LAM RESEARCH CORP

Previous wording

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; trends and opportunities in the semiconductor industry, including in the end markets and applications for semiconductors, in device complexity, and in the complexity of device manufacturing; growth or decline in the industry and the market for, and spending on, wafer fabrication equipment; the anticipated levels of, and rates of change in, margins, market share, served available 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; restructuring activities; business process improvements and initiatives; volatility in our quarterly results; the makeup of our customer base; customer and end user requirements and our ability to satisfy those requirements; the performance and benefits of our products and services; customer spending and 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 products and services; our competition, and our ability to defend our market share and to gain new market share; the success of joint development and collaboration relationships with customers, suppliers, or others; outsourced activities; our supply chain and the role of suppliers in our business, including the impacts of supply chain constraints and material costs; our leadership and competency, and our ability to facilitate innovation; our research and development programs; the opportunities in our industry for, and our ability to create sustainable differentiation; technology inflections in the industry and our ability to identify those inflections and to invest in research and development programs to meet them; our ability to deliver multi-product solutions; the resources invested to comply with evolving standards and the impact of such efforts; changes in state, federal and international tax laws, our estimated annual tax rate and the factors that affect our tax rates; legal and regula…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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; trends and opportunities in the semiconductor industry, including in the end markets and applications for semiconductors, in device complexity, and in the complexity of device manufacturing; growth or decline in the industry and the market for, and spending on, wafer fabrication equipment; the anticipated levels of, and rates of change in, margins, market share, served available 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; restructuring activities; business process improvements and initiatives; volatility in our quarterly results; the makeup of our customer base; customer and end user requirements and our ability to satisfy those requirements; the performance and benefits of our products and services; customer spending and 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 products and services; our competition, and our ability to defend our market share and to gain new market share; the success of joint development and collaboration relationships with customers, suppliers, or others; outsourced activities; our supply chain and the role of suppliers in our business, including the impacts of supply chain constraints and material costs; our leadership and competency, and our ability to facilitate innovation; our research and development programs; the opportunities in our industry for, and our ability to create sustainable differentiation; technology inflections in the industry and our ability to identify those inflections and to invest in research and development programs to meet them; our ability to deliver multi-product solutions; the resources invested to comply with evolving standards and the impact of such efforts; changes in state, federal and international tax laws, our estimated annual tax rate and the factors that affect our tax rates; legal and regula…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

For a full understanding of our financial position and results of operations for the three months ended September 29, 2024, 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 2024 Form 10-K.

Current wording

For a full understanding of our financial position and results of operations for the three and six months ended December 29, 2024, 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 2024 Form 10-K.

Previous wording

In calendar year 2024, we anticipate higher wafer fabrication equipment spending, driven by an increase in both memory and non-memory market segments versus calendar year 2023. In the short term, volatility in the semiconductor demand environment, as well as other risks and uncertainties, may negatively impact our revenue and operating margin. Over the longer term, we believe that secular demand for semiconductors, combined with technology inflections in our industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will drive sustainable growth and lead to an increase in the served available market for our products and services in the deposition, etch, and clean businesses.

Current wording

Overall, calendar year 2024 wafer fabrication equipment spending was higher, driven by increases in both the memory and non-memory market segments versus calendar year 2023. In the short term, volatility in the semiconductor demand environment, as well as other risks and uncertainties, may negatively impact our revenue and operating margin. Over the longer term, we believe that secular demand for semiconductors, combined with technology inflections in our industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will drive sustainable growth and lead to an increase in the served available market for our products and services in the deposition, etch, and clean businesses.

Previous wording

On May 21, 2024, the Company announced a ten-for-one stock split which was effective October 2, 2024. All references made to share or per share amounts throughout this Form 10-Q, including those presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, have been retroactively adjusted to reflect the stock split.

Current wording

On October 2, 2024, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares. All references made to share or per share amounts throughout this Form 10-Q, including those presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, have been retroactively adjusted to reflect the stock split.

Previous wording

In the September 2024 quarter, revenue increased 8% compared to the three months ended June 30, 2024 (the “June 2024 quarter”), driven by increases in systems revenue as a result of strengthened investments in the dynamic random access memory (“DRAM”) market segment as well as increases in customer support-related revenue. The deferred revenue balance was $2,047.0 million at the end of the September 2024 quarter, an increase relative to the balance at the end of the June 2024 quarter of $1,551.6 million, mainly due to an increase in customer advanced deposits.

