-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U2Yukk6297d5v++pLu4quPVxsfLa4BQ8YcQ4ODYYSlaW3fy0PRBvqTpblVTliTpz eGou8TaQ1W7fvX/+vHmRHQ== 0001012870-97-000226.txt : 19970225 0001012870-97-000226.hdr.sgml : 19970225 ACCESSION NUMBER: 0001012870-97-000226 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAM RESEARCH CORP CENTRAL INDEX KEY: 0000707549 STANDARD INDUSTRIAL CLASSIFICATION: 3559 IRS NUMBER: 942634797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12933 FILM NUMBER: 97526555 BUSINESS ADDRESS: STREET 1: 4650 CUSHING PKWY CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5106590200 MAIL ADDRESS: STREET 1: 4650 CUSHING PARKWAY CITY: FREMONT STATE: CA ZIP: 94538 10-Q 1 FORM 10-Q FOR PERIOD END 12/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1996 Commission File No. 0-12933 Lam Research Corporation (Exact name of Registrant as specified in its charter) Delaware 94-2634797 - - --------------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 4650 Cushing Parkway, Fremont, California 94538 - - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (510) 659-0200 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 --- ---- As of December 31, 1996 there were 30,585,280 shares of Registrant's Common Stock outstanding. INDEX Page No. ---- PART I. FINANCIAL INFORMATION....................................... 3 Item 1. Financial Statements (unaudited)............................ 3 Condensed Consolidated Balance Sheets ................... 3 Condensed Consolidated Statements of Income.............. 4 Condensed Consolidated Statements of Cash Flows.......... 5 Notes to Condensed Consolidated Financial Statements..... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 9 Results of Operations.................................... 9 Liquidity and Capital Resources.......................... 11 Risk Factors............................................. 12 PART II. OTHER INFORMATION........................................... 16 Item 1. Legal Proceedings........................................... 16 Item 4. Results of Vote of Stockholders............................. 16 Item 6. Exhibits and Reports on Form 8-K............................ 17 2 ITEM 1. FINANCIAL STATEMENTS -------------------- LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except per share data)
December 31, June 30, 1996 1996 (Unaudited) (Note) -------------- ---------- Assets Cash and cash equivalents $17,034 $62,879 Short-term investments 143,333 67,605 Accounts receivable, net 202,896 256,767 Inventories 256,923 322,366 Prepaid expenses and other assets 21,872 17,193 Deferred income taxes 51,120 50,035 -------------- ---------- Total Current Assets 693,178 776,845 Equipment and leasehold improvements, net 199,139 170,839 Other assets 28,323 21,681 -------------- ---------- Total Assets $920,640 $969,365 ============== ========== Liabilities and Stockholders' Equity Trade accounts payable $69,058 $112,883 Accrued expenses and other current liabilities 135,720 155,874 Line of credit borrowings 10,000 25,000 Current portion of long-term debt and capital lease obligations 14,181 12,896 -------------- ---------- Total Current Liabilities 228,959 306,653 Long-term debt and capital lease obligations, less current portion 61,844 52,926 -------------- ---------- Total Liabilities 290,803 359,579 Preferred stock: 5,000 shares authorized; none outstanding Common Stock at par value of $.001 per share Authorized -- 90,000 shares; issued and outstanding 30,585 shares at December 31, 1996 and 30,266 shares at June 30, 1996 31 30 Additional paid-in capital 305,107 298,160 Retained earnings 324,699 311,596 -------------- ---------- Total Stockholders' Equity 629,837 609,786 -------------- ---------- $920,640 $969,365 ============== ==========
- - ------------------------ Note -- The Condensed Consolidated Balance Sheet at June 30, 1996 has been derived from the audited financial statements at that date. See Notes to condensed consolidated financial statements. 3 LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited)
Three Months Ended Six Months Ended -------------------------- -------------------------- December 31, December 31, ------------ ------------ 1996 1995 1996 1995 --------- --------- --------- --------- Net sales $236,646 $284,195 $512,846 $541,942 Royalty income 4,710 6,322 11,269 11,819 --------- --------- --------- --------- Total revenue 241,356 290,517 524,115 553,761 Costs and expenses: Cost of goods sold 153,232 148,507 320,885 283,214 Research and development 38,846 39,054 80,371 75,037 Selling, general and administrative 45,686 52,578 94,568 100,162 Restructuring charge - - 9,021 - --------- --------- --------- --------- Operating income 3,592 50,378 19,270 95,348 Other expense, net 547 1,145 1,062 1,317 --------- --------- --------- --------- Income before income taxes 3,045 49,233 18,208 94,031 Income taxes 552 15,754 5,105 30,085 --------- --------- --------- --------- Net income $2,493 $33,479 $13,103 $63,946 ========= ========= ========= ========= Net income per share Primary $0.08 $1.18 $0.43 $2.26 ========= ========= ========= ========= Fully diluted $0.08 $1.12 $0.43 $2.12 ========= ========= ========= ========= Number of shares used in per share calculations Primary 30,900 28,300 30,750 28,350 ========= ========= ========= ========= Fully diluted 30,900 30,875 30,750 31,000 ========= ========= ========= =========
See Notes to condensed consolidated financial statements. 4 LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended ------------------------------------ December 31, December 31, 1996 1995 -------------- -------------- Cash flows from operating activities: Net income 13,103 63,946 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,166 14,803 Deferred income taxes (1,085) - Change in certain working capital accounts 55,834 (47,898) -------------- -------------- Net cash provided by operating activities 91,018 30,851 Cash flows from investing activities: Capital expenditures (37,310) (22,736) Purchase of short-term investments (380,835) (191,932) Sale/maturities of short-term investments 305,107 157,459 Restricted cash - 900 Proceeds from sales of securities - 12,038 Other (6,642) (5,633) -------------- -------------- Net cash used in investing activities (119,680) (49,904) -------------- -------------- Cash flows from financing activities: Proceeds from borrowings under line of credit 45,000 - Repayments of borrowings under line of credit (60,000) - Sale of stock, net of issuance costs 6,948 999 Proceeds from issuance of long-term debt 184 - Principal payments on long-term debt and capital lease obligations (9,315) (7,155) Other - (681) -------------- -------------- Net cash used in financing activities (17,183) (6,837) -------------- -------------- Net decrease in cash and cash equivalents (45,845) (25,890) Cash and cash equivalents at beginning of period 62,879 43,675 -------------- -------------- Cash and cash equivalents at end of period 17,034 17,785 ============== ==============
See Notes to condensed consolidated financial statements. 5 LAM RESEARCH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 1996 (Unaudited) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles 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 (the "Company") for the year ended June 30, 1996, which are included in the Annual Report on Form 10-K, File number 0-12933. The results of operations for the three and six month periods ended December 31, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 30, 1997. NOTE B -- INVENTORIES Inventories consist of the following:
December 31, June 30, 1996 1996 -------------- ----------- (in thousands) Raw materials $ 154,592 $167,513 Work-in-process 76,249 122,828 Finished goods 26,082 32,025 -------------- ----------- $ 256,923 $322,366 ============== =========== NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements consist of the following: December 31, June 30, 1996 1996 -------------- ----------- (in thousands) Equipment $ 154,771 $120,770 Furniture & fixtures 51,644 45,740 Leasehold improvements 96,866 88,131 -------------- ----------- 303,281 254,641 Accumulated depreciation and amortization (104,142) (83,802) -------------- ----------- $ 199,139 $170,839 ============== ===========
