Lam Research (LRCX) 10-K risk factor changes: FY2018 vs FY2017

In addition to the other information in this Annual Report on Form 10-K [removed: (“2017] [added: (“2018] Form 10-K”), the following risk factors should be carefully considered in evaluating [removed: the Company] [added: us] and [removed: its] [added: our] business because such factors may significantly impact our business, operating results, and financial condition.

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 [removed: training] [added: training, assimilating,] and managing our workforce, and in appropriately sizing our supply chain [removed: infrastructure and facilities, work force, and other components of our business on a timely basis.]

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 14][added: 15]

[removed: ][added: ]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 15][added: 16]

| • | legal, tax, accounting, or regulatory changes (including but not limited to change in import/export [removed: regulations)] [added: regulations and tariffs)] or changes in the interpretation or enforcement of existing requirements; |

We review our long-lived assets, including goodwill and [added: 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.

We have [removed: $2.9] [added: $2.5] billion in aggregate principal amount of senior unsecured [removed: notes and] [added: notes,] convertible [removed: note] [added: notes, and commercial paper] instruments outstanding.

[removed: Additionally, we have $750 million available to us in] [added: Our] revolving credit [removed: arrangements, with] [added: facility also includes] an option [removed: for us] to [removed: request an] increase [removed: in] the [removed: facility of] [added: amount] up to an additional [removed: $250] [added: $600] million, for a potential total commitment of [removed: $1.0] [added: $1.85] billion.

We may, in the future, decide to [removed: borrow amounts under the revolving credit agreement, or to] enter into additional debt arrangements.

Furthermore, our operations may not generate sufficient cash flows, [removed: particularly in the United States,] to enable us to meet our expenses and service our debt.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 16][added: 17]

[added: 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.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 17][added: 18]

[removed: 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.

Our products are priced up to approximately [removed: $10] [added: $11] million per system.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 18][added: 19]

[removed: 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.

Our manufacturing facilities are concentrated in [removed: just] a [removed: few] [added: 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, [removed: and] utility [removed: interruptions.][added: interruptions, or other events beyond our control.]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 19][added: 20]

[added: 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.

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 [added: and support] our existing products.

[removed: Business,] [added: Business of this 2018 Form 10-K,] accounted for approximately [removed: 92%,] [added: 93%,] 92%, and [removed: 83%] [added: 92%] of total revenue in fiscal years [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] respectively.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 20][added: 21]

| • | our ability to secure and retain qualified people, and effectively manage people, in all necessary [removed: locations for the successful operation of our business.] |

Our failure or inability to obtain such licenses [removed: would substantially] [added: could potentially] limit our markets and [removed: severely restrict] [added: impact] our revenues.

Many of the challenges noted above are applicable in China, which is a [removed: fast developing] [added: fast-developing] market for the semiconductor equipment industry and therefore an area of [removed: potential significant] [added: anticipated] growth for our business.

[removed: As the business volume between China and the rest of the world grows, there] [added: There] is inherent risk, based on the complex relationships among China, Japan, Korea, Taiwan, and the United States, that political and diplomatic influences might lead to trade disruptions.

A significant trade disruption in [removed: these areas] [added: any area where we do business] could have a materially adverse impact on our future revenue and profits.

In addition, there are risks that [removed: the Chinese government] [added: foreign governments] may, among other things, insist on the use of local suppliers; compel companies [removed: that do business in China] 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; 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.

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 [added: denominated] monetary assets and liabilities, primarily third-party accounts receivables, accounts payables, and intercompany receivables and payables.

[removed: We believe these are our] primary exposures to currency rate fluctuation.

Since the majority of our cash is generated outside of the United States, this may impact certain business decisions and [removed: adversely affect business] outcomes.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 21][added: 22]

[added: 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.

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

These information systems [removed: include,] [added: include] but are not limited to, telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, [added: (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.

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

infrastructure and facilities, work force, and other components of our business on a timely basis.

Continues on next page


Continues on next page


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.

Continues on next page


This shift may result in a

Continues on next page


These providers and suppliers might suffer financial setbacks, be acquired by third parties, become

Continues on next page


Continues on next page


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

locations for the successful operation of our business.

Tariffs, additional taxes or trade barriers 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.

We believe these are our

Continues on next page


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.

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 including intellectual property stored on these critical information systems or transmitted to or from those systems; |

Continues on next page


| • | 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; |

| • | 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. |

There can be no assurance that we will be able to achieve and manage

If we

Such disruptions may cause delays in shipping our products,

| • | our ability to repatriate cash in a tax-efficient manner; |

Our success in hiring

Many of these information systems and outsourced service providers, including certain hosted software applications that we use for storage of confidential data and data processing (e.g., company-related, whether intellectual property or not; customer-related; supplier-related; and/or employee-related), employ Cloud technology for such storage and data processing (which refers to an information technology hosting and delivery system in which data is not stored or processed within the user’s physical infrastructure but instead is delivered to and consumed by the user as an Internet-based service).

All of these information systems are subject to disruption, breach or failure from sources including but not limited to attacks, degradation, and failures resulting from potential sources, including viruses, malware, denial of service, destructive or inadequate code, power failures, and physical damage to computers, hard drives, communication lines, and networking equipment.

Confidential and/or sensitive information stored on these information systems or transmitted to or from Cloud storage could be intentionally or unintentionally compromised, lost, and/or stolen.

Our inability to use or access these information systems at critical points in time, or unauthorized releases of proprietary or confidential information, could unfavorably impact the timely and efficient operation of our business, including our results of operations, and our reputation.

We have experienced cyber attacks.

The insurance we carry may not fully compensate us for the effects of potential losses arising from a cyber-related incident.

Cyber-related incidents could result in:

| • | disruptions to our operations; |

| • | litigation with, or claims of damages arising from, our employees, customers, suppliers, or other third parties which whom we collaborate; or |

| • | adverse impact to our results of operations, as a result of associated remediation costs such as those related to responding to potential regulatory inquiries, to rebuild the effected information systems, and those associated with improving our security and internal control environment. |

on our ability to generate future taxable income in the United States.

Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in “Risk Factors” and elsewhere in this [removed: 2017] [added: 2018] Form 10-K and other documents we file from time to time with the Securities and Exchange Commission.

(See “Cautionary Statement Regarding Forward-Looking Statements” in Part I of this [removed: 2017] [added: 2018] Form 10-K.)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in [added: Part II, Item 8 of] this [removed: 2017] [added: 2018] Form 10-K.

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 31][added: 32]

[removed: ][added: ]

Lam Research [removed: has been an innovative] [added: is a global] supplier of [added: innovative] wafer fabrication equipment and services to the semiconductor [removed: industry for more than 35 years.][added: industry.]

Our customer base includes leading semiconductor memory, foundry, and [removed: IDMs] [added: integrated device manufacturers] that make products such as NVM, DRAM memory, and logic devices.

At the same time, there are growing technical challenges with traditional [removed: two-dimensional] scaling.

These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical [added: 3D] scaling strategies [removed: like 3D architectures] as well as multiple patterning to enable shrinks.

We believe we are in [removed: an] [added: a] strong position with our leadership and competency in deposition, etch, and [removed: single-wafer] clean to facilitate some of the most significant innovations in semiconductor device manufacturing.

Several factors create opportunity for sustainable differentiation for us: [added: (i)] our focus on research and development, with [removed: a breadth of] [added: several on-going] programs [removed: across] [added: relating to] sustaining engineering, product and process development, and concept and feasibility; [added: (ii)] our ability to effectively leverage cycles of learning from our broad installed base; [removed: and] [added: (iii)] our collaborative focus with ecosystem [removed: partners.][added: partners; and (iv) focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.]

During the most recent fiscal year, demand for our products improved as semiconductor device [removed: manufacturers, particularly non volatile memory and foundry customers,] [added: manufacturers] made [removed: capacity and] technology [added: and capacity] investments.

[removed: Technology] [added: Over the longer term, we believe that our technology] inflections in our industry, including [removed: NVM,] [added: 3D device scaling,] multiple [removed: patterning, FinFET] [added: patterning process flow,] and advanced [removed: packaging have led] [added: packaging/chip integration will lead] to an increase in our served addressable market for our products [added: and services] in deposition, etch, [removed: single-wafer clean] and [removed: customer service business.][added: clean.]

[removed: We] [added: While there could be variability in the near-term, we] believe that demand for our products and services [removed: should] [added: will] increase faster than overall spending on wafer fabrication equipment, as the proportion of customers’ capital expenditures rises in these technology inflection areas, and we [removed: continue] [added: target] to gain market share.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 32][added: 33]

| | Year Ended | | | | | | | | | | | | [added: Change] | | | | | | | | | | | | |

| June [removed: 25, 2017] [added: 24, 2018] | | | | June [removed: 26, 2016] [added: 25, 2017] | | | | June [removed: 28, 2015] [added: 26, 2016] | | | | [removed: FY17] [added: FY18] vs. [removed: FY16] [added: FY17] | | | | | | | [removed: FY16] [added: FY17] vs. [removed: FY15] [added: FY16] | | | | | | |

| Revenue | $ | [removed: 8,013,620] [added: 11,076,998] | | | $ | [removed: 5,885,893] [added: 8,013,620] | | | $ | [removed: 5,259,312] [added: 5,885,893] | | | $ | [removed: 2,127,727] [added: 3,063,378] | | | [removed: 36.1] [added: 38.2] | % | | $ | [removed: 626,581] [added: 2,127,727] | | | [removed: 11.9] [added: 36.1] | % |

| Gross margin | $ | [removed: 3,603,359] [added: 5,165,032] | | | $ | [removed: 2,618,922] [added: 3,603,359] | | | $ | [removed: 2,284,336] [added: 2,618,922] | | | $ | [removed: 984,437] [added: 1,561,673] | | | [removed: 37.6] [added: 43.3] | % | | $ | [removed: 334,586] [added: 984,437] | | | [removed: 14.6] [added: 37.6] | % |

| Gross margin as a percent of total revenue | [removed: 45.0] [added: 46.6] | | % | | [removed: 44.5] [added: 45.0] | | % | | [removed: 43.4] [added: 44.5] | | % | | [removed: 0.5] [added: 1.6%] | | [removed: %] | | | | | [removed: 1.1] [added: 0.5%] | | [removed: %] | | | |

| Total operating expenses | $ | [removed: 1,701,227] [added: 1,951,733] | | | $ | [removed: 1,544,666] [added: 1,701,227] | | | $ | [removed: 1,496,297] [added: 1,544,666] | | | $ | [removed: 156,561] [added: 250,506] | | | [removed: 10.1] [added: 14.7] | % | | $ | [removed: 48,369] [added: 156,561] | | | [removed: 3.2] [added: 10.1] | % |

| Net income | $ | [removed: 1,697,763] [added: 2,380,681] | | | $ | [removed: 914,049] [added: 1,697,763] | | | $ | [removed: 655,577] [added: 914,049] | | | $ | [removed: 783,714] [added: 682,918] | | | [removed: 85.7] [added: 40.2] | % | | $ | [removed: 258,472] [added: 783,714] | | | [removed: 39.4] [added: 85.7] | % |

| Net income per diluted share | $ | [removed: 9.24] [added: 13.17] | | | $ | [removed: 5.22] [added: 9.24] | | | $ | [removed: 3.70] [added: 5.22] | | | $ | [removed: 4.02] [added: 3.93] | | | [removed: 77.0] [added: 42.5] | % | | $ | [removed: 1.52] [added: 4.02] | | | [removed: 41.1] [added: 77.0] | % |

Revenues in fiscal year [removed: 2017] [added: 2018] increased [removed: 36%] [added: 38%] compared to fiscal year [removed: 2016,] [added: 2017,] and revenues in fiscal year [removed: 2016] [added: 2017] increased [removed: 12%] [added: 36%] compared to fiscal year [removed: 2015,] [added: 2016,] reflecting [removed: a continuous] [added: an] increase in technology and capacity investments by our customers.