Current wording

In the December 2024 quarter, revenue increased 5%compared to the three months ended September 29, 2024 (the “September 2024 quarter”), driven by an increase in systems revenue as a result of strengthened memory investments in both the NAND and dynamic random access memory (“DRAM”) market segments. The deferred revenue balance was $2,031.6 million at the end of the December 2024 quarter, a slight decrease relative to the balance at the end of the September 2024 quarter of $2,047.0 million.

Previous wording

The increase in gross margin as a percentage of revenue in the September 2024 quarter compared to the June 2024 quarter was primarily a result of improved factory efficiencies, partially offset by increased incentive compensation expense. The increase in operating expenses in the September 2024 quarter compared to the June 2024 quarter was driven by higher headcount and incentive compensation expense, as well as increases in outside services spend, partially offset by lower spending for supplies.

Current wording

The decrease in gross margin as a percentage of revenue in the December 2024 quarter compared to the September 2024 quarter was primarily a result of unfavorable customer mix. Operating expenses in the December 2024 quarter were flat compared to the September 2024 quarter, as increases in headcount and incentive compensation expense were largely offset by lower elective deferred compensation plan-related costs.

Previous wording

Our cash, cash equivalents, and restricted cash balances increased to $6.1 billion at the end of the September 2024 quarter compared to $5.9 billion at the end of the June 2024 quarter. This increase was primarily the result of $1,568.5 million of cash generated from operating activities, partially offset by $997.0 million of share repurchases, including net share settlement of employee stock-based compensation; $261.0 million of dividends paid to stockholders; and $110.6 million of capital expenditures. Employee headcount as of September 29, 2024 was approximately 17,700.

Current wording

Our cash, cash equivalents, and restricted cash balances decreased to $5.7 billion at the end of the December 2024 quarter compared to $6.1 billion at the end of the September 2024 quarter. This decrease was primarily the result of $697.7 million of share repurchases, including net share settlement of employee stock-based compensation and excise tax; $297.6 million of dividends paid to stockholders; and $188.3 million of capital expenditures; partially offset by $741.9 million of cash generated from operating activities. Employee headcount as of December 29, 2024 was approximately 18,300.

Previous wording

The increase in gross margin as a percentage of revenue in the three months ended September 29, 2024 compared to the same period in the prior year was primarily due to improved factory efficiencies and reduced spending on material costs, offset by unfavorable changes in customer and product mix, increased transformational charges, and increased employee-related expenses.

Current wording

The increase in gross margin as a percentage of revenue in the six months ended December 29, 2024 compared to the same period in the prior year was primarily due toimproved factory efficiencies, partially offset by unfavorable changes in customer mix, increased transformational charges, and higher employee-related expenses.

Previous wording

We continued to make significant R&D investments in the September 2024 quarter focused on leading-edge deposition, etch, clean and other semiconductor manufactu ring processes. Thedecrease in R&D expense in the September 2024 quarter compared to the June 2024 quarter was primarily driven by a decrease in supplies spending, partially offset by increased headcount and incentive compensation expense, as well as higher elective deferred compensation plan-related costs.

Current wording

We continued to make significant R&D investments in the December 2024 quarter focused on leading-edge deposition, etch, clean and other semiconductor manufactu ring processes. R&D expense in the December 2024 quarter was flat compared to the September 2024 quarter, as increases in headcount and incentive compensation expense were largely offset by lower elective deferred compensation plan-related costs.

Previous wording

R&D expense in the three months ended September 29, 2024 increased compared to the same period in the prior year, driven by increases in headcount and incentive compensation expense, elective deferred compensation plan-related costs, as well as higher spending on outside services.

Current wording

R&D expense in the six months ended December 29, 2024 increased compared to the same period in the prior year, driven by higher headcount and incentive compensation expense as well as spending on outside services, partially offset by lower supplies expense.

Previous wording

SG&A expense during the September 2024 quarter increased in comparison to the June 2024 quarter, primarily driven by increases in headcount and incentive compensation expense.

Current wording

SG&A expense during the December 2024 quarter was flat to the September 2024 quarter, with increases in incentive compensation and supplies expenses largely offset by lower spending on outside services.

Previous wording

SG&A expense during the three months ended September 29, 2024 increased compared to the same period in the prior year, driven by higher spending for transformational activities, as well as increases in headcount and incentive compensation expense.

Current wording

SG&A expense during the six months ended December 29, 2024 increased compared to the same period in the prior year, driven by increases in headcount and incentive compensation expense as well as higher spending for transformational activities.