6 NOTE D -- OTHER EXPENSE, NET The significant components of other expense, net are as follows (in thousands):
Three Months Ended Six Months Ended December 31, December 31, 1996 1995 1996 1995 ----------------------------- ------------------------- Interest Expense $ 1,271 $ 2,131 $ 2,807 $ 4,099 Interest Income (1,316) (1,364) (2,435) (2,739) Other 592 378 690 (43) ----------------------------- ------------------------- $ 547 $ 1,145 $ 1,062 $ 1,317 ============================= =========================
NOTE E -- LINE OF CREDIT During fiscal 1996, the Company entered into a syndicated bank line of credit totaling $210.0 million, which expires in December 1998. At December 31, 1996, the Company had outstanding borrowings of $10.0 million against the line of credit. NOTE F -- NET INCOME PER SHARE For the three and six month periods ended December 31, 1996 and 1995, primary net income per share is calculated using the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The common stock equivalents include shares issuable upon the assumed exercise of stock options reflected under the treasury stock method. In addition, fully diluted net income per share for the three and six month periods ended December 31, 1995 reflects the assumed conversion of the Company's convertible subordinated debentures at the beginning of that period, and also adds the interest expense incurred on the debentures, net of income tax effect, to the net income amount for use in the fully diluted calculation. The convertible subordinated debentures were called by the Company during the quarter ended June 30, 1996, and therefore the impact of the assumed conversion is not included in the fully diluted net income per share for the three and six month periods ended December 31, 1996. NOTE G -- RESTRUCTURING During the first quarter of fiscal 1997, the Company restructured its operations by consolidating its previous business unit structure into a more centralized functional organization. As a result of the restructuring, and in response to industry conditions, the Company reduced its work force by approximately 11%. The Company recorded a restructuring charge of $9.0 million for costs related primarily to severance compensation and consolidation of facilities. 7 NOTE H -- STOCKHOLDER RIGHTS PLAN On January 23, 1997, the Company adopted a Shareholder Rights Plan (the Rights Agreement). Pursuant to the Rights Agreement rights will be distributed as a dividend at the rate of one right for each share of common stock, par value $0.001 per share, of the Company held by stockholders of record as of the close of business on January 31, 1997. The Rights will expire on January 31, 2007, unless redeemed or exchanged. Under the Rights Agreement, each right initially will entitle the registered holder to buy one unit of a share of preferred stock for $250.00. The rights will become exercisable only if a person or group (other than stockholders currently owning 15 percent of the Company's common stock) acquires beneficial ownership of 15 percent or more of the Company's common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15 percent or more of the Company's common stock. NOTE I -- LITIGATION See Part II, item 1 for discussion of litigation. 8 ITEM 2. Management's Discussion and Analysis of Financial -------------------------------------------------- Condition and Results of Operations ----------------------------------- The information in this discussion contains forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the Safe Harbor provisions created by that statute. Such statements are subject to certain risks and uncertainties, including those discussed below and under the heading Risk Factors, that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Forward-looking statements are indicated by an asterisk (*). The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The components of the Company's statements of income, expressed as a percentage of total revenue, are as follows:
Three Months Six Months Ended Ended December 31 December 31, 1996 1995 1996 1995 ------------------- -------------------- Net Sales 98.1% 97.8% 97.9% 97.9% Royalty income 1.9 2.2 2.1 2.1 ------------------- -------------------- 100.0 100.0 100.0 100.0 Cost of goods sold 63.5 51.1 61.2 51.1 Research and development 16.1 13.5 15.3 13.6 Selling, general & administrative 18.9 18.1 18.1 18.1 Restructuring charge - - 1.7 - -------------------- ------------------ Operating income 1.5 17.3 3.7 17.2 Other expense, net 0.2 0.4 0.2 0.2 -------------------- ------------------ Income before income taxes 1.3 16.9 3.5 17.0 Income taxes 0.3 5.4 1.0 5.4 -------------------- ------------------ Net income 1.0% 11.5% 2.5% 11.6% ==================== ==================
Results of Operations - - --------------------- Total revenue for the three month period ended December 31, 1996, was 17% and 15%, respectively, lower compared to the year-ago and preceding periods. Total revenue for the six month period ended December 31, 1996 was $524.1 million, a decrease of $29.6 million from the year-ago period. Overall, total revenue was down due to the reduced demand for equipment caused by oversupply. During the first six months of fiscal 1997, the Company's product mix shifted towards a higher percentage of sales of Alliance/TM/ cluster etch systems and chemical 9 vapor deposition(CVD) systems and a significantly lower percentage of sales of Rainbow/TM/ systems. Total export sales were 63% of total revenue during the second quarter of fiscal 1997 compared to 59% and 68% of total revenue, respectively, for the year-ago quarter and the preceding quarter. Regionally, the Company experienced increased sales in the Far East (Taiwan, Singapore and China) during both the three and six month periods ended December 31, 1996 compared to the year-ago periods. All other regions except Europe experienced decreases in net sales for both the three and six month periods ended December 31, 1996. Total spares and service revenue decreased 5% and 9%, respectively during the second fiscal quarter compared with the year-ago quarter and the preceding quarter, but was slightly higher on a fiscal year-to-date basis. The worldwide semiconductor market has been experiencing a slowdown in product demand. This slowdown has caused a reduction in demand for semiconductor processing equipment. During the first six months of fiscal 1997, the Company's revenue was adversely affected by the worldwide slowdown in the semiconductor market. The Company anticipates that its sales will continue to be adversely affected by this slowdown and therefore the revenue levels achieved for the remaining half of fiscal 1997 may be lower than the revenue level achieved in the first half months of fiscal 1997.* Royalty income for the three month period ended December 31, 1996 decreased 25% and 28%, respectively, from the year-ago quarter and the preceding quarter. Royalty income also decreased 5% for the first six months of fiscal 1997 compared to the year-ago period all reductions of which are due to a continued slowdown in demand for wafer processing equipment in the Japanese market sector. The Company expects that royalty income will decrease significantly in subsequent quarters as the recently extended royalty agreement with Tokyo Electron Limited reduces the 5% royalty rate to 1% beginning January 1, 1997.