[removed: The increase in] [added: Fiscal year 2017] gross margin as a percentage of revenue [removed: for fiscal year 2017] compared to fiscal year 2016 [removed: was] [added: improved] primarily due to higher revenue and improved factory utilization resulting from higher production volume.

[removed: Fiscal year 2016] [added: The increase in] gross margin as a percentage of revenue [added: for fiscal year 2018] compared to fiscal year [removed: 2015 improved] [added: 2017 was] primarily due to [removed: a more] favorable [removed: customer] [added: margin mix] and [removed: product mix.][added: higher revenue.]

[removed: Operating expenses] [added: The increase] in [added: SG&A expense during] fiscal year 2017 [removed: increased as] compared to fiscal year 2016 [added: was] primarily [removed: as] [added: due to] a [removed: result of continued investments] [added: $36 million increase] in [removed: research] [added: employee compensation] and [removed: development including the effect of] [added: benefits from] increased [removed: employee] headcount, [removed: partially] [added: a $15 million gain from sale of assets in fiscal year 2016, and a $14 million increase in outside services,] offset by a [added: $41 million] decrease in acquisition-related costs associated with the terminated agreement with KLA-Tencor.

Operating expenses in fiscal year [removed: 2016] [added: 2018] increased as compared to fiscal [removed: year 2015] [added: years 2017 and 2016] primarily as a result of [removed: continued investments] [added: higher employee headcount and increased investment] in research and [removed: development and increased employee headcount.][added: development.]

Our cash and cash equivalents, investments, and restricted cash and investments balances totaled approximately [removed: $6.3] [added: $5.2] billion as of June [removed: 25, 2017,] [added: 24, 2018,] compared to [removed: $7.1] [added: $6.3] billion as of June [removed: 26, 2016.][added: 25, 2017.]

Cash flow provided from operating activities was [removed: $2.0] [added: $2.7] billion for fiscal year [removed: 2017] [added: 2018] compared to [removed: $1.4] [added: $2.0] billion for fiscal year [removed: 2016.][added: 2017.]

Cash flow provided from operating activities in fiscal [removed: 2017] [added: 2018] was primarily used for [removed: $1.7] [added: $2.7] billion [removed: of principal payments on debt instruments, $812 million] in treasury stock purchases, [removed: $243] [added: $396] million in [added: net principal payments on debt, $308 million in] dividends paid to our stockholders, and [removed: $157] [added: $273] million of capital expenditures and are partially offset by [removed: $73] [added: $85] million of treasury stock reissuance and Common Stock issuance resulting from our employee equity-based compensation programs.

Shipments for fiscal year [removed: 2016] [added: 2018] were approximately [removed: $5.9] [added: $11.2] billion, an increase of [removed: 8%] [added: 30%] compared to fiscal year [removed: 2015.][added: 2017.]

The increase in shipments during the fiscal year [removed: 2017] [added: 2018] as compared to the last two fiscal years is related to [removed: continued strengthening of] [added: stronger] customer [removed: demand for semiconductor equipment.][added: demand.]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 33][added: 34]

| June [removed: 25, 2017] [added: 24, 2018] | | | | June [removed: 26, 2016] [added: 25, 2017] | | | | June [removed: 28, 2015] [added: 26, 2016] | | | |

| Shipments (in millions) | $ | [removed: 8,586] [added: 11,176] | | | $ | [removed: 5,901] [added: 8,586] | | | $ | [removed: 5,472] [added: 5,901] | |

| Korea | [removed: 32] [added: 33] | | % | | [removed: 17] [added: 32] | | % | | [removed: 26] [added: 17] | | % |

| Taiwan | [removed: 24] [added: 13] | | % | | [removed: 25] [added: 24] | | % | | [removed: 22] [added: 25] | | % |

| Japan | [removed: 15] [added: 19] | | % | | [removed: 16] [added: 15] | | % | | [removed: 14] [added: 16] | | % |

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.

We acquired the outstanding shares of Coventor, Inc. (“Coventor”), a privately-held company, on August 28, 2017, as further discussed in Note 19 of our Consolidated Financial Statements contained in Part II, Item 8 of this 2018 Form 10-K.

The results of the acquired business are included in our Consolidated Financial Statements.

Continues on next page


Continues on next page


Our shipments to memory customers during the fiscal year 2018 increased primarily due to higher levels of investments from our DRAM and NAND customers.

Our shipments to foundry customers decreased during the fiscal year 2018 primarily due to decreased investments in leading and trailing edge technology applications from our foundry customers.

| June 24, 2018 | | | | June 25, 2017 | | | | June 26, 2016 | | | |

Continues on next page


As noted in Note 3 to our Consolidated Financial Statements in Part II, Item 8 of this 2018 Form 10-K, the adoption of accounting standard update 2014-09 is expected to result in a net decrease, estimated between $100 million and $200 million, to our total current liabilities balance, affecting our deferred revenue, deferred costs and resulting deferred profit recognition.

| | Year Ended | | | | | | | | | | | | Change | | | | | | | | | | | | |

| Gross margin | $ | 5,165,032 | | | $ | 3,603,359 | | | $ | 2,618,922 | | | $ | 1,561,673 | | | 43.3 | % | | $ | 984,437 | | | 37.6 | % |

| Percent of revenue | 46.6 | | % | | 45.0 | | % | | 44.5 | | % | | 1.6% | | | | | | | 0.5% | | | | | |

| | Year Ended | | | | | | | | | | | | Change | | | | | | | | | | | | |

| June 24, 2018 | | | | June 25, 2017 | | | | June 26, 2016 | | | FY18 vs. FY17 | | | | | | | FY17 vs. FY16 | | | | | | | |

Continues on next page


| | Year Ended | | | | | | | | | | | | Change | | | | | | | | | | | | |

| June 24, 2018 | | | | June 25, 2017 | | | | June 26, 2016 | | | FY18 vs. FY17 | | | | | | | FY17 vs. FY16 | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Year Ended | | | | | | | | | | | | Change | | | | | | | | | | | | |

| June 24, 2018 | | | | June 25, 2017 | | | | June 26, 2016 | | | FY18 vs. FY17 | | | | | | | FY17 vs. FY16 | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| Loss on impairment of investments | (42,456 | | ) | | — | | | | — | | | | $ | (42,456 | ) | | 100.0 | % | | $ | — | | | — | % |

The decrease in interest expense during fiscal year 2018 compared to fiscal year 2017 was primarily due to the conversions of 2018 and 2041 Convertible Notes as well as the retirement of the 2018 Convertible Notes in May 2018.

Continues on next page


The loss on impairment of investments during fiscal year 2018 is the result of a decision to sell selected investments held in foreign jurisdictions in connection with our cash repatriation strategy following the December 2017 U.S. tax reform.

As discussed in Note 6, “Income Taxes,” to our Consolidated Financial Statements in Part II, Item 8 of this 2018 Form 10-K, the “Tax Cuts & Jobs Act” (hereafter referred to as “U.S. tax reform”) was signed into law on December 22, 2017 and was effective starting in our quarter ended December 24, 2017.

U.S. tax reform reduces the U.S. federal statutory tax rate from 35% to 21%, mandates payment of a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings.

The impact on income taxes due to a 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 allows 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.

As such, there is significant activity in the fiscal year ended June 24, 2018, which reflects the change in legislation.

Most of that activity has provisionally been recorded in our Consolidated Financial Statements in the period ended June 24, 2018, as we have not yet completed all of the accounting for the tax effects of enactment.

We recorded what we believe to be a reasonable estimate and the provisional activity is subject to further adjustments under SAB 118, with the exception of revaluation of our deferred tax balances to reflect the new U.S. federal statutory tax rate, which is considered final and complete under SAB 118.

In addition, for significant items for which we could not make a reasonable estimate, no provisional activity was recorded.

In October 2015, we entered into an Agreement and Plan of Merger and Reorganization with KLA-Tencor.

On October 5, 2016, we announced that the parties mutually agreed to terminate that agreement.

Fiscal year 2016 also included $51 million of acquisition-related costs associated with the terminated agreement with KLA-Tencor.

Our shipments to memory customers during fiscal year 2017 was largely unchanged compared to fiscal year 2016.

Foundry spending increased due to higher investments at leading-edge process nodes.

| Percent of total revenue | 45.0 | | % | | 44.5 | | % | | 43.4 | | % | | 0.5 | | % | | | | | 1.1 | | % | | | |

Additionally, there was a $10 million impairment charge of a long-lived asset in fiscal year 2015.

The increase in SG&A expense during fiscal year 2016 compared to fiscal year 2015 was primarily due to $51 million of KLA-Tencor acquisition-related costs and a $3 million increase in restructuring charges.

This increase was offset by a $15 million gain on sale of assets, net of associated exit costs.

Goodwill Impairment

Our annual goodwill impairment analysis for fiscal year 2015 resulted in a non-cash impairment charge upon our Single-Wafer Clean reporting unit of $79 million, extinguishing the goodwill ascribed to the reporting unit.

Uncertainty surrounding future revenue growth in certain products resulted in the estimated discounted cash flow falling below the carrying value of the goodwill balance.

There were no impairment charges in fiscal year 2017 or 2016.

The increase in interest expense during fiscal year 2016 compared to fiscal year 2015 was primarily due to the $1.0 billion Senior Note issuance in March 2015, combined with the note issuance cost amortization related to the October 2015 bridge financing arrangement.

The decrease in the effective tax rate in fiscal year 2016 as compared to fiscal year 2015 was primarily due to the tax benefit of the Altera court ruling (discussed in more detail below), higher income in lower tax jurisdictions, and an increased federal tax benefit due to a retroactive and permanent extension of federal research and development tax credit in fiscal year 2016.

However, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation from its regulations.

We have evaluated the opinion and as a result of such evaluation have recorded a tax benefit of $88 million related to reimbursement of cost share payments for the previously shared stock-based compensation costs.

We have also recorded a tax benefit of $11 million related to stock-based compensation expense.