Previous wording

Interest income increased in the September 2024 quarter as compared to the June 2024 quarter, primarily due to higher cash balances. Interest income increased for the three months ended September 29, 2024, compared to the same period in 2023, because of higher yields and higher cash balances.

Current wording

Interest income decreased in the December 2024 quarter as compared to the September 2024 quarter, primarily due to lower cash balances and lower interest rates. Interest income increased for the six months ended December 29, 2024, compared to the same period in 2023, because of higher cash balances, partially offset by lower interest rates.

Previous wording

The gains and losses on deferred compensation plan-related assets, net were driven by fluctuations in the fair market value of the underlying funds for all periods presented.

Current wording

The gains on deferred compensation plan-related assets, net were driven by fluctuations in the fair market value of the underlying funds for all periods presented.

Previous wording

The variations in other, net for the September 2024 quarter compared to the June 2024 quarter and September 2023 quarter were primarily driven by fluctuations in the fair market value of equity investments.

Current wording

The variation in other, net was primarily driven by fluctuations in the fair market value of equity investments for all periods presented.

Previous wording

The increase in the effective tax rate for the September 2024 quarter compared to the June 2024 quarter was primarily due to the change in level and proportion of income in higher and lower tax jurisdictions.

Current wording

The decrease in the effective tax rate for the December 2024 quarter compared to the September 2024 quarter was primarily due to the recognition of previously unrecognized tax benefits from lapses of statutes of limitation and the income tax benefit from a change in tax law in the December 2024 quarter.

Previous wording

The effective tax rate for the September quarter compared to the same period in the prior year remained consistent.

Current wording

The effective tax rate for the six months ended December 29, 2024 compared to the same period in the prior year remained consistent.

Previous wording

Total gross cash, cash equivalents, and restricted cash balances were $6.1 billion at September 29, 2024 compared to $5.9 billion as of June 30, 2024. This slight increase was primarily driven by cash generated from operating activities totaling $1,568.5 million, partially offset by $997.0 million of share repurchases, including net share settlement on employee stock-based compensation; $261.0 million in dividends paid; and $110.6 million in capital expenditures.

Current wording

Total gross cash, cash equivalents, and restricted cash balances were $5.7 billion at December 29, 2024 compared to $5.9 billion as of June 30, 2024. The decrease was primarily driven by $1,694.7 million of share repurchases, including net share settlement on employee stock-based compensation and excise tax; $558.6 million in dividends paid; and $298.9 million in capital expenditures, partially offset by cash generated from operating activities totaling $2,310.4 million.

Previous wording

Net cash provided by operating activities of $1,568.5 million during the three months ended September 29, 2024, consisted of (in thousands):

Current wording

Net cash provided by operating activities of $2,310.4 million during the six months ended December 29, 2024 consisted of (in thousands):

Previous wording

Significant changes in operating asset and liability accounts, net of foreign exchange impact, included the following sources of cash: an increase in deferred gross profit of $519.5 million, an increase in accrued expenses and other liabilities of $240.4 million and an increase in trade accounts payable of $82.6 million. These sources of cash are offset by the following uses of cash: increases in accounts receivable of $414.1 million, inventory of $23.8 million, and prepaid expenses and other current assets of $17.8 million.

Current wording

Changes in operating asset and liability accounts, net of foreign exchange impact, included the following uses of cash: increases in accounts receivable of $785.1 million, inventory of $198.8 million, and prepaid expenses and other current assets of $10.8 million. These uses of cash were offset by the following sources of cash: increases in deferred gross profit of $510.1 million, trade accounts payable of $189.4 million, and accrued expenses and other liabilities of $146.3 million.

Previous wording

Net cash used for investing activities during the three months ended September 29, 2024, was $110.6 million, primarily consisting of capital expenditures.

Current wording

Net cash used for investing activities during the six months ended December 29, 2024 was $285.9 million, primarily consisting of capital expenditures.

Previous wording

Net cash used for financing activities during the three months ended September 29, 2024, was $1,259.3 million, primarily consisting of $997.0 million in treasury stock repurchases, including net share settlement on employee stock-based compensation, and $261.0 million in dividends paid.

Current wording

Net cash used for financing activities during the six months ended December 29, 2024 was $2,194.6 million, primarily consisting of $1,694.7 million in treasury stock repurchases, including net share settlement on employee stock-based compensation and excise tax, and $558.6 million in dividends paid.