* The Company's gross margin percentage declined to 36.5% in the second quarter of fiscal 1997 compared with 48.9% and 40.7%, respectively, for the year-ago quarter and the preceding quarter. Gross margin percentage was 38.8% for the first six months of fiscal 1997 compared with 48.9% for the year-ago period. Approximately half of the decline in the Company's gross margin can be attributed to the change in product sales mix and the remaining half to a combination of excess manufacturing capacity costs and increased warranty and installation costs as a percentage of revenue. During the second quarter of fiscal 1997, the Company's product mix continued to shift to a higher percentage of the newer lower margin Alliance cluster etch and CVD products. During fiscal 1996 the Company sold a higher percentage of the higher margin Rainbow etch products. Furthermore, as a result of reduced manufacturing volumes the Company experienced substantial excess manufacturing capacity during the first and second quarters of fiscal 1997 that contributed to the decline in gross margin. Warranty and installation costs continued to increase as a percentage of the reduced sales levels. Also contributing to the decline in gross margin were costs incurred in relation to a first quarter fiscal 1997 inventory reduction program involving the return of certain inventory to suppliers. During the first six months of fiscal 1997, the Company also incurred lower gross margins on its spares and service revenue due to increasing service contract costs and increasing spare parts costs. The Company anticipates that the slowdown in the worldwide semiconductor industry and the Company's related excess manufacturing costs will continue to negatively impact its gross margins for the remainder of fiscal 1997.* Research and development (R&D) expenses for the quarter ended December 31, 1996 were flat compared to the year-ago quarter but decreased 10 6.5% compared to the preceding quarter. For the six month period ended December 31, 1996, R&D expenses increased 7.1% compared to the same period of the prior fiscal year. During the first quarter of fiscal 1997, the Company implemented a restructuring of its operations which eliminated the prior business unit structure. As a result, the Company centralized its R&D activities and eliminated certain duplicate functions, which resulted in reduced headcount and contributed to the decreased R&D expense for the quarter ended December 31, 1996 compared to the year-ago quarter and preceding quarter. The Company believes that in order to remain competitive it must continue to invest substantially in R&D. The Company continues to invest in advanced etch applications, chemical vapor deposition (CVD) technologies, flat panel display technology and continued enhancements of the Alliance and TCP products. Selling, general and administrative (SG&A) expenses decreased 13.1% and 6.5%, respectively, during the second quarter of fiscal 1997 compared to the year-ago quarter and the preceding quarter. In addition, SG&A expenses for the six month period ended December 31, 1996 were 5.6% lower than the prior fiscal year period. During fiscal 1996, the Company added new employees in all areas to accommodate the increase in sales volume. However, as a result of the slowdown in the industry, and the need to keep costs in line with demand, the Company implemented a restructuring of its operations during the first quarter of fiscal 1997, and implemented programs, including a reduction in workforce, to reduce expenses and capital spending. During the second quarter of fiscal 1997, the Company's operating expenses were reduced due to the effects of the restructuring, execution of programs designed to reduce discretionary spending, and a significant reduction in capital spending. During the first quarter of fiscal 1997, and as part of the restructuring, the Company recorded a charge of $9.0 million related primarily to severance compensation and consolidation of facilities. The Company expects that operating expenses may continue to decline on a dollar basis in fiscal 1997 compared to fiscal 1996 but may be slightly higher as a percentage of revenue.* The effective tax rate for the fiscal 1997 six month period is 28% compared to 32% for the prior year period, due primarily to the reinstatement of the federal research and development tax credit for fiscal 1997 and available tax credits becoming a higher percentage of the Company's lower profit before tax in fiscal 1997. Liquidity and Capital Resources - - ------------------------------- Net cash from operating activities was $91.0 million for the six months ended December 31, 1996, derived primarily from decreases in working capital. The decline in system shipments contributed to decreases in receivables, inventory and accounts payable. Also contributing to the decrease in inventory was the impact of a Company-wide inventory reduction program. During the first six months of fiscal 1997, an additional $46.7 million was provided from the sale of yen-denominated Japanese receivables to a bank (under an amended agreement whereby the Company increased the amount of yen-denominated Japanese receivables it may sell to the bank from 6 billion yen to 9 billion). At December 31, 1996, $21.2 million of the total receivables sold under this agreement remained uncollected by the bank and subject to recourse provisions. Capital expenditures for the six month period ended December 31, 1996 were $37.3 million, primarily for capitalization of Alliance demonstration machines, and the completion of facility 11 leasehold improvements and furnishings. Also contributing to the cash used in investing activities were net purchases of short-term investments of $75.7 million. Net cash used in financing was $17.2 million due primarily to net repayments of borrowings under the line of credit of $15.0 million and principal debt payments of $9.3 million offset by proceeds from the sale of common stock under the employee stock purchase and option plans. As of December 31, 1996, the Company had $160.4 million in cash, cash equivalents and short-term investments compared with $130.5 million at June 30, 1996. The Company has a total of $210.0 million available under a syndicated bank line of credit which is due to expire in December 1998. Borrowings under the line of credit bear interest at the bank's prime rate or 0.7% to 0.9% over London Interbank Offered Rate. Borrowings under the line of credit are subject to the Company's compliance with financial covenants. At December 31, 1996, the Company had borrowings against the syndicated bank line of credit of $10.0 million. The Company's cash, cash equivalents, short-term investments and available lines of credit at the end of the first quarter of fiscal 1997 are considered adequate to support current levels of operations for at least the next twelve months.* Risk Factors - - ------------ CURRENT VOLATILITY IN THE SEMICONDUCTOR INDUSTRY The Company's business depends upon the capital expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits and products utilizing integrated circuits. The semiconductor industry has been cyclical in nature and historically experienced periodic downturns. The semiconductor industry has recently followed such cyclicality and is presently experiencing such a downturn in product demand and pricing. This slowdown has had an adverse effect on the semiconductor industry's demand for semiconductor processing equipment which has had an adverse effect on the Company's operating results in the first six months of fiscal 1997. The Company anticipates that the current slowdown in demand for semiconductor equipment will continue to adversely affect the Company's operating results through fiscal 1997.* No assurance can be given that the Company's revenue and operating results will not continue to be adversely affected for longer or by future downturns. In addition, the need for continued investments in R&D, substantial capital equipment requirements and extensive ongoing worldwide customer service and support requirements may limit the Company's ability to reduce expenses. Accordingly, there can be no assurance that the Company will be able to remain profitable in the future or if it remains profitable how profitable it will be.