In addition, we have recorded a tax liability of $74 million for the U.S. tax cost of potential repatriation of the associated contingent foreign earnings because at this time we cannot reasonably conclude that we have the ability and the intent to indefinitely reinvest these contingent earnings.

We will continue to monitor this matter and related potential impacts to our consolidated financial statements.

We also recorded a valuation allowance on certain state tax credits and continue to record valuation allowances on certain foreign entities’ net operating losses.

cost.

We estimate the fair value of our stock options and ESPP awards using a Black-Scholes option valuation model.

This model requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award.

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.

This decrease was primarily due to the redemption of our Senior Notes with contractual maturities in 2023 and 2026.

Refer to Note 6 of our Consolidated Financial Statements, included in Item 8 of this report, for information concerning the potential tax impact of repatriating earnings of certain non-U.S. subsidiaries that are permanently reinvested outside the United States.

| Loss on extinguishment of debt, net | 36 | | |

| | $ | 2,029 | |

While we have substantial cash balances in

| Operating leases | $ | 156,845 | | | $ | 50,798 | | | $ | 60,453 | | | $ | 19,639 | | | $ | 25,955 | |

| Capital leases | 7,201 | | | | 744 | | | | 1,457 | | | | 5,000 | | | | — | | |

| Purchase obligations | 284,804 | | | | 274,574 | | | | 6,942 | | | | 3,061 | | | | 227 | | |

| Long-term debt and interest expense (1) | 3,518,070 | | | | 523,401 | | | | 634,822 | | | | 888,114 | | | | 1,471,733 | | |

| Other long-term liabilities (2) | 280,186 | | | | 3,487 | | | | 2,728 | | | | 10,246 | | | | 263,725 | | |

| Total | $ | 4,247,106 | | | $ | 853,004 | | | $ | 706,402 | | | $ | 926,060 | | | $ | 1,761,640 | |

We pay cash interest on the 2018 Notes at an annual rate of 1.25%, on a semi-annual basis.

The 2018 Notes may be converted into our Common Stock, under certain circumstances, based on a conversion rate of 16.5702 shares of our Common Stock per $1,000 principal amount of Notes, which is equal to a conversion price of approximately $60.35 per share of our Common Stock.

The conversion price will be subject to adjustment for certain corporate events, including dividends on our Common Stock.

The conversion price will be subject to adjustment for certain events, including dividends on our Common Stock.

As of June [removed: 25, 2017,] [added: 24, 2018,] our mutual funds are classified as trading securities.

The hypothetical fair values as of June [removed: 25, 2017,were] [added: 24, 2018,were] as follows:

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 45][added: 47]

[removed: ][added: ]

As of June [removed: 25, 2017,] [added: 24, 2018,] we had [removed: $2.9] [added: $2.1] billion in principal amount of fixed-rate long-term debt outstanding, with a fair value of [removed: $5.8] [added: $3.5] billion.

Additionally, the fair value of the [removed: Convertible] [added: 2041] Notes will increase as our Common Stock price increases and decrease as our Common Stock price decreases.

The hypothetical fair values as of June [removed: 25, 2017,] [added: 24, 2018,] were as follows:

To protect against [removed: the reduction] [added: adverse movements] in value of anticipated revenues denominated in Japanese yen and expenses denominated in euro and Korean won, we enter into foreign currency forward and option contracts that generally expire within 12 months and no later than 24 months.

The notional amount and unrealized [removed: gain] [added: loss] of our outstanding [added: foreign currency] forward [removed: and option] contracts that are designated as [removed: cash flow] [added: balance sheet] hedges, as of June [removed: 25, 2017,] [added: 24, 2018,] are shown in the table below.

This table also shows the change in fair value of these cash flow hedges [added: assuming a hypothetical foreign currency exchange rate movement of plus or minus 10 percent and plus or minus 15 percent.]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 46][added: 48]

| June [removed: 25, 2017] [added: 24, 2018] | | | | \= +/- (10%) | | | | \= +/- (15%) | | | | | | | | | |

| Option [removed: contracts] [added: Contracts (1)] | | | | | | | | | | | | | | | | | |

| Buy put | Japanese yen | $ | [removed: 36.0] [added: 9.0] | | | $ | [removed: 1.0] [added: 0.2] | | | | $ | [removed: 3.2] [added: 0.7] | | | $ | [removed: 4.5] [added: 1.0] | |

The notional amount and unrealized [removed: loss] [added: gain] of our outstanding [removed: foreign currency] forward [added: and option] contracts that are [removed: designated as balance sheet hedges, as of June 25, 2017, are shown in the table below.]

| | June [removed: 25, 2017] [added: 24, 2018] | | | | \= +/- (10%) | | | | \= +/- (15%) | | | | | | | | |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 47][added: 49]

| | | Valuation of Fair Value Hedge Given an Interest Rate [removed: Increase] [added: Decrease] of X Basis Points | | | | | | | | Fair Value as of | | | | Valuation of Fair Value Hedge Given an Interest Rate [removed: Decrease] [added: Increase] of X Basis Points | | | | | | |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 48][added: 50]

| | June 24, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Municipal notes and bonds | 153,974 | | | | 153,365 | | | | 152,750 | | | | 152,136 | | | | 151,521 | | | | 150,906 | | | | 150,292 | | |

| U.S. Treasury and agencies | 357,056 | | | | 356,874 | | | | 356,692 | | | | 356,509 | | | | 356,327 | | | | 356,145 | | | | 355,963 | | |

| Government-sponsored enterprises | 111,104 | | | | 110,990 | | | | 110,876 | | | | 110,762 | | | | 110,648 | | | | 110,534 | | | | 110,420 | | |

| Foreign government bonds | 19,999 | | | | 19,995 | | | | 19,990 | | | | 19,985 | | | | 19,981 | | | | 19,976 | | | | 19,971 | | |

| Bank and corporate notes | 518,765 | | | | 517,798 | | | | 516,832 | | | | 515,866 | | | | 514,899 | | | | 513,933 | | | | 512,967 | | |

| Mortgage backed securities - residential | 849 | | | | 833 | | | | 817 | | | | 801 | | | | 785 | | | | 770 | | | | 754 | | |

| Total | $ | 1,161,747 | | | $ | 1,159,855 | | | $ | 1,157,957 | | | $ | 1,156,059 | | | $ | 1,154,161 | | | $ | 1,152,264 | | | $ | 1,150,367 | |

| | June 24, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Mutual funds | $ | 51,707 | | | $ | 58,601 | | | $ | 62,048 | | | 68,942 | | | $ | 75,836 | | | $ | 79,283 | | | $ | 86,178 | |

The option contracts include collars, an option strategy that is comprised of a combination of a purchased put option and a written call option with the same expiration dates and Japanese yen notional amounts but with different strike prices.

Continues on next page


designated as cash flow hedges, as of June 24, 2018, are shown in the table below.

| Sell | Japanese yen | $ | 569.0 | | | $ | 1.1 | | | | $ | 55.8 | | | $ | 83.7 | |

| Buy | Euro | 102.6 | | | | (4.7 | | | ) | | 10.7 | | | | 17.0 | | |

| Buy | Korean won | 28.9 | | | | (0.6 | | | ) | | 2.8 | | | | 4.2 | | |

| | | | | | | $ | (4.2 | | ) | | $ | 69.3 | | | $ | 104.9 | |

| Sell call | Japanese yen | 9.7 | | | | (0.1 | | | ) | | — | | | | — | | |

| | | | | | | $ | 0.1 | | | | $ | 0.7 | | | $ | 1.0 | |

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

| Sell | Japanese yen | $ | 267.4 | | | $ | 0.1 | | | | $ | 26.7 | | | $ | 40.0 | |

| Sell | Korean won | 99.4 | | | | — | | | | | 9.9 | | | | 14.9 | | |

| Buy | Euro | 45.3 | | | | — | | | | | 14.9 | | | | 16.6 | | |

| Buy | Taiwan dollar | 31.9 | | | | — | | | | | 3.2 | | | | 4.8 | | |

| Buy | Singapore dollar | 21.4 | | | | — | | | | | 2.2 | | | | 3.2 | | |

| Buy | British pound | 15.9 | | | | — | | | | | 0.9 | | | | 1.3 | | |

| Buy | Swiss francs | 14.9 | | | | — | | | | | 1.5 | | | | 2.2 | | |

| Buy | Chinese renminbi | 2.5 | | | | — | | | | | 0.2 | | | | 0.4 | | |

| Buy | Indian rupee | 3.2 | | | | — | | | | | 0.3 | | | | 0.5 | | |

| | | | | | | $ | 0.1 | | | | $ | 59.8 | | | $ | 83.9 | |

Continues on next page


| | | | June 24, 2018 | | | | | | | | | | | | | | | | | |

| Interest Rate Contracts | | $ | 33.6 | | | $ | 34.8 | | | $ | 31.2 | | | $ | 28.8 | | | $ | 27.6 | |

Continues on next page


| | June 25, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Time deposit | $ | 640,666 | | | $ | 640,666 | | | $ | 640,666 | | | $ | 640,666 | | | $ | 640,666 | | | $ | 640,666 | | | $ | 640,666 | |

| Municipal notes and bonds | 197,037 | | | | 196,890 | | | | 195,918 | | | | 194,876 | | | | 193,834 | | | | 192,792 | | | | 191,751 | | |

| U.S. Treasury and agencies | 821,172 | | | | 813,220 | | | | 804,147 | | | | 795,049 | | | | 785,862 | | | | 776,677 | | | | 767,493 | | |

| Government-sponsored enterprises | 25,355 | | | | 25,069 | | | | 24,783 | | | | 24,496 | | | | 24,210 | | | | 23,924 | | | | 23,638 | | |

| Foreign government bonds | 65,205 | | | | 64,482 | | | | 63,752 | | | | 63,022 | | | | 62,292 | | | | 61,563 | | | | 60,833 | | |

| Bank and corporate notes | 2,494,798 | | | | 2,475,500 | | | | 2,455,967 | | | | 2,436,436 | | | | 2,416,907 | | | | 2,397,381 | | | | 2,377,857 | | |

| Mortgage backed securities - residential | 105,825 | | | | 104,728 | | | | 103,543 | | | | 102,358 | | | | 101,171 | | | | 99,984 | | | | 98,797 | | |

| Mortgage backed securities - commercial | 68,710 | | | | 67,719 | | | | 66,729 | | | | 65,739 | | | | 64,750 | | | | 63,761 | | | | 62,773 | | |

| Total | $ | 4,418,768 | | | $ | 4,388,274 | | | $ | 4,355,505 | | | $ | 4,322,642 | | | $ | 4,289,692 | | | $ | 4,256,748 | | | $ | 4,223,808 | |

| | June 25, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Mutual funds | $ | 42,191 | | | $ | 47,816 | | | $ | 50,629 | | | 56,254 | | | $ | 61,879 | | | $ | 64,692 | | | $ | 70,318 | |

assuming a hypothetical foreign currency exchange rate movement of plus or minus 10 percent and plus or minus 15 percent.

| Sell | Japanese yen | $ | 670.2 | | | $ | (1.4 | | ) | | $ | 66.4 | | | $ | 99.6 | |

| Buy | Euro | 58.9 | | | | 2.7 | | | | | 6.1 | | | | 9.1 | | |

| Buy | Korean won | 22.0 | | | | — | | | | | 2.2 | | | | 3.3 | | |

| | | | | | | $ | 1.3 | | | | $ | 74.7 | | | $ | 112.0 | |

| Buy put de-designated (1) | Japanese yen | 26.5 | | | | 0.2 | | | | | 2.0 | | | | 3.0 | | |

| Sell put (2) | Japanese yen | 26.5 | | | | (0.2 | | | ) | | 1.9 | | | | 3.0 | | |

| | | | | | | $ | 1.0 | | | | $ | 7.1 | | | $ | 10.5 | |

(1) Contracts were entered into and designated as cash flow hedges under ASC 815 during the fiscal year as part of our cash flow hedge program.

