt [Line Items]
Variable interest spread	0.50%
One-month LIBOR
Extinguishment of Debt [Line Items]
Variable interest spread	1.00%
One-month LIBOR | Minimum
Extinguishment of Debt [Line Items]
Variable interest spread	0.00%
One-month LIBOR | Maximum
Extinguishment of Debt [Line Items]
Variable interest spread	0.50%
LIBOR | Minimum
Extinguishment of Debt [Line Items]
Variable interest spread	0.90%
LIBOR | Maximum
Extinguishment of Debt [Line Items]
Variable interest spread	1.50%

XML

LONG-TERM DEBT AND OTHER BORROWINGS - Schedule of Recognized Interest Cost Relating to Both Contractual Interest Coupon and Amortization of Discount on Liability Component of Notes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Debt Disclosure [Abstract]
Contractual interest coupon	$ 24,837	$ 20,663	$ 58,814	$ 57,246
Amortization of interest discount	956	2,860	2,743	10,374
Amortization of issuance costs	355	561	1,013	1,590
Effect of interest rate contracts, net	1,558	51	3,088	(552)
Total interest cost recognized	$ 27,706	$ 24,135	$ 65,658	$ 68,658

XML

COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($)	9 Months Ended
	Mar. 31, 2019	Jun. 24, 2018	[1]
Loss Contingencies [Line Items]
Restricted cash and investments	$ 255,774,000	$ 256,301,000
Letters of Credit
Loss Contingencies [Line Items]
Guarantee obligation maximum exposure	27,200,000
Operating Leases
Loss Contingencies [Line Items]
Operating lease residual value of guarantee, maximum	$ 220,400,000
Maximum percentage of aggregate investment value guaranteed	100.00%
Guarantee obligation maximum exposure	$ 250,000,000.0
Operating Lease Cash Collateral
Loss Contingencies [Line Items]
Restricted cash and investments	$ 250,000,000.0

[1] Derived from audited financial statements

XML

COMMITMENTS AND CONTINGENCIES - Schedule of Changes in Product Warranty Reserves (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Changes in Product Warranty Reserve
Balance at beginning of period	$ 166,906	$ 179,680	$ 192,480	$ 161,981
Warranties issued during the period	62,853	70,176	190,250	176,664
Settlements made during the period	(74,432)	(50,118)	(237,310)	(138,518)
Changes in liability for pre-existing warranties	3,994	340	13,901	(49)
Balance at end of period	$ 159,321	$ 200,078	$ 159,321	$ 200,078

XML

STOCK REPURCHASE PROGRAM - Additional Information (Details) $ / shares in Units, shares in Thousands			1 Months Ended	3 Months Ended			9 Months Ended
	Jan. 31, 2019 USD ($) financial_institution agreement shares	Aug. 15, 2018 USD ($) financial_institution agreement shares	Nov. 30, 2018 USD ($) shares	Mar. 31, 2019 USD ($) agreement $ / shares shares	Dec. 23, 2018 agreement $ / shares shares	Sep. 23, 2018 shares	Mar. 31, 2019 USD ($) shares
Equity, Class of Treasury Stock [Line Items]
Board authorized increase			$ 5,000,000,000
Net shares of settlements to cover tax withholding obligations (shares) | shares				423			447
Amount paid for shares under net share settlements				$ 74,800,000			$ 78,500,000
Weighted-average share price (usd per share) | $ / shares					$ 148.72
Stock repurchase program
Equity, Class of Treasury Stock [Line Items]
Board authorized increase			$ 5,000,000,000.0
Number of shares repurchased (shares) | shares			0	5,702	1,683	7,807
January 2019 ASR
Equity, Class of Treasury Stock [Line Items]
Number of accelerated share repurchase agreements | agreement	2
Number of financial institutions | financial_institution	2
Total repurchase amount	$ 760,000,000
Number of shares repurchased (shares) | shares	3,300
Percent of prepayment divided by closing stock price	75.00%
August 2018 ASR
Equity, Class of Treasury Stock [Line Items]
Number of accelerated share repurchase agreements | agreement		4		2	2
Number of financial institutions | financial_institution		2
Total repurchase amount		$ 1,400,000,000
Number of shares repurchased (shares) | shares		5,800		1,800	1,700
Percent of prepayment divided by closing stock price		75.00%
Weighted-average share price (usd per share) | $ / shares				$ 146.00