* HIGHLY COMPETITIVE INDUSTRY The semiconductor processing equipment industry is highly competitive. The Company faces substantial competition throughout the world. The Company believes that to remain competitive, it will require significant financial resources in order to offer a broad range of products, to maintain customer service and support centers worldwide, and to invest in product and process research and 12 development. In addition, the Company intends to continue to invest substantial resources into its effort to increase sales of its systems to Japanese semiconductor manufacturers, who represent a substantial portion of the worldwide semiconductor market and whose market is difficult for non-Japanese equipment companies to penetrate.* The Company believes that the semiconductor equipment industry is becoming increasingly dominated by large manufacturers which have the resources to support customers on a worldwide basis and to provide a single source for a broad range of products, and certain of the Company's competitors have substantially greater financial resources, more extensive engineering, manufacturing, marketing and customer service and support capabilities and broader product line than the Company. In addition, there are smaller emerging semiconductor equipment companies which provide innovative technology. The Company expects its competitors to continue to improve the design and performance of their current products and processes and to introduce new products and processes with improved price and performance characteristics.* Although no such alliances have yet been formed which have negatively impacted the Company's business, if the Company's competitors enter into strategic relationships with leading semiconductor manufacturers covering etch or deposition products similar to those sold by the Company, its ability to sell its products to those manufacturers could be adversely affected. No assurance can be given that the Company will continue to compete successfully in the United States or worldwide.* DEPENDENCE ON NEW PRODUCTS AND PROCESSES; RAPID TECHNOLOGICAL CHANGE Semiconductor manufacturing equipment and processes are subject to rapid technological change. The Company believes that its future success will depend in part upon its ability to continue to enhance its existing products and their process capabilities and to develop and manufacture new products with improved process capabilities. As a result, the Company expects to continue to make significant investments in R&D.* The Company also must manage product transitions successfully, as introductions of new products could adversely affect sales of existing products. There can be no assurance that future technologies, processes or product developments will not render the Company's current product offerings obsolete or that the Company will be able to develop and introduce new products or enhancements to its existing products and processes in a timely manner which satisfy customer needs or achieve market acceptance. The failure to do so could adversely affect the Company's business. Furthermore, if the Company is not successful in the development of advanced processes or equipment for manufacturers with whom it has formed strategic alliances, its ability to sell its products to those manufacturers will be adversely affected. In addition, in connection with the development of the Company's new products, the Company invests in high levels of preproduction inventory, and the failure to complete development and commercialization of these new products in a timely manner could result in inventory obsolescence, which could have an adverse effect on the Company's financial results. FLUCTUATIONS IN QUARTERLY OPERATING RESULTS The Company's revenue and operating results may fluctuate from quarter to quarter. The Company derives its revenue primarily from the sale of a relatively small number of high-priced systems which can 13 range in price from $300,000 to over $3.5 million. Some of these systems are ordered and shipped during the same quarter. The Company's results of operations for a particular quarter could be adversely affected if anticipated orders for even a small number of systems were not received in time to enable shipment during the quarter, if anticipated shipments were delayed or cancelled by one or more customers or if shipments were delayed due to manufacturing difficulties. In particular, during the first six months of fiscal 1997 the Company has experienced certain cases of rescheduling or cancellation of orders, which have had an adverse effect on the Company's operating results. The Company's revenue and operating results may also fluctuate due to the mix of products sold, the channel of distribution or the level of royalty income from the Company's Japanese licensees. The Company generally realizes a higher margin on sales of its mature etch products and on revenue from service and spare parts than on sales of new Alliance cluster etch, CVD and flat panel display products. While newer products usually have lower margins in the initial phase of production, there can be no assurance that margins will improve as the products mature.* Increases or decreases in royalty income will also have a disproportionate impact on operating income and will continue to fluctuate on a quarterly basis. Specifically, the Company's royalty agreement with Tokyo Electron Limited, which was due to expire in December 1996, has been renewed at a significantly lower royalty rate. The impact of these and other factors on the Company's revenues and operating results in any future periods is difficult for the Company to forecast. DEPENDENCE ON KEY SUPPLIERS Certain of the components and subassemblies included in the Company's products are obtained from a single supplier or a limited group of suppliers. The Company believes that alternative sources could be obtained and qualified to supply these products.* Nevertheless, a prolonged inability to obtain certain components could have an adverse effect on the Company's operating results and could result in damage to customer relationships. ENVIRONMENTAL REGULATIONS The Company is subject to a variety of governmental regulations related to the discharge or disposal of toxic, volatile, or otherwise hazardous chemicals used in the manufacturing process. The Company believes that it is in compliance with these regulations and that it has obtained all necessary environmental permits to conduct its business, which permits generally relate to the disposal of hazardous wastes. Nevertheless, the failure to comply with present or future regulations could result in fines being imposed on the Company, suspension of production or cessation of operations. Such regulations could require the Company to acquire significant equipment or to incur substantial other expenses to comply with environmental regulations. Any failure by the Company to control the use of, or adequately restrict the discharge or disposal of hazardous substances could subject the Company to future liabilities. INTERNATIONAL SALES The Company anticipates that export sales will continue to account for a significant portion of its net sales. Additionally, the Company continues to expand its international operations, including expansion 14 of its facilities in Asia.