The contracts were subsequently de-designated during the year ended June 25, 2017.

Changes in fair market value subsequent to de-designation affect current earnings.

(2) Contracts were entered into to offset the de-designated buy put contracts, and while not designated as a cash flow hedge they are considered to be part of our cash flow hedge program.

Changes in fair market value effect current earnings.

| Sell | Japanese yen | $ | 269.5 | | | $ | — | | | | $ | 26.9 | | | $ | 40.4 | |

| Sell | Korean won | 34.1 | | | | 0.2 | | | | | 3.4 | | | | 5.1 | | |

| Buy | Euro | 18.4 | | | | — | | | | | 1.9 | | | | 2.7 | | |

| Buy | Taiwan dollar | 11.2 | | | | — | | | | | 1.1 | | | | 1.7 | | |

| Buy | Swiss francs | 8.7 | | | | — | | | | | 0.9 | | | | 1.3 | | |

| Buy | Chinese renminbi | 7.2 | | | | — | | | | | 0.7 | | | | 1.1 | | |

| | | | | | | $ | 0.2 | | | | $ | 34.9 | | | $ | 52.3 | |

| | | | June 25, 2017 | | | | | | | | | | | | | | | | | |

| Interest Rate Contracts | | $ | 7.3 | | | $ | 5.9 | | | $ | 10.1 | | | $ | 12.9 | | | $ | 14.3 | |

Incorporated in 1980, Lam Research Corporation (“Lam Research,” “Lam,” “we,” “our,” “us,” or [removed: “the Company”)] [added: the “Company”)] is a Delaware corporation, headquartered in Fremont, California.

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 3

[removed: ][added: ]

Our Annual Report on Form 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Forms 8-K, Proxy Statements and all other filings we make with the SEC are available on our [removed: website] [added: website, free of charge,] as soon as reasonably practical after we file them with or furnish them to the SEC and are also available online at the SEC’s website at www.sec.gov.

These demand and technology inflections have significantly expanded our addressable markets from about 26% of wafer fabrication equipment [removed: (“WFE”)] spending in calendar year 2013 to about [removed: 34%] [added: 36%] in calendar year [removed: 2016.][added: 2017.]

We believe we are in a strong position with our leadership and competency in deposition, etch, and [removed: single wafer] 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; [removed: and] (iii) our collaborative focus with semi-ecosystem [removed: partners.][added: partners; (iv) our ability to identify and invest in the breadth of our product portfolio to meet technology inflections; and (v) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.]

In addition, our products are well-suited for related markets that rely on semiconductor processes and require production-proven manufacturing capability, such as complementary metal-oxide-semiconductor [removed: (“CMOS”)] image sensors (“CIS”) and micro-electromechanical systems (“MEMS”).

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 4

Lastly, [removed: innovative] post-deposition [removed: film] treatments such as ultraviolet thermal processing [removed: (“UVTP”)] are [removed: being] used to improve [removed: low-k] [added: dielectric] film [removed: integrity and increase strain in nitride layers for improved device performance.][added: properties.]

[removed: Copper] [added: | Deposition | |] Metal Films [removed: —] [added: | | Electrochemical Deposition (“ECD”) (Copper & Other) | |] SABRE® [removed: Product Family][added: family |]

System capabilities include [removed: deposition of] copper [added: deposition] directly on various liner materials, [added: which is] important for next-generation metallization schemes.

[removed: Tungsten Metal Films —] ALTUS® Product Family

Our [removed: ALTUS] [added: ALTUS®] systems [added: combine CVD and ALD technologies to] deposit [added: the] highly conformal [removed: atomic layer] films [added: needed] for advanced tungsten metallization applications.

The [removed: patented] Multi-Station Sequential Deposition [removed: (“MSSD”)] architecture enables [removed: a] nucleation layer [removed: to be formed using Pulsed Nucleation Layer (“PNL”) technology] [added: formation] and bulk CVD fill to be performed in the same chamber (“in situ”).

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 5

[removed: PECVD Dielectric Films —] VECTOR® Product Family

[removed: ALD Dielectric Films —] Striker® Product Family

[removed: Gapfill Dielectric Films —] SPEED® Product Family

[removed: The SPEED] [added: Our SPEED®] HDP-CVD products [removed: are designed to] provide [removed: void-free gapfill of high-quality] [added: a multiple] dielectric [removed: films] [added: film solution for high-quality gapfill] with [removed: superior] [added: industry-leading] throughput and reliability.

[removed: Film Treatment —] SOLA® Product Family

[removed: The Multi-Station Sequential Processing (“MSSP”) architecture allows] [added: SOLA® products offer process flexibility through] independent control of temperature, wavelength, and intensity at each station of the wafer [removed: path.][added: path, enabled by Multi-Station Sequential Processing architecture.]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 6

[added: | Etch | |] Conductor Etch [removed: —] [added: | | Reactive Ion Etch | |] Kiyo® [removed: Product Family,] [added: family,] Versys® Metal [removed: Product Family][added: family |]

[removed: Uniformity, uniformity control,] [added: Superior CD] and [removed: repeatability] [added: profile uniformity] are enabled by a symmetrical chamber [removed: design, electrostatic chuck technology, and] [added: design with] independent [added: process] tuning features.

[removed: The Flex] [added: To precisely create these challenging structures, our Flex®] product family offers differentiated technologies and application-focused capabilities for critical dielectric etch applications.

Uniformity, repeatability, and tunability are enabled by a [added: unique] multi-frequency, small-volume, confined plasma design.

[removed: The systems deliver high productivity with low defectivity, enabled by] [added: Flex offers] in situ multi-step etch and continuous plasma [removed: capability.][added: capability that delivers high productivity with low defectivity.]

[removed: TSV Etch —] Syndion® Product Family

The systems support both conventional single-step etch and rapidly alternating [removed: process (“RAP”).][added: process, which minimizes damage and delivers precise depth uniformity.]

[added: | Clean | | Wafer Cleaning | |] Wet Clean [removed: —] [added: | |] EOS®, [added: DV-Prime®,] Da Vinci®, [removed: DV-Prime®,] SP Series [added: |]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 7

[removed: Plasma Bevel Clean —] Coronus® Product Family

[removed: The Coronus plasma-based] [added: Plasma] bevel [removed: clean products] [added: cleaning is used to] enhance die yield by removing [removed: particles, residues and] unwanted [removed: films] [added: materials] from the wafer’s edge that [removed: can] [added: could] impact the device area.

Purchasing through an original equipment manufacturer [removed: (“OEM”)] like us minimizes the risks of unexpected costs and unpredictable time to production that are typically associated with the legacy equipment market.

Our products also provide production-worthy, cost-effective solutions for MEMS, power semiconductor, radio frequency device, and light emitting diode [removed: (“LED”)] markets.

| | | Dielectric Films | | [removed: PECVD] [added: Plasma-enhanced CVD (“PECVD”)] ALD Gapfill [removed: HDP-CVD] [added: High-Density Plasma CVD (“HDP-CVD”)] | | VECTOR® family Striker® family SPEED® family |

| | | Film Treatment | | [removed: UVTP] [added: Ultraviolet Thermal Processing (“ULTP”)] | | SOLA® family |

| | | [removed: TSV] [added: Through-silicon Via (“TSV”)] Etch | | Deep Reactive Ion Etch | | Syndion® family |

Any materials we file with the SEC may also be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

To obtain information on the operation of the Public Reference Room, call the SEC at 1-800-SEC-0330.

Continues on next page


| | | | | Chemical Vapor Deposition (“CVD”) Atomic Layer Deposition (“ALD”) (Tungsten) | | ALTUS® family |

| Mass Metrology | | Deposition, Etch, Clean | | Sub-milligram Mass Measurement | | Metryx® Family |

Deposition Processes and Product Families

Deposition processes create layers of dielectric (insulating) and metal (conducting) materials used to build a semiconductor device.

Depending on the type of material and structure being made, different techniques are employed.

Electrochemical deposition creates the copper wiring (interconnect) that links devices in an integrated circuit (“IC” or “chip”).

Plating of copper and other metals is also used for TSV and WLP applications.

Small tungsten connectors and thin barriers are made with the precision of chemical vapor deposition and atomic layer deposition, which adds only a few layers of atoms at a time.

Plasma-enhanced CVD, high-density plasma CVD, and ALD are used to form the critical insulating layers that isolate and protect all of these electrical structures.

Tungsten deposition is used to form conductive features such as contacts, vias, and plugs on a chip.

These features are small, often narrow, and use only a small amount of metal, so minimizing resistance and achieving complete fill can be difficult.

At these nanoscale dimensions, even slight imperfections can impact device performance or cause a chip to fail.

Continues on next page


SABRE® Product Family

Copper deposition lays down the electrical wiring for most semiconductor devices.

Even the smallest defect - say, a microscopic pinhole or dust particle - in these conductive structures can impact device performance, from loss of speed to complete failure.

The SABRE® ECD product family, which helped pioneer the copper interconnect transition, offers the precision needed for copper damascene manufacturing in logic and memory.

For advanced WLP applications, such as forming conductive bumps and redistribution layers, and for filling TSVs, the SABRE® 3D family combines Lam’s SABRE Electrofill® technology with additional innovation to deliver the high-quality films needed at high productivity.

The modular architecture can be configured with multiple plating and pre/post-treatment cells, providing flexibility to address a variety of packaging applications.

Dielectric materials designed to meet the insulation requirements of logic chips often have attributes that make them unusually difficult to use.

These films are easily damaged and vulnerable to losing some of their insulating capability, which can lead to poor device performance.

To enable these applications, some films can be stabilized - and others enhanced to improve device performance - using specialized post-deposition film treatments available with Lam’s SOLA® UVTP product family.

Dielectric gapfill processes deposit critical insulation layers between conductive and/or active areas by filling openings of various aspect ratios between conducting lines and between devices.

With advanced devices, the structures being filled can be very tall and narrow.

As a result, high-quality dielectric films are especially important due to the ever-increasing possibility of cross-talk and device failure.

SPEED® products have excellent particle performance, and their design allows large batch sizes between cleans and faster cleans.