XML

STOCK REPURCHASE PROGRAM - Repurchases Under the Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Thousands	1 Months Ended	3 Months Ended				9 Months Ended
	Nov. 30, 2018	Mar. 31, 2019	Dec. 23, 2018	Sep. 23, 2018	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018	Jun. 24, 2018
Equity, Class of Treasury Stock [Line Items]
Total Cost of Repurchase		$ 936,270,000			$ 81,197,000	$ 2,673,572,000	$ 1,349,105,000
Board authorization	$ 5,000,000,000
Stock repurchase program
Equity, Class of Treasury Stock [Line Items]
Total Number of Shares Repurchased	0	5,702	1,683	7,807
Total Cost of Repurchase	$ 0	$ 861,506,000	$ 0	$ 1,733,530,000
Average Price Paid Per Share (usd per share)	$ 0	$ 168.78	$ 0	$ 183.55
Amount Available Under Repurchase Program	$ 5,000,000,000	$ 4,138,494,000	$ 5,000,000,000	$ 108,000		$ 4,138,494,000		$ 1,733,638,000
Board authorization	$ 5,000,000,000.0

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019		Mar. 25, 2018
Change in Accumulated Other Comprehensive Loss
Beginning balance		$ 5,784,363	$ 6,143,131	$ 6,501,851	[1]	$ 6,817,451
Other comprehensive (loss) income before reclassifications				(1,527)
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income				(1,457)
Effects of ASU 2018-02 adoption				(2,227)
Other comprehensive income (loss), net of tax		2,032	(1,271)	(5,211)		(3,731)
Ending balance		5,291,196	6,803,055	5,291,196		6,803,055
Accumulated Foreign Currency Translation Adjustment
Change in Accumulated Other Comprehensive Loss
Beginning balance				(32,722)
Other comprehensive (loss) income before reclassifications				(8,081)
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income				1,236
Effects of ASU 2018-02 adoption				0
Other comprehensive income (loss), net of tax				(6,845)
Ending balance		(39,567)		(39,567)
Accumulated Unrealized Gain or Loss on Cash flow hedges
Change in Accumulated Other Comprehensive Loss
Beginning balance				(4,042)
Other comprehensive (loss) income before reclassifications				4,437
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income				(2,492)
Effects of ASU 2018-02 adoption				(399)
Other comprehensive income (loss), net of tax				1,546
Ending balance		(2,496)		(2,496)
Accumulated Unrealized Holding Gain or Loss on Available-For-Sale Investments
Change in Accumulated Other Comprehensive Loss
Beginning balance				(1,190)
Other comprehensive (loss) income before reclassifications				1,441
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income				(201)
Effects of ASU 2018-02 adoption				0
Other comprehensive income (loss), net of tax				1,240
Ending balance		50		50
Accumulated Unrealized Components of Defined Benefit Plans
Change in Accumulated Other Comprehensive Loss
Beginning balance				(19,495)
Other comprehensive (loss) income before reclassifications				676
Losses (income) reclassified from accumulated other comprehensive income (loss) to net income				0
Effects of ASU 2018-02 adoption				(1,828)
Other comprehensive income (loss), net of tax				(1,152)
Ending balance		(20,647)		(20,647)
Total
Change in Accumulated Other Comprehensive Loss
Beginning balance		(64,692)	(64,160)	(57,449)		(61,700)
Effects of ASU 2018-02 adoption	[2]			(2,227)
Other comprehensive income (loss), net of tax			(1,271)			(3,731)
Ending balance		$ (62,660)	$ (65,431)	$ (62,660)		$ (65,431)

[1] Derived from audited financial statements

[2] Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS - Components of Accumulated Other Comprehensive Loss Footnotes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 25, 2018	Mar. 31, 2019	Mar. 25, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Revenue	$ 2,439,048	$ 2,892,115	$ 7,292,412	$ 7,951,070
Cost of goods sold	1,364,711	1,561,401	4,014,844	4,265,446
Selling, general, and administrative	190,306	197,791	534,179	565,719
Other income and expense	$ 20,532	$ (55,810)	(10,494)	$ (64,464)
Accumulated Unrealized Gain or Loss on Cash flow hedges | Reclassified from accumulated other comprehensive income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Revenue			7,727
Cost of goods sold			3,819
Selling, general, and administrative			1,339
Other income and expense			$ (77)

XML

Label	Element	Value
Dividends Payable	us-gaap_DividendsPayableCurrentAndNoncurrent	$ 82,030,000
Dividends Payable	us-gaap_DividendsPayableCurrentAndNoncurrent	164,874,000
Restricted Cash and Cash Equivalents	us-gaap_RestrictedCashAndCashEquivalents	256,587,000
Restricted Cash and Cash Equivalents	us-gaap_RestrictedCashAndCashEquivalents	$ 255,774,000