* As a result, a significant portion of the Company's sales and operations will be subject to certain risks, including tariffs and other barriers, difficulties in staffing and managing foreign subsidiary and branch operations, difficulties in managing distributors, potentially adverse tax consequences and the possibility of difficulty in accounts receivable collection. There can be no assurance that any of these factors will not have a material adverse effect on the Company's business, financial condition and results of operations. INTELLECTUAL PROPERTY MATTERS From time to time, the Company is notified that it may be in violation of certain patents. In such cases, the Company's policy is to defend against the claims or negotiate licenses where considered appropriate. However, no assurance can be given that it will be able to obtain necessary licenses on commercially reasonable terms or at all. Any failure to obtain such licenses on commercially reasonable terms, or at all, or litigation resulting from such claims could have a material adverse effect on the Company's business and financial condition. CHANGE OF CONTROL On January 23, 1997, the Company adopted a Shareholder Rights Plan (the "Rights Plan") in which rights were distributed as a dividend at the rate of one right for each share of common stock, par value $.001 per share, of the Company held by stockholders of record as of the close of business on January 31, 1997. In connection with the adoption of the Rights Plan, the Board of Directors also adopted a number of amendments to the Company's Bylaws, including amendments requiring advance notice of stockholder nominations of directors, stockholder proposals, actions by written consent by stockholders and a stockholder's intention to cumulate votes. The Bylaw amendments also eliminate the right of stockholders to call special meetings of stockholders. The Rights Plan may have certain anti-takeover effects. The Rights Plan will cause substantial dilution to a person or group that attempts to acquire the Company in certain circumstances. Accordingly, the existence of the Rights Plan and the issuance of the related rights may deter certain acquirors from making takeover proposals or tender offers. The Rights Plan, however, is not intended to prevent a takeover but rather is designed to enhance the ability of the Board of Directors to negotiate with a potential acquiror on behalf of all of the stockholders. In addition, certain of the provisions of the Bylaw amendments may have the effect of delaying or deferring a change in control of the Company. 15 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings - - ------- ----------------- In October 1993, Varian Associates, Inc. ("Varian") brought suit against the Company in the United States District Court, Northern District of California, seeking monetary damages and injunctive relief based on the Company's alleged infringement of certain patents held by Varian. The lawsuit is in the late stages of discovery and was reassigned a new judge. The Company has asserted defenses of invalidity and unenforceability of the patents that are the subject of the lawsuit, as well as noninfringement of such patents by the Company's products. While litigation is subject to inherent uncertainties and no assurance can be given that the Company will prevail in such litigation or will obtain a license under such patents on commercially reasonable terms or at all if such patents are held valid and infringed by the Company's products, the Company believes that the Varian lawsuit will not have a material adverse effect on the Company's consolidated financial statements. In addition, the Company is from time to time notified by various parties that it may be in violation of certain patents. In such cases, it is the Company's intention to seek negotiated licenses where it is considered appropriate. The outcome of these matters will not, in management's opinion, have a material impact on the Company's consolidated financial position, operating results or cash flows. ITEM 4. Results of Vote of Stockholders The Annual Meeting of Stockholders of Lam Research Corporation was held at the principal office of the Company at 4650 Cushing Parkway, Fremont, California 94538 on October 31, 1996. Out of 30,298,633 shares of Common Stock entitled to vote at the meeting, 27,372,313 shares were present in person or by proxy. The vote for nominated directors, to serve for the ensuing year, and until their successors are elected, was as follows:
NOMINEE IN FAVOR WITHHELD - - ------- -------- -------- Roger D. Emerick 26,991,096 381,217 David G. Arscott 27,047,741 324,572 Jack R. Harris 27,045,927 326,386 Grant M. Inman 27,047,156 325,157 Osamu Kano 27,000,163 372,150
The results of voting on the following items were as set forth below: (a) Approval of amendment of the Company's 1984 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 350,000 shares to 1,687,500:
BROKER IN FAVOR OPPOSED WITHHELD NON-VOTES -------- ------- -------- --------- 26,533,000 571,670 108,498 159,145
(b) Ratification of appointment of Ernst & Young LLP as independent auditors for the Company for the fiscal year ending June 30, 1997:
BROKER IN FAVOR OPPOSED WITHHELD NON-VOTES -------- ------- -------- ------------- 27,284,278 42,856 45,179 none
16 ITEM 6. Exhibits and Reports on Form 8-K - - ------- -------------------------------- (a) Exhibits Exhibit 3.2/(1)/ Amended and Restated ByLaws of the Registrant, dated January 23, 1997 Exhibit 4.7/(2)/ Rights Agreement, dated as of January 23, 1997 , between the Registrant and Chase Mellon Shareholder Service, L.L.C., which includes Exhibit B thereto the Form of Right Certificate Exhibit 10.34 Agreement between Registrant and Henk J. Evenhuis, dated January 21, 1997 Exhibit 11.1 Statement Re: Computation of Earnings Per Share Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed a Form 8-K on February 4, 1997, reporting that on January 23, 1997, the Company adopted a Shareholder Rights Plan (the Rights Agreement) and a number of amendments to the Company's ByLaws. Pursuant to the Rights Agreement rights will be distributed as a dividend at the rate of one right for each share of common stock, par value $0.001 per share, of the Company held by stockholders of record as of the close of business on January 31, 1997. The Rights will expire on January 31, 2007, unless redeemed or exchanged. Under the Rights Agreement, each right initially will entitle the registered holder to buy one unit of a share of preferred stock for $250.00. The rights will become exercisable only if a person or group (other than stockholders currently owning 15 percent of the Company's common stock) acquires beneficial ownership of 15 percent or more of the Company's common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15 percent or more of the Company's common stock. In connection with the adoption of the Rights Plan, the Board of Directors also adopted a number of amendments to the Company's ByLaws, including amendments requiring advance notice of stockholder nomination of directors, stockholder proposals, actions by written consent by stockholders, and a stockholder's intention to cumulate votes. The ByLaw amendments also eliminate the right of stockholders to call special meetings of stockholders. /(1)/ Incorporated herein by reference to Exhibit 3.10 to the Company's Current Report on Form 8-K filed by the Company on February 4, 1997. /(2)/ Incorporated herein by reference to Exhibit 1 to the Company's Registration Statement and Form 8-A/A, dated January 30, 1997. 