The latest memory, logic, and imaging devices require extremely thin, highly conformal dielectric films for continued device performance improvement and scaling.

For example, such films are critical for spacer-based multiple patterning schemes where the spacers help define critical dimensions, as well as for insulating liners, which have little tolerance for even the smallest defect.

The Striker® single-wafer ALD products provide solutions for these challenging requirements through application-specific process and hardware options that deliver film technology and defect performance.

Reduced processing times with Striker® products are enabled by rapid ALD cycles and ALD-rated components, software, and controls.

Dielectric film deposition processes are used to form some of the most difficult-to-produce insulating layers in a semiconductor device, including those used in the latest transistors and 3D structures.

In some applications, these films need to conform tightly around intricate structures.

Other applications require dielectric films to be exceptionally smooth and defect free since slight imperfections are multiplied greatly in subsequent layers.

Our VECTOR® PECVD products are designed to provide the performance and flexibility needed to create these enabling structures within a wide range of challenging device applications.

As a result of its design, VECTOR® produces superior thin film quality, along with exceptional within-wafer and wafer-to-wafer uniformity.

Thin Film Deposition

In leading-edge semiconductor designs, metal deposition processes face significant scaling and integration challenges.

For advanced copper interconnect structures, challenges for electrochemical deposition (“ECD”) include providing complete, void-free fill of high aspect ratio (“HAR”) structures with low defectivity and high productivity.

Electroplating of copper and other metals is also used for through-silicon via (“TSV”) and WLP applications, such as forming conductive bumps and redistribution layers (“RDLs”).

These applications require excellent within-wafer uniformity with high plating rates, minimal defects, and cost competitiveness.

For tungsten chemical vapor deposition (“CVD”)/atomic layer deposition (“ALD”) processes, key requirements are minimizing contact resistance to meet lower power consumption requirements and achieving void-free fill for narrow nanoscale structures.

In addition, good barrier step coverage at reduced thicknesses relative to physical vapor deposition (“PVD”)/CVD barrier films is also needed to improve contact fill and reduce resistivity.

In dielectric deposition, high-productivity, high-quality films are needed for a number of critical patterning and gapfill applications.

For example, atomic layer deposition is required for front-end-of-line (“FEOL”) transistor structures and back-end-of-line (“BEOL”) self-aligned multiple patterning schemes to deposit highly conformal and uniform films.

For NVM applications, high-quality conformal films are needed to form device isolation and ensure structural integrity.

Plasma-enhanced CVD (“PECVD”) is used to deposit multiple dielectric films, including the alternating mold stack layers used in NVM memory and critical patterning layers for logic/foundry.

These applications require excellent thickness uniformity, low defectivity, and stress control.

For gapfill deposition, achieving defect-free fills while maintaining high throughput is essential.

Preferred approaches are to use high-density plasma CVD (“HDP-CVD”) either as a complete gapfill solution or as a cap over other gapfill technologies to enhance process control and mitigate integration risks.

The SABRE ECD product family is the industry’s leading system for copper damascene manufacturing.

Electrofill® technology is designed to provide high-throughput, void-free fill with superior defect density performance for advanced technology nodes.

SABRE chemistry packages provide leading-edge fill performance for low defectivity, a wide process window, and high rates of bottom-up growth to fill the most challenging HAR features.

The number of yielding ICs per wafer is optimized by increasing the usable die area through process edge exclusion engineering.

Applications include copper deposition for both advanced logic and memory interconnect.

We also offer the SABRE 3D system to address TSV and WLP applications, such as copper pillar, RDL, high-density fanout, underbump metallization, bumping, and microbumps used in post-TSV processing.

PNL is also used to reduce thickness and alter CVD bulk fill grain growth, lowering the overall resistivity of thin tungsten films.

The advanced ExtremeFillTM CVD and LFW (low-fluorine tungsten) ALD technologies provide extendibility to fill the most challenging structures at advanced technology nodes.

Applications include tungsten plug and via fill, NVM word lines, low-stress composite interconnects, and tungsten nitride barrier for via and contact metallization.

The VECTOR family of PECVD systems delivers advanced thin film quality, wafer-to-wafer uniformity, productivity, and low cost of ownership.

The MSSD architecture combines the required film performance with both sequential and parallel processing to provide flexibility for a range of applications.

VECTOR products include specialized systems for logic and memory applications with multiple platform options.

The Express platform offers a small footprint with four processing stations.

Excel is a modular platform for advanced technology nodes where pre-and-post deposition treatments are needed.

The Extreme platform accommodates up to 12 processing stations for high-throughput applications.

Our Q platform accommodates up to 16 processing stations for depositing multi-stack films.

Applications include deposition of oxides, nitrides, and carbides for hardmasks, multiple patterning films, anti-reflective layers, multi-layer stack films, and diffusion barriers.

The Striker family of ALD systems delivers highly conformal dielectric films for spacer-based patterning and liner applications in the most advanced memory and logic structures.

The MSSD architecture combines the required film performance with both sequential and parallel processing modes to provide flexibility to deliver both precise control of critical dimensions and low cost of ownership.

The unique capability to deliver tunable and high-quality films over a vast range of temperatures and process conditions allows the Striker family to deliver unique and high electrical quality films to support the most demanding logic, DRAM, NVM, and CIS applications.

Striker products include specialized systems for logic and memory applications, with similar multiple platform options as are available for our VECTOR products.

Applications include conformal deposition of dielectric films for spacers and liners.

The unique source design provides for particle performance, while the ability to customize the deposition and in situ etching profile ensures across-wafer thickness and gapfill uniformity.

Together, the chamber and plasma source designs allow large batch sizes between cleans and faster cleans to deliver superior throughput.

Broad process flexibility is available on the same platform, without requiring major hardware changes.

Applications include shallow trench isolation (“STI”), pre-metal dielectrics, inter-layer dielectrics, inter-metal dielectrics, and passivation layers.

For the fiscal year ended June [removed: 25, 2017][added: 24, 2018]

| Title of [added: each] class | | Name of [added: each] exchange on which registered |

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T [added: (§ 232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K [added: (§ 229.405 of this chapter)] is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 [removed: Exchange] Act.

The aggregate market value of the Registrant’s Common Stock, $0.001 par value, held by non-affiliates of the Registrant, as of December [removed: 25, 2016,] [added: 24, 2017,] the last business day of the most recently completed second fiscal [removed: quarter with respect to the fiscal year covered by this Form 10-K,] [added: quarter,] was [removed: $12,210,431,182.][added: $24,908,278,746.]

Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock has been excluded from this computation [removed: in] [added: based on the assumption] that such persons may be deemed to be affiliates.

As of August [removed: 10, 2017,] [added: 9, 2018,] the Registrant had [removed: 162,454,686] [added: 157,579,984] outstanding shares of Common Stock.

Parts of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders expected to be held on or about November [removed: 8, 2017,] [added: 6, 2018,] are incorporated by reference into Part III of this Form 10-K.

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 1

[removed: ][added: ]

[removed: 2017] [added: 2018] ANNUAL REPORT ON FORM 10-K

| Item 1. | [removed: [Business](#s8A72693021DD54ACAAB8FE6EE711D68D)] [added: [Business](#s510735AA1897575EA5709ED1379ED98A)] | [removed: [3](#s8A72693021DD54ACAAB8FE6EE711D68D)] [added: [3](#s510735AA1897575EA5709ED1379ED98A)] |

| Item 1A. | [Risk [removed: Factors](#s37B8EA58DBAD5EC29E4E767A89D70C0E)] [added: Factors](#s6372A8C7F27D59669581C1A1E6305BF5)] | [removed: [14](#s37B8EA58DBAD5EC29E4E767A89D70C0E)] [added: [15](#s6372A8C7F27D59669581C1A1E6305BF5)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s0BF4D2725FCC50889FC8D8EDF183C93B)] [added: Comments](#s9187FB20B67F514DB1C44AC4DF1A809D)] | [removed: [25](#s0BF4D2725FCC50889FC8D8EDF183C93B)] [added: [27](#s9187FB20B67F514DB1C44AC4DF1A809D)] |

| Item 2. | [removed: [Properties](#sD22495FC4D79535EAF53FA9137DC495A)] [added: [Properties](#s1C5040FF04CC5CF6A0CE023AFD71598F)] | [removed: [25](#sD22495FC4D79535EAF53FA9137DC495A)] [added: [27](#s1C5040FF04CC5CF6A0CE023AFD71598F)] |

| Item 3. | [Legal [removed: Proceedings](#sADCA0AF688EF5AF28EB60DAABE9A22FD)] [added: Proceedings](#sB4081D9F9750539CBB100B330781174D)] | [removed: [26](#sADCA0AF688EF5AF28EB60DAABE9A22FD)] [added: [27](#sB4081D9F9750539CBB100B330781174D)] |

| Item 4. | [Mine Safety [removed: Disclosures](#sEA03DCCDB2C45484BA55079DA8F82753)] [added: Disclosures](#s439E4C2673C15B4FB5451DEDDAE8AFEE)] | [removed: [26](#sEA03DCCDB2C45484BA55079DA8F82753)] [added: [27](#s439E4C2673C15B4FB5451DEDDAE8AFEE)] |

| [Part [removed: II.](#s58E7786CA5A35F9B8A7C55EEBB2477D2)] [added: II.](#sEE6BD498675A55A8978F36FAE8E08E8B)] | | |

| Item 5. | [Market for the Registrant’s Common Equity, Related Stockholder [removed: Matters,] [added: Matters] and Issuer Purchases of Equity [removed: Securities](#s00EED9E204795A5D927C1FE826055E9C)] [added: Securities](#s644A23336AD750399DD4FCC42CB6862F)] | [removed: [27](#s00EED9E204795A5D927C1FE826055E9C)] [added: [28](#s644A23336AD750399DD4FCC42CB6862F)] |

| Item 6. | [Selected Financial [removed: Data](#s2ABAEAF7D4365DB281FF947D79AC530D)] [added: Data](#s467A3A85AEEF50B085DEA86FB5FDB648)] | [removed: [30](#s2ABAEAF7D4365DB281FF947D79AC530D)] [added: [31](#s467A3A85AEEF50B085DEA86FB5FDB648)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s29263142F4345487B17B11C0B20095EC)] [added: Operations](#sC13F6B0EC27A51E49A6A1A3317D92DCD)] | [removed: [32](#s2F3729194BEF5B13BF2884827F244CE1)] [added: [33](#sB459175A4076592E87FD87746D40E4B8)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sEF2388748A2B50879F0251120CBD8933)] [added: Risk](#s92DE640F1CAD580B995FF2BF2BEA3762)] | [removed: [45](#sEF2388748A2B50879F0251120CBD8933)] [added: [47](#s92DE640F1CAD580B995FF2BF2BEA3762)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s974C69F819635EB29F67E0D1E094C301)] [added: Data](#s813D14CB0B785E65B2A95AA57737596F)] | [removed: [49](#s974C69F819635EB29F67E0D1E094C301)] [added: [51](#s813D14CB0B785E65B2A95AA57737596F)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sC212A0DC261455539A920AF1DFAC1D7B)] [added: Disclosure](#sA8520BCC2BCF5324B893B5C3864EDFF7)] | [removed: [95](#sC212A0DC261455539A920AF1DFAC1D7B)] [added: [99](#sA8520BCC2BCF5324B893B5C3864EDFF7)] |