17 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: February 12, 1997 LAM RESEARCH CORPORATION By:/s/ Henk J. Evenhuis -------------------- Henk J. Evenhuis, Executive Vice President, Finance & Chief Financial Officer 18 EX-10.34 2 AGREEMENT BETWEEN REGISTRANT & HENK EVENHUIS Exhibit 10.34 January 21, 1997 Henk J. Evenhuis 3344 Deer Hollow Drive Danville, California 94526 Re: Change of Employment Status Dear Henk: The purpose of this letter is to memorialize the Agreement between yourself and Lam Research Corporation ("Lam" or the "Company") regarding your upcoming change in employment status and your subsequent termination of employment. Subject to the Board's approval at the next meeting, your signature on the enclosed copy of this letter will constitute a binding Agreement between you and Lam relative to your continued employment and the termination of that employment on the following terms and conditions: 1. LOA Status. Effective April 30, 1997, you will commence a fully ---------- paid Leave of Absence ("LOA") from Lam. The commencement date may be adjusted upon mutual agreement. The term of the LOA will be fifteen (15) months unless sooner terminated as set forth below. From now until the commencement of your LOA, and during the LOA, if necessary, you agree to work with the President of Lam on making an orderly transition of your current duties and responsibilities to others at Lam. 2. Duties and Position While on LOA. During the LOA period, you will -------------------------------- hold the title and position of a "non-officer" Vice President, that is, you will no longer hold a corporate officer position at Lam. Accordingly, you will not be authorized Henk J. Evenhuis January 21, 1997 Page 2 to make commitments with third parties on behalf of Lam, speak in an official capacity to the press or securities analysts or others about Lam's business or prospects, or bind Lam contractually, unless given prior written authorization to do so by the Chief Executive Officer (the "CEO") of the Company. During the LOA term, you will report directly to the CEO and you will have no active duties or responsibilities other than those specifically assigned by the CEO. Regardless of whether the Company uses your services, however, you agree to make yourself available to discharge such duties and perform such services as may be assigned to you. During the LOA term, you agree that you will not engage in any other significant business activity, whether or not competitive with Lam. 3. Compensation. During the LOA term, Lam will continue to pay your ------------ annual salary on a biweekly basis. During the LOA term, your salary shall not be subject to any downward adjustment. You will be entitled to participate in Lam's Executive Deferred Compensation Plan, Performance Based Restricted Stock Plan, Performance Plus Plan, and any other bonus or profit sharing plan available to non-officer vice presidents of Lam, in the same manner as any other non-officer vice president (under a VP-A designation). You will also be entitled to continue your participation in Lam's 401(k) Plan and Stock Purchase Plan. Following termination of the LOA for any reason, your vested benefits under Lam's 401(k) Plan and Stock Purchase Plan and any other plan described in this paragraph 3 in which you then participate will be distributed to you in accordance with applicable provisions of such plans governing distributions; provided, however, that notwithstanding any provisions contained in such plans to the contrary, at the conclusion of the LOA term, you will be permitted to receive one or more distributions from the Henk J. Evenhuis January 21, 1997 Page 3 Performance Based Restricted Stock Plan in either cash or Lam stock, at your election, and to withdraw all or any portion of the funds credited to your account in the Deferred Compensation Plan, without imposition of any penalty for early withdrawal or for any other reason. Your current monthly car allowance will be paid through the LOA term. You will be entitled to receive reimbursement for all authorized Company related expenses (airfare, accommodations, mileage, parking, meals, etc.) incurred during the LOA term, in accordance with Lam's reimbursement policy as it applies to other non-officer vice presidents of Lam with a VP-A designation. During the LOA term, you will not accrue any vacation or holiday credits, or any other paid time off benefits. In lieu of the sabbatical you are entitled to take after April 25, 1997, you will receive a cash distribution equal to the amount of your base salary that would have been payable to you during the sabbatical, less applicable withholding. 4. Benefits. During the LOA term, you will be entitled to receive -------- the same medical, dental, disability and life insurance benefits received by other non-officer vice presidents with a VP-A designation at Lam, to the extent that you satisfy the eligibility requirements of such plans and programs, and subject to the terms and conditions thereof. Following any termination of this Agreement, other than a termination under paragraph 6(a) below, your participation in such plans will cease and you will then be entitled to participate in the Company's group medical and dental plans for retired board members and executives, on the terms and conditions contained in the plans described in Attachment A. 5. Stock Options. Your outstanding stock options will continue to ------------- vest according to the applicable vesting schedules Henk J. Evenhuis January 21, 1997 Page 4 during the LOA term, and any option exercises during the LOA term must be made in accordance with your current stock option agreements. Unless otherwise specifically provided for herein, you must exercise any vested options within ninety 90 days following any termination of the LOA. Failure to do so will cause any vested options to lapse. No additional stock options will be granted to you during the LOA term. 6. Termination. Your employment during the LOA term will be "at ----------- will," meaning that either you or Lam will have the right to terminate your employment at any time in your or Lam's discretion, subject to the provisions of this paragraph 6. Except as described in this paragraph 6, no severance or other payments will be payable by Lam to you or any other person upon termination of the LOA and your employment. The LOA and your employment with Lam will continue for fifteen (15) months unless sooner terminated in accordance with subparagraphs (a) through (d) below. (a) Lam may terminate your employment for cause at any time upon the occurrence of the events described in Attachment B, hereto, by delivering to you prior written notice of termination supported by a statement of the reasons for termination. Upon termination for cause, all of your duties will immediately cease, and all of Lam's obligations under this Agreement and all of the compensation and benefits described in paragraphs 3 and 4 above (and all reimbursements for expenses incurred after your receipt of notice) will cease. In the event of such termination, the Company will pay you, no later than ten days following the date of termination, a lump sum equal to your accrued salary through the date of termination, and all accrued vacation pay, if any. Your vested benefits under the plans described in Henk J. Evenhuis January 21, 1997 Page 5 paragraph 3 will be distributed to you in accordance with the applicable provisions thereof. (b) Lam may terminate your employment other than for cause at any time by giving you 90 days advance notice in writing. In such case, all of your duties will cease following the notice period, and Lam will have the option to (i) continue providing the compensation and benefits described in paragraphs 3 and 4 above for the remainder of the LOA term, or (ii) accelerate payment of all remaining salary, accrued vacation pay, accrued bonuses, if any, and any other fixed payments that can be accelerated, and pay the same to you in a lump sum disbursement. Any payments that are not fixed will continue to be paid in accordance with paragraph 3 during the term of the LOA, unless you and Lam agree otherwise. Upon such termination, Lam will continue to provide all medical benefits for the remainder of the original 15-month LOA term and, thereafter, you will be entitled to participate in the Company's group medical and dental plans for retired board members and executives, on the terms and conditions contained in the plans described in Attachment A. No termination of your employment under this paragraph 6(b) will affect your eligibility to participate in or otherwise prevent your participation in such group medical and dental plans. Notwithstanding termination hereunder, your stock options will continue to vest during the remainder of the original 15-month LOA term and will be