| Item 9A. | [Controls and [removed: Procedures](#s808F1B50D7E75D2B8AFBBEA8E12956A3)] [added: Procedures](#s58548A9F97D55924AC1A52761C82B5F2)] | [removed: [95](#s808F1B50D7E75D2B8AFBBEA8E12956A3)] [added: [99](#s58548A9F97D55924AC1A52761C82B5F2)] |

| Item 9B. | [Other [removed: Information](#s535A7A9A244759838308F9D18DC3D63D)] [added: Information](#s1285C5FC2AA7542294CDEE037BCFF29A)] | [removed: [95](#s535A7A9A244759838308F9D18DC3D63D)] [added: [99](#s1285C5FC2AA7542294CDEE037BCFF29A)] |

| [Part [removed: III.](#s67CFC05CD5F852E882D7179E2E353FB1)] [added: III.](#sB780E40ADB7B5F63A680732093F0184B)] | | |

| Item 10. | [Directors, Executive [removed: Officers,] [added: Officers] and Corporate [removed: Governance](#s892B8D3252EE5743BF0117DBCF60368E)] [added: Governance](#s977373136AF159F6B4856593E77B6BD7)] | [removed: [96](#s892B8D3252EE5743BF0117DBCF60368E)] [added: [100](#s977373136AF159F6B4856593E77B6BD7)] |

| Item 11. | [Executive [removed: Compensation](#s0B4BFF8CB6CB54909D3AF825166951AB)] [added: Compensation](#sBFD2C548EC355910B407A24F1AA37E7E)] | [removed: [96](#s0B4BFF8CB6CB54909D3AF825166951AB)] [added: [100](#sBFD2C548EC355910B407A24F1AA37E7E)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sF7A6DB4846A55EF49502EDBC33534D3B)] [added: Matters](#s1DA823B3DCE05EE7AB0CC78E42863962)] | [removed: [96](#sF7A6DB4846A55EF49502EDBC33534D3B)] [added: [100](#s1DA823B3DCE05EE7AB0CC78E42863962)] |

| Item 13. | [Certain Relationships and Related [removed: Transactions] [added: Transactions,] and Director [removed: Independence](#s31FCC4D095105CE3B9803B2CCCF4EDEB)] [added: Independence](#s6C3B650E1A6A5552A8548AC568464865)] | [removed: [96](#s31FCC4D095105CE3B9803B2CCCF4EDEB)] [added: [100](#s6C3B650E1A6A5552A8548AC568464865)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s4A05736E254B5124B8158B0B561D6516)] [added: Services](#s6E40DC5C7C8E5EE4B6153D26559A4BC8)] | [removed: [96](#s4A05736E254B5124B8158B0B561D6516)] [added: [100](#s6E40DC5C7C8E5EE4B6153D26559A4BC8)] |

| [Part [removed: IV.](#s24E54166D3A75480AC1600184E6DEA73)] [added: IV.](#sACF7579B62B95848A2806480B249C32D)] | | |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#s01535EB7C19C50FF98E8E5C83E2E24E9)] [added: Schedules](#s3382CF045EDD5D31B6DDC2897E2CF113)] | [removed: [97](#s01535EB7C19C50FF98E8E5C83E2E24E9)] [added: [101](#s3382CF045EDD5D31B6DDC2897E2CF113)] |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K 2

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,” [added: “estimated,”] “anticipate,” “expect,” [added: “probable,” “intend,”] “plan,” “aim,” “may,” “should,” “could,” “would,” [added: “will,”] “continue,” and other future-oriented terms.

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, future shipments, margins, market share, capital expenditures, research and development expenditures, international sales, [removed: revenue,] [added: revenue (actual and/or deferred),] and operating expenses 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 [removed: products,] [added: products] and [added: services, and] the reliability of indicators of change in customer spending and demand; the effect of variability in our customers’ business plans [removed: on] [added: or] demand for our equipment and services; changes in demand for our products and in our market share resulting from, among other things, increases in our customers’ proportion of capital expenditure (with respect to certain technology inflections); hedging transactions; our [added: competition; our] ability to defend our market [removed: share;] [added: share,] and to gain new market share; our ability to obtain and qualify alternative sources of supply; [added: the impact of U.S. tax reform, our estimated annual tax rate and the] factors that affect our tax rates; anticipated growth in the industry and the total market for wafer fabrication equipment and our growth relative to such growth; 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; [added: 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 [added: benefits or] liabilities, and the adequacy of our accruals relating to them); our [added: investment portfolio; our] access to capital markets; [added: uses of, payments of, and impact of interest rate fluctuations on,] our [added: debt; our] intention to pay quarterly dividends and the amounts thereof, if any; our ability and intention to repurchase our shares; [added: 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 to support future business activities (including but not limited to operations, investments, debt service requirements, and capital expenditures).

10-K 1 lrcx_10kx2018xdocument.htm 10-K

| [Part I.](#s04E99A92F4555B0AB43D8939CF6BF8F1) | | |

| [Exhibit Index](#s2939CC9D871952BD96CD44518A35A0F8) | | [102](#s2939CC9D871952BD96CD44518A35A0F8) |

| [Signatures](#sF03F86E49DA55ABBAC960F51CCAEF3F4) | | [107](#sF03F86E49DA55ABBAC960F51CCAEF3F4) |

| | | |

Continues on next page


10-K 1 lrcx_10kx2017xdocument.htm 10-K

(Check one):

| [Part I.](#sFB2C9E12F224584E819998200228F70E) | | |

| [Signatures](#s1B787E1DC6325261BD67298F0D3449EB) | | [98](#s1B787E1DC6325261BD67298F0D3449EB) |

| [Exhibit Index](#sFD825957C6E350CB82BE004CB2E8390F) | | [101](#sFD825957C6E350CB82BE004CB2E8390F) |

In addition, we lease or own properties for our service, technical support, and sales personnel throughout the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan and lease or own manufacturing facilities located in [removed: Ohio,] [added: Ohio] and Korea.

The Company owns two properties in Fremont, as well as the [added: majority of the] Tualatin facilities.

Continues on next page

Lam Research Corporation 2017 10-K 25


Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 26][added: 27]

[removed: ][added: ]

Our Common Stock is traded on the Nasdaq Global Select MarketSM under the symbol “LRCX.” As of August [removed: 10, 2017,] [added: 9, 2018,] we had [removed: 440] [added: 418] stockholders of record.

[removed: In the second fiscal quarter of 2017 we] [added: We] increased our [removed: stockholders] quarterly dividend [removed: to $0.45 per share; previous to that quarter of fiscal year 2017 and] throughout [added: the 2018] fiscal year [removed: 2016, quarterly dividends of $0.30] [added: from $0.45] per share [removed: were paid.][added: to $1.10 per share.]

The table below sets forth the [added: quarterly dividend declared as well as the] high and low prices of our Common Stock as reported by the Nasdaq Stock Market, for the period indicated:

| | 2017 | | | | | | | [added: | | | |]

| [added: Declared | | | |] High | | | | Low | | | |

| First quarter | $ | [added: 0.30 | | | $ |] 95.77 | | | $ | 79.15 | |

| Second quarter | $ | [added: 0.45 | | | $ |] 108.60 | | | $ | 90.56 | |

| Third quarter | $ | [added: 0.45 | | | $ |] 129.35 | | | $ | 105.30 | |

| Fourth quarter | $ | [added: 0.45 | | | $ |] 167.05 | | | $ | 124.91 | |

Repurchases [removed: may] [added: will] be funded using our [removed: onshore] cash and [removed: onshore cash generation, or our] available [removed: debt instruments.][added: credit facilities.]

On April 19, 2017, we entered into two separate accelerated share repurchase agreements (collectively, the [removed: “ASR”)] [added: “April 2017 ASR”)] with two financial institutions to repurchase a total of $500 million of [removed: our] Common Stock.

The total number of shares [removed: to be] received under the [added: May 2018] ASR [removed: is] [added: was] based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount.

Approximately 780,000 shares were received at final settlement, which [removed: represented] [added: resulted in] a weighted-average share price of approximately $149.16 for the transaction period.

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 27][added: 28]

[removed: ][added: ]

| [removed: May 22, 2017 -] [added: Available balance as of] June 25, 2017 | [removed: 55] | | | [removed: $] | [removed: 154.92] | | | [removed: —] | | | [removed: 282,141] [added: $] | [added: 282,141] | |

| (1) | In addition to shares repurchased under the Board-authorized repurchase program, [removed: the Company] [added: we] acquired [removed: 809,427] [added: 577 thousand] shares at a total cost of [removed: $93.8] [added: $104.9] million 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 through these net share settlements are not a part of the Board-authorized repurchase program, but instead are authorized under our equity compensation plans. |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 28][added: 29]

The graph tracks the performance of a $100 investment in our Common Stock and in each of the indices (with the reinvestment of all dividends) from June 30, [removed: 2012,] [added: 2013,] to June 30, [removed: 2017.][added: 2018.]

[removed: ][added: ]

*$100 invested on [removed: 6/30/2012] [added: 6/30/2013] in stock or index, including reinvestment of dividends.

Copyright © [removed: 2017] [added: 2018] Standard & Poor’s, a division of S&P Global.

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 29][added: 30]

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | 2018 | | | | | | | | | | |

| Dividend | | | | Stock Price | | | | | | | |

| First quarter | $ | 0.45 | | | $ | 178.18 | | | $ | 139.24 | |

| Second quarter | $ | 0.50 | | | $ | 219.70 | | | $ | 167.52 | |

| Third quarter | $ | 0.50 | | | $ | 234.88 | | | $ | 156.83 | |

| Fourth quarter | $ | 1.10 | | | $ | 219.46 | | | $ | 170.51 | |

| | Dividend | | | | Stock Price | | | | | | |

| | Declared | | | | High | | | | Low | | |

In March 2018, the board of directors authorized us to repurchase up to an additional $2.0 billion of Common Stock.

The new authorization increases the share repurchase authorization granted in November 2017 to an aggregate of up to $4.0 billion of Common Stock, and supplements the remaining balances for any prior authorizations.

Accelerated Share Repurchase Agreements Settled in the 2018 Fiscal Year

On May 9, 2018, we entered into two separate accelerated share repurchase agreements (collectively, the "May 2018 ASR") with two financial institutions to repurchase a total of $1.0 billion of Common Stock.

We took an initial delivery of approximately 3,505,000 shares, which represented 70% of the prepayment amount divided by our closing stock price on May 9, 2018.

Final settlement of these two transactions occurred on June 8, 2018 and June 11, 2018, respectively.

Approximately 1,640,000 additional shares were received at final settlement, which resulted in a weighted-average price of approximately $194.35 for the transaction period.

On November 20, 2017, we entered into four separate accelerated share repurchase agreements (collectively, the " November 2017 ASR") with two financial institutions to repurchase a total of $1.0 billion of Common Stock.

We took an initial delivery of 3,254,300 shares, which represented 70% of the prepayment amount divided by our closing stock price on November 20, 2017.

The total number of shares received under the November 2017 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 transactions occurred on February 1, 2018

and February 2, 2018, respectively.

Approximately 1,019,000 additional shares were received at the February 2018 final settlement, which resulted in a weighted-average share price of approximately $189.03 for the transaction period.

Final settlement for the remaining transactions occurred on April 24, 2018 and May 23, 2018, respectively.

Approximately 984,000 additional shares were received at final settlement, which resulted in a weighted-average share price of approximately $191.55 for the transaction period.

The total number of shares received under the April 2017 ASR was based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount.

The April 2017 ASR settled on June 30, 2017.

| Quarter ended September 24, 2017 | 1,790 | | | $ | 158.40 | | | 1,779 | | | 124,203 | | |

| Board authorization, $2.0 billion increase, November 2017 | | | | | | | | | | | 2,124,203 | | |

| Quarter ended December 24, 2017 | 3,806 | | | $ | 194.99 | | | 3,709 | | | 1,034,459 | | |

| Board authorization, $2.0 billion increase, March 2018 | | | | | | | | | | | 3,034,459 | | |

| Quarter ended March 25, 2018 | 1,470 | | | $ | 180.03 | | | 1,019 | | | 3,034,459 | | |

| March 26, 2018 - April 22, 2018 | 1,151 | | | $ | 193.37 | | | 1,144 | | | 3,003,614 | | |

| April 23, 2018 - May 20, 2018 | 4,923 | | | $ | 190.88 | | | 4,917 | | | 1,733,638 | | |

| May 21, 2018 - June 24, 2018 | 1,646 | | | $ | 184.37 | | | 1,641 | | | 1,733,638 | | |

| Total | 14,786 | | | $ | 181.16 | | | 14,209 | | | $ | 1,733,638 | |

Continues on next page


Continues on next page

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | 2016 | | | | | | |

| First quarter | $ | 84.13 | | | $ | 61.20 | |

| Second quarter | $ | 80.85 | | | $ | 61.65 | |

| Third quarter | $ | 81.29 | | | $ | 63.10 | |

| Fourth quarter | $ | 87.19 | | | $ | 72.00 | |

In November 2016, the Board of Directors authorized us to repurchase up to $1.0 billion of our Common Stock, which included the remaining value available under our prior authorization.

Following our fiscal year end, the counterparties designated June 30, 2017, as the termination date, at which time we settled the ASR.

| Available balance as of June 26, 2016 | | | | | | | | | | | $ | 229,094 | |

| Quarter ended September 25, 2016 | 20 | | | $ | 90.53 | | | — | | | 229,094 | | |

| Board-approved increase (November 2016) | | | | | | | | | | | 1,000,000 | | |

| Quarter ended December 25, 2016 | 735 | | | $ | 103.43 | | | 619 | | | 934,986 | | |

| Quarter ended March 26, 2017 | 1,826 | | | $ | 115.12 | | | 1,223 | | | 795,226 | | |

| March 27, 2017 - April 23, 2017 | 2,682 | | | $ | 128.27 | | | 2,672 | | | 282,141 | | |

| April 24, 2017 - May 21, 2017 | 5 | | | $ | 150.58 | | | — | | | 282,141 | | |

| Total | 5,323 | | | $ | 137.39 | | | 4,514 | | | $ | 282,141 | |

| | 6/12 | | | 6/13 | | | 6/14 | | | 6/15 | | | 6/16 | | | 6/17 | |

| Lam Research Corporation | 100.00 | | | 117.49 | | | 179.56 | | | 218.44 | | | 229.31 | | | 391.30 | |

| Nasdaq Composite Index | 100.00 | | | 117.69 | | | 155.50 | | | 177.19 | | | 173.36 | | | 221.11 | |

| S&P 500 Index | 100.00 | | | 120.60 | | | 150.27 | | | 161.43 | | | 167.87 | | | 197.92 | |

| Philadelphia Semiconductor Sector Index | 100.00 | | | 116.96 | | | 156.62 | | | 161.36 | | | 173.61 | | | 241.00 | |

| June [added: 24, 2018 | | | | June] 25, 2017 | | | | June 26, 2016 | | | | June 28, 2015 | | | | June 29, 2014 | | | | [removed: June 30, 2013] | [removed: | | | |]

| Revenue | $ | [removed: 8,013,620] [added: 11,076,998] | | | $ | [removed: 5,885,893] [added: 8,013,620] | | | $ | [removed: 5,259,312] [added: 5,885,893] | | | $ | [removed: 4,607,309] [added: 5,259,312] | | | $ | [removed: 3,598,916] [added: 4,607,309] | | |

| Gross margin | [removed: 3,603,359] [added: 5,165,032] | | | | [removed: 2,618,922] [added: 3,603,359] | | | | [removed: 2,284,336] [added: 2,618,922] | | | | [removed: 2,007,481] [added: 2,284,336] | | | | [removed: 1,403,059] [added: 2,007,481] | | | |

| Goodwill impairment (1) | — | | | | — | | | | [removed: 79,444] [added: —] | | | | [removed: —] [added: 79,444] | | | | — | | | |

| Operating income | [removed: 1,902,132] [added: 3,213,299] | | | | [removed: 1,074,256] [added: 1,902,132] | | | | [removed: 788,039] [added: 1,074,256] | | | | [removed: 677,669] [added: 788,039] | | | | [removed: 118,071] [added: 677,669] | | | |

| Net income | [removed: 1,697,763] [added: 2,380,681] | | | | [removed: 914,049] [added: 1,697,763] | | | | [removed: 655,577] [added: 914,049] | | | | [removed: 632,289] [added: 655,577] | | | | [removed: 113,879] [added: 632,289] | | | |

| Basic | $ | [removed: 10.47] [added: 14.73] | | | $ | [removed: 5.75] [added: 10.47] | | | $ | [removed: 4.11] [added: 5.75] | | | $ | [removed: 3.84] [added: 4.11] | | | $ | [removed: 0.67] [added: 3.84] | | |

| Diluted | $ | [removed: 9.24] [added: 13.17] | | | $ | [removed: 5.22] [added: 9.24] | | | $ | [removed: 3.70] [added: 5.22] | | | $ | [removed: 3.62] [added: 3.70] | | | $ | [removed: 0.66] [added: 3.62] | | |

| Cash dividends declared per common share | $ | [removed: 1.65] [added: 2.55] | | | $ | [removed: 1.20] [added: 1.65] | | | $ | [removed: 0.84] [added: 1.20] | | | $ | [removed: 0.18] [added: 0.84] | | | $ | [removed: —] [added: 0.18] | | |

| Working capital | $ | [removed: 6,192,383] [added: 5,999,603] | | | $ | [removed: 6,795,109] [added: 6,192,383] | | | $ | [removed: 3,639,488] [added: 6,795,109] | | | $ | [removed: 3,201,661] [added: 3,639,488] | | | $ | [removed: 2,389,354] [added: 3,201,661] | | |

| Total assets | [removed: 12,122,765] [added: 12,479,478] | | | | [removed: 12,264,315] [added: 12,122,765] | | | [removed: (2)] | [removed: 9,358,904] [added: 12,264,315] | | | (2) | [removed: 7,986,998] [added: 9,358,904] | | | (2) | [removed: 7,241,645] [added: 7,986,998] | | | (2) |

| Long-term obligations, less current portion | [removed: 2,185,338] [added: 2,749,127] | | | | [removed: 3,744,205] [added: 2,185,338] | | | [removed: (2)] | [removed: 1,386,536] [added: 3,744,205] | | | (2) | [removed: 1,191,913] [added: 1,386,536] | | | (2) | [removed: 1,161,378] [added: 1,191,913] | | | (2) |

| Current portion of long-term debt and capital leases | [added: 610,030 | | | |] 908,439 | | | | 947,733 | | | (2) | 1,355,705 | | | (2) | 518,267 | | | | [removed: 514,655 | | | |]

| (1) | Goodwill impairment analysis during fiscal year 2015 resulted in a non-cash impairment charge to our [removed: Single-Wafer] Clean reporting unit, extinguishing the goodwill ascribed to the reporting unit. |

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 30][added: 31]

[removed: ][added: ]

| Net income [added: (loss)] per share | | | | | | | | | | | | | | | |

| June [removed: 26, 2016] [added: 24, 2018] | | | | March [removed: 27, 2016] [added: 25, 2018] | | | | December [removed: 27, 2015] [added: 24, 2017] | | | | September [removed: 27, 2015] [added: 24, 2017] | | | |

| QUARTERLY FISCAL YEAR [removed: 2016:] [added: 2018:] | | | | | | | | | | | | | | | |

| (1) | Our reporting period is a 52/53-week fiscal year. The fiscal years ended June [removed: 25, 2017,] [added: 24, 2018,] and June [removed: 26, 2016,] [added: 25, 2017,] included 52 weeks. All quarters presented above included 13 weeks. |

| (2) | Adjusted for effects of retrospective implementation of ASU 2015-3 in the first quarter of fiscal 2017. |

| Revenue | $ | 3,125,928 | | | $ | 2,892,115 | | | $ | 2,580,815 | | | $ | 2,478,140 | |

| Gross margin | 1,479,408 | | | | 1,330,714 | | | | 1,205,567 | | | | 1,149,343 | | |

| Operating income | 955,195 | | | | 827,511 | | | | 737,371 | | | | 693,222 | | |

| Net income (loss) | 1,021,146 | | | (2) | 778,800 | | | | (9,955 | | ) | (2) | 590,690 | | |

| Basic | $ | 6.35 | | | $ | 4.80 | | | $ | (0.06 | ) | (2) | $ | 3.64 | |

| Diluted | $ | 5.82 | | | $ | 4.33 | | | $ | (0.06 | ) | (2) | $ | 3.21 | |

| Basic | 160,916 | | | | 162,378 | | | | 161,135 | | | | 162,141 | | |

| Diluted | 175,432 | | | | 179,779 | | | | 161,135 | | | | 183,880 | | |

| (2) | The comparability of our quarter ended December 24, 2017 was affected by a $757 million provisional charge associated with the December 2017 U.S. tax reform. During the quarter ended June 24, 2018, $116 million of this provisional charge was reversed. |

| | |

| --- | --- |

| Restructuring charges, net | — | | | | — | | | | — | | | | — | | | | 1,813 | | | |

| (2) | Adjusted for effects of retrospective implementation of ASU 2015-3, see Notes 3 and 13 to the Consolidated Financial Statements contained in Part II, Item 8. |

| Revenue | $ | 1,546,261 | | | $ | 1,314,055 | | | $ | 1,425,534 | | | $ | 1,600,043 | |