exercisable, to the extent vested, for a period of ninety (90) days thereafter. (c) You may terminate your employment at any time by giving 30 days advance notice in writing. In such case, all of your duties and all of Lam's obligations under this Agreement and Henk J. Evenhuis January 21, 1997 Page 6 all of the compensation and benefits described in paragraphs 3 and 4 above (and all reimbursements for expenses incurred following the notice period), will cease following the notice period, except that you will then be entitled to participate in the Company's medical and dental plans for retired board members and executives, on the terms and conditions contained in the plans described in Attachment A. No later than the date of termination, Lam will pay you a lump sum equal to your accrued salary, accrued vacation and unreimbursed expenses through the date of termination, but you shall not be entitled to receive any bonus, car allowance or any other payments from Lam. Upon termination, the vesting of all of your outstanding stock options shall be accelerated to the extent they would have vested during the remainder of the original 15-month LOA term, and such vested options shall be exercisable for ninety (90) days after such termination. (d) Your employment with Lam will terminate in the event of your death. Upon your death during the term of the LOA, Lam will pay your estate all salary due or accrued as of the date of death, and all accrued vacation pay and accrued bonuses, if any, and all expense reimbursements then due and payable. Subject to paragraph 14 hereof, Lam will have no obligation to pay any severance, death benefit or any other compensation or payments to your estate, administrators, heirs, personal representatives or executors upon your death. Distributions, if any, under any benefit plans in which you were a participant on the date of death will be made in accordance with the provisions of such plans. 7. Successors and Assigns. Any successor to all or substantially all ---------------------- of Lam's business and/or assets shall be required to assume the obligations under this Agreement in the same manner Henk J. Evenhuis January 21, 1997 Page 7 and to the same extent as Lam would be required to perform such obligations in the absence of a succession. You will not assign any of your rights hereunder. 8. Release and Covenant Not to Sue. In exchange for the sums and ------------------------------- benefits paid to you under this Agreement, and for other good and valuable consideration, the sufficiency of which you acknowledge, you agree to waive and release and promise never to assert any and all claims which you now, in the past or in the future may have against Lam and its predecessors, subsidiaries, related entities, officers, directors, shareholders, agents, attorneys, employees, successors, or assigns (collectively, the "Releasees"), whether presently known or unknown, suspected or unsuspected, arising from or related to your LOA, your employment with Lam and/or the termination of the LOA or your employment with Lam. These claims include, but are not limited to: (a) any and all claims relating to or arising from your position and employment relationship with the Company, your change in status and the termination of that employment relationship; (b) any and all claims relating to, or arising from, your right to purchase or actual purchase of shares of stock of the Company; (c) any and all claims for wrongful discharge of employment; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and Henk J. Evenhuis January 21, 1997 Page 8 implied; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; personal injury; violation of public policy; and defamation; (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the California Fair Employment and Housing Act; (e) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and (f) any and all claims for attorneys' fees and costs. You agree that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. It is understood and agreed that this release will have no effect upon any Workers' Compensation claims, nor will it have any effect upon any long-term disability claims that you may have against insurance carriers, nor does it extend to any obligations incurred under this Agreement. 9. Acknowledgement of Waiver of Claims under ADEA. You acknowledge ---------------------------------------------- that you are waiving and releasing any rights you may have under the Age Discrimination in Employment Act of 1967 Henk J. Evenhuis January 21, 1997 Page 9 ("ADEA") and that this waiver and release is knowing and voluntary. You and the Company agree that this waiver and release does not apply to any rights or claims that may arise under ADEA after the effective date of this Agreement. You acknowledge that the consideration given for this waiver and release Agreement is in addition to anything of value to which you are already entitled. You further acknowledge that you have been advised by this writing that (a) you should consult with an attorney prior to executing this Agreement; (b) you have ----- had at least twenty-one (21) days within which to consider this Agreement; (c) you have had at least seven (7) days following the execution of this Agreement to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. 10. Civil Code Section 1542. You expressly waive and relinquish all ----------------------- rights and benefits afforded by any statute (such as Section 1542 of the Civil Code of the State of California) which limits the effect of a release with respect to unknown claims. You do so understanding and acknowledging the significance of your release of unknown claims and your waiver of statutory protection against a release of unknown claims (such as under Section 1542). Section 1542 of the Civil Code of the State of California states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Henk J. Evenhuis January 21, 1997 Page 10 Thus, notwithstanding the provisions of Section 1542 or of any similar statute, and for the purpose of implementing a full and complete release and discharge of the Releasees, you expressly acknowledge that this Agreement is intended to include in its effect all claims which are known and all claims which you do not know or suspect to exist in your favor at the time of execution of this Agreement and that this Agreement contemplates the extinguishment of all such claims. 11. Confidentiality. During the course of your employment with Lam, --------------- you have had access to or have had possession of confidential and proprietary information and materials of Lam (including, but not necessarily limited to, software or computer equipment, client or customer lists, telephone records or lists, accounting procedures and Company forecasts and projections). You acknowledge that all such information and materials constitute the protected trade secrets of Lam. You represent that you have held all such information and materials confidential and will continue to do so during the LOA term and thereafter, except as required by subpoena or other court order, provided that you give Lam sufficient advance notice to contest the subpoena or other court order or seek a protective order. You further agree not to disclose to others any information regarding the terms of this letter, the benefits being paid under it or the fact of any payments made, except that you may disclose this information to your immediate family (spouse, children or parents), or to your attorney, accountant, or other professional advisor to whom you must make the disclosure in order for them to render professional services to you. You will instruct Hank J. Evenhuis January 21, 1997 Page 11 all such persons, however, to maintain the confidentiality of this information. 12. Arbitration. Any dispute between Lam and you arising out of or ----------- relating to the interpretation, enforcement, performance or alleged breach of this Agreement will be submitted to binding arbitration in San Jose, California. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association. Arbitration shall be the exclusive remedy for any arbitrable dispute. Should any party to this Agreement institute any legal action or administrative proceeding against the other with respect to any claim waived by this Agreement or pursue any arbitrable dispute by any method other than arbitration, the responding party shall be entitled to recover from the initiating party all damages, costs, expenses and attorneys' fees, except witness fees, costs of appeal and other costs incurred as a result of that action. This agreement to arbitrate is not applicable to your rights under the California Workers' Compensation Law, which are governed under the applicable provisions of that law, or to enforcement of the provisions of this Agreement and any other agreement signed by you pertaining to confidential information, ownership of inventions or any unauthorized actions or statements by you on behalf of Lam. If there is a breach or threatened breach of such provisions, Lam shall be entitled to an injunction restraining you from such breach or to pursue any other available remedies at law or in equity. 13. Termination of Employment. Upon termination of the LOA term, ------------------------- your employment with Lam shall terminate and the terms Hank J. Evenhuis January 21, 1997 Page 12 and provision of paragraphs 5 and 6 shall govern your rights and obligations and the rights and obligations of Lam thereafter. Upon termination of employment, you agree to return to the Company all the Company property and confidential and proprietary information in your possession within five business days. 14. Indemnification. The Company shall indemnify you to the maximum --------------- extent permitted under the Company's By-laws and the General Corporate Law of Delaware. The provisions of this paragraph shall inure to the benefit of your estate, executor, administrator, heirs, legatees or devises. 15. Miscellaneous. ------------- (a) Choice of Law. The validity, interpretation, construction and enforcement of this Agreement shall be governed by the laws of the State of California. (b) Severability. The invalidity or unenforce-ability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (c) Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes. (d) Waiver. A waiver by Lam of a breach of any provision of this Agreement by you shall not operate or be construed as a waiver of any subsequent breach by you. Hank J. Evenhuis January 21, 1997 Page 13 (e) Entire Agreement. This Agreement represents the entire agreement and understanding between Lam and you concerning your leave of absence and separation from the Company, and supersedes and replaces any and all prior agreements and understandings, whether written or oral, concerning your relationship with Lam and your compensation from Lam, except for the terms and provisions of any stock option agreements between you and Lam. In the event of any conflict between the terms and provisions of this Agreement and those of any such stock option agreement, the terms and provisions of this Agreement shall control. (f) No Oral Modification. This Agreement may only be amended in a writing signed by you and the Chief Executive Officer of the Company. (g) Notice. All notices required or permitted to be given in this Agreement shall be deemed properly given and received if sent by U.S. mail postage prepaid or by registered mail or Federal Express to you at your address at 3344 Deer Hollow Drive, Danville, California 94526, or to my attention at Lam. (h) Survival. Notwithstanding termination of this Agreement, the LOA term or your employment with Lam, the provisions of paragraphs 8, 9, 10, 11, 12 and 14 shall survive and continue in full force and effect. To accept this Agreement, please sign, date and return the enclosed copy of this letter to my attention. Hank J. Evenhuis January 21, 1997 Page 14 Very truly yours, Roger D. Emerick Chief Executive Officer and Chairman of the Board Read, Understood and Agreed this ____ day of _____________. - - ------------------------------ Henk J. Evenhuis Hank J. Evenhuis January 21, 1997 Page 15 ATTACHMENT B Cause. "Cause" shall mean (i) a willful act of personal dishonesty knowingly - - ----- taken by the Executive in connection with his responsibilities as an employee and intended to result in his substantial personal enrichment, (ii) a willful and knowing act by the Executive which constitutes gross misconduct, or any refusal by the Executive to comply with a reasonable directive of the Board, (iii) the willful breach by the Executive of a material provision of this Agreement, or (iv) a material and willful violation of a federal or state law or regulation applicable to the business of the Company. No act, or failure to act, by the Executive shall be considered "willful" unless committed without good faith, and without a reasonable belief that the act or omission was in the Company's best interest. Termination for Cause shall not be deemed to have occurred unless, by the affirmative vote of all of the members of the Board (excluding the Executive, if applicable), at a meeting called and held for that purpose (after reasonable notice to the Executive and his counsel after allowing the Executive and his counsel to be heard before the Board), a resolution is adopted finding that in the good faith opinion of such Board members the Executive was guilty of conduct set forth in (i), (ii), (iii), or (iv) and specifying the particulars thereof. EX-11.1 3 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11.1 LAM RESEARCH CORPORATION STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended (in thousands except per share data) -------------------------------------------------------- December 31, December 31, 1996 1995 -------- -------- -------- -------- Fully Fully Primary Diluted Primary Diluted -------- -------- -------- -------- Net income $2,493 $2,493 $33,479 $33,479 Add interest expense on convertible subordinated debentures, net of income tax effect 975 -------- -------- -------- -------- $2,493 $2,493 $33,479 $34,454 ======== ======== ======== ======== Average shares outstanding 30,266 30,266 27,375 27,305 Net effect of dilutive stock options 634 634 925 930 Assumed conversion of convertible subordinated debentures 2,640 -------- -------- -------- -------- 30,900 30,900 28,300 30,875 ======== ======== ======== ======== Net income per share $0.08 $0.08 $1.18 $1.12 ======== ======== ======== ======== Six Months Ended (in thousands except per share data) -------------------------------------------------------- December 31, December 31, 1996 1995 -------- -------- ------------------------ Fully Fully Primary Diluted Primary Diluted -------- -------- -------- -------- Net income $13,103 $13,103 $63,946 $63,946 Add interest expense on convertible subordinated debentures, net of income tax effect 1,748 -------- -------- -------- -------- $13,103 $13,103 $63,946 $65,694 ======== ======== ======== ======== Average shares outstanding 30,266 30,266 27,313 27,313 Net effect of dilutive stock options 484 484 1,037 1,047 Assumed conversion of convertible subordinated debentures 2,640 -------- -------- -------- -------- 30,750 30,750 28,350 31,000 ======== ======== ======== ======== Net income per share $0.43 $0.43 $2.26 $2.12 ======== ======== ======== ========
19 EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS, THE CONSOLIDATED BALANCE SHEET AND THE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMSNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FIFNANCIAL STATEMENTS. 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 17,034 143,333 204,510 1,614 256,923 693,178 303,281 104,142 920,640 228,959 0 0 0 31 629,806 920,640 512,846 524,115 320,885 504,845 0 0 2,807 18,208 5,105 13,103 0 0 0 13,103 0.43 0.43
-----END PRIVACY-ENHANCED MESSAGE-----