| Gross margin | 698,784 | | | | 571,265 | | | | 626,510 | | | | 722,363 | | |

| Operating income | 309,241 | | | | 190,753 | | | | 238,834 | | | | 335,428 | | |

| Net income | 258,939 | | | | 143,451 | | | | 222,980 | | | | 288,679 | | |

| Basic | $ | 1.62 | | | $ | 0.90 | | | $ | 1.41 | | | $ | 1.82 | |

| Diluted | $ | 1.46 | | | $ | 0.82 | | | $ | 1.28 | | | $ | 1.66 | |

| Basic | 159,862 | | | | 159,039 | | | | 158,424 | | | | 158,352 | | |

| Diluted | 177,649 | | | | 174,373 | | | | 174,242 | | | | 174,374 | | |

| Consolidated Statements of Operations — Years Ended June [added: 24, 2018, June] 25, 2017, [removed: June 26, 2016,] and June [removed: 28, 2015] [added: 26, 2016] | [removed: [50](#s3FDB6D6D5DD65D0AB0511A9A1745F5D9)] [added: [52](#sE77AF5097D6D50F2A680394B79203E93)] |

| Consolidated Statements of Comprehensive Income — Years Ended June [added: 24, 2018, June] 25, 2017, [removed: June 26, 2016,] and June [removed: 28, 2015] [added: 26, 2016] | [removed: [51](#s025045BD6B6954788227E11472E2E23D)] [added: [53](#sB58EDB95F47F57E3B9D49E5DC812C1A4)] |

| Consolidated Balance Sheets — June [removed: 25, 2017,] [added: 24, 2018,] and June [removed: 26, 2016] [added: 25, 2017] | [removed: [52](#s20E006B5811252F181EDE663233024F4)] [added: [54](#sA6A4E0C1519B57EE9043EC142A68C08A)] |

| Consolidated Statements of Cash Flows — Years Ended June [added: 24, 2018, June] 25, 2017, [removed: June 26, 2016,] and June [removed: 28, 2015] [added: 26, 2016] | [removed: [53](#s738FDE6518A95227A6392A1360E4067B)] [added: [55](#sE88E24C85BEB5BC5A2ADAA4AFEA1A4BB)] |

| Consolidated Statements of Stockholders’ Equity — Years Ended June [added: 24, 2018, June] 25, 2017, [removed: June 26, 2016,] and June [removed: 28, 2015] [added: 26, 2016] | [removed: [55](#sEA17F4791D0E5D90B34BBC6C5A657FC8)] [added: [57](#sFBDA6A2D491B525895907D1F969EDECE)] |

| Notes to Consolidated Financial Statements | [removed: [56](#sB8214FBD66635701A9E1A247C25AF75A)] [added: [58](#s1AA4605FBEE0575BB22C1574ACD2BE34)] |

| Reports of Independent Registered Public Accounting Firm | [removed: [93](#s46DA60CD25B353089DDAA8F89C61CBA7)] [added: [97](#sA5AE9811F6D054F7A661B3E074444D43)] |

Continues on next [removed: page][added: page]

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 49][added: 51]

[removed: ][added: ]

| June [removed: 25, 2017] [added: 24, 2018] | | | | June [removed: 26, 2016] [added: 25, 2017] | | | | June [removed: 28, 2015] [added: 26, 2016] | | | |

| Revenue | $ | [removed: 8,013,620] [added: 11,076,998] | | | $ | [removed: 5,885,893] [added: 8,013,620] | | | $ | [removed: 5,259,312] [added: 5,885,893] | |

| Cost of goods sold | [removed: 4,410,261] [added: 5,911,966] | | | | [removed: 3,266,971] [added: 4,410,261] | | | | [removed: 2,974,976] [added: 3,266,971] | | |

| Gross margin | [removed: 3,603,359] [added: 5,165,032] | | | | [removed: 2,618,922] [added: 3,603,359] | | | | [removed: 2,284,336] [added: 2,618,922] | | |

| Research and development | [removed: 1,033,742] [added: 1,189,514] | | | | [removed: 913,712] [added: 1,033,742] | | | | [removed: 825,242] [added: 913,712] | | |

| Selling, general, and administrative | [removed: 667,485] [added: 762,219] | | | | [removed: 630,954] [added: 667,485] | | | | [removed: 591,611] [added: 630,954] | | |

| Total operating expenses | [removed: 1,701,227] [added: 1,951,733] | | | | [removed: 1,544,666] [added: 1,701,227] | | | | [removed: 1,496,297] [added: 1,544,666] | | |

| Operating income | [removed: 1,902,132] [added: 3,213,299] | | | | [removed: 1,074,256] [added: 1,902,132] | | | | [removed: 788,039] [added: 1,074,256] | | |

| Other expense, net | [removed: (90,459] [added: (61,510] | | ) | | [removed: (114,139] [added: (90,459] | | ) | | [removed: (47,189] [added: (114,139] | | ) |

| Income before income taxes | [removed: 1,811,673] [added: 3,151,789] | | | | [removed: 960,117] [added: 1,811,673] | | | | [removed: 740,850] [added: 960,117] | | |

| Income tax expense | [removed: (113,910] [added: (771,108] | | ) | | [removed: (46,068] [added: (113,910] | | ) | | [removed: (85,273] [added: (46,068] | | ) |

| Net income | $ | [removed: 1,697,763] [added: 2,380,681] | | | $ | [removed: 914,049] [added: 1,697,763] | | | $ | [removed: 655,577] [added: 914,049] | |

| Basic | $ | [removed: 10.47] [added: 14.73] | | | $ | [removed: 5.75] [added: 10.47] | | | $ | [removed: 4.11] [added: 5.75] | |

| Diluted | $ | [removed: 9.24] [added: 13.17] | | | $ | [removed: 5.22] [added: 9.24] | | | $ | [removed: 3.70] [added: 5.22] | |

| Basic | [removed: 162,222] [added: 161,643] | | | | [removed: 158,919] [added: 162,222] | | | | [removed: 159,629] [added: 158,919] | | |

| Diluted | [removed: 183,770] [added: 180,782] | | | | [removed: 175,159] [added: 183,770] | | | | [removed: 177,067] [added: 175,159] | | |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 50][added: 52]

| Foreign currency translation adjustment | [removed: (2,843] [added: 9,649] | | [removed: )] | | [removed: (4,403] [added: (2,843] | | ) | | [removed: (22,139] [added: (4,403] | | ) |

| Net unrealized [removed: gains] (losses) [added: gains] during the period | [removed: 5,841] [added: (6,960] | | [added: )] | | [removed: (17,725] [added: 5,841] | | [removed: )] | | [removed: 1,595] [added: (17,725] | | [added: )] |

| Net losses [removed: (gains)] reclassified into earnings | [removed: 8,971] [added: 3,729] | | | | [removed: 4,961] [added: 8,971] | | | | [removed: (4,388] [added: 4,961] | | [removed: )] |

| | [removed: 14,812] [added: (3,231] | | [added: )] | | [removed: (12,764] [added: 14,812] | | [removed: )] | | [removed: (2,793] [added: (12,764] | | ) |

| Net unrealized (losses) gains during the period | [removed: (3,789] [added: (45,382] | | ) | | [removed: 9,028] [added: (3,789] | | [added: )] | | [removed: (5,389] [added: 9,028] | | [removed: )] |

| Net [removed: (gains)] losses [added: (gains)] reclassified into earnings | [removed: (1] [added: 43,086] | | [removed: )] | | [removed: (371] [added: (1] | | ) | | [removed: 71] [added: (371] | | [added: )] |

| | [removed: (3,790] [added: (2,296] | | ) | | [removed: 8,657] [added: (3,790] | | [added: )] | | [removed: (5,318] [added: 8,657] | | [removed: )] |

| Defined benefit plans, net change in unrealized component | [removed: (546] [added: 129] | | [removed: )] | | [removed: (3,027] [added: (546] | | ) | | [removed: 1,109] [added: (3,027] | | [added: )] |

| Other comprehensive income (loss), net of tax | [removed: 7,633] [added: 4,251] | | | | [removed: (11,537] [added: 7,633] | | [removed: )] | | [removed: (29,141] [added: (11,537] | | ) |

| Comprehensive income | $ | [removed: 1,705,396] [added: 2,384,932] | | | $ | [removed: 902,512] [added: 1,705,396] | | | $ | [removed: 626,436] [added: 902,512] | |

Lam Research Corporation [removed: 2017] [added: 2018] 10-K [removed: 51][added: 53]

| [added: June 24, 2018] | [added: | | |] June 25, 2017 | | | | June 26, 2016 | | | |

| ASSETS: | | | | | | | | [removed: |]

Continues on next page


| Net income | $ | 2,380,681 | | | $ | 1,697,763 | | | $ | 914,049 | |

Continues on next page


| Cash and cash equivalents | $ | 4,512,257 | | | $ | 2,377,534 | |

Continues on next page


| Net income | $ | 2,380,681 | | | $ | 1,697,763 | | | $ | 914,049 | |

| Impairment of investments | 42,456 | | | | — | | | | — | | |

| Proceeds from maturities of available-for-sale securities | 650,255 | | | | 891,002 | | | | 642,505 | | |

| Proceeds from sales of available-for-sale securities | 5,035,460 | | | | 1,806,963 | | | | 1,031,321 | | |

Continues on next page


| Net proceeds from issuance of commercial paper | 359,604 | | | | — | | | | — | | |

| Proceeds from borrowings on revolving credit facility | 750,000 | | | | — | | | | — | | |

| Repayment of borrowings on revolving credit facility | (750,000 | | ) | | — | | | | — | | |

Continues on next page


| Sale of common stock | 1,934 | | | 2 | | | | 9,256 | | | | — | | | | — | | | | — | | | | 9,258 | | |

| Purchase of treasury stock | (14,786 | ) | | (15 | | ) | | — | | | | (2,653,350 | | ) | | — | | | | — | | | | (2,653,365 | | ) |

| Reissuance of treasury stock | 677 | | | 1 | | | | 52,562 | | | | 23,061 | | | | — | | | | — | | | | 75,624 | | |

| Effect of conversion of convertible notes | 10,199 | | | 10 | | | | (26,776 | | ) | | — | | | | — | | | | — | | | | (26,766 | | ) |

| Effect of bond hedge, cash in lieu of shares | (2,855 | ) | | (3 | | ) | | 13 | | | | — | | | | — | | | | — | | | | 10 | | |

| Adoption of ASU 2016-09 | — | | | — | | | | — | | | | — | | | | — | | | | 40,065 | | | | 40,065 | | |

| Net income | — | | | — | | | | — | | | | — | | | | — | | | | 2,380,681 | | | | 2,380,681 | | |

| Balance at June 24, 2018 | 156,892 | | | $ | 157 | | | $ | 6,144,425 | | | $ | (7,846,476 | ) | | $ | (57,449 | ) | | $ | 8,261,194 | | | $ | 6,501,851 | |