Item 1. Financial Statements

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
Revenue			$	5,277,569					$	4,226,604					$	10,351,690					$	8,531,069
Cost of goods sold			2,901,220						2,248,688						5,638,506						4,576,399
Gross margin			2,376,349						1,977,916						4,713,184						3,954,670
Research and development			462,385						403,644						895,760						785,971
Selling, general, and administrative			233,802						236,133						439,422						458,327
Total operating expenses			696,187						639,777						1,335,182						1,244,298
Operating income			1,680,162						1,338,139						3,378,002						2,710,372
Other income (expense), net			(28,234)						17,999						(71,329)						(10,858)
Income before income taxes			1,651,928						1,356,138						3,306,673						2,699,514
Income tax expense			(183,421)						(161,308)						(412,287)						(324,940)
Net income			$	1,468,507					$	1,194,830					$	2,894,386					$	2,374,574
Net income per share:
Basic			$	10.80					$	8.50					$	21.21					$	16.82
Diluted			$	10.77					$	8.44					$	21.16					$	16.71
Number of shares used in per share calculations:
Basic			136,018						140,630						136,455						141,187
Diluted			136,339						141,530						136,774						142,071

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 3

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
Net income			$	1,468,507					$	1,194,830					$	2,894,386					$	2,374,574
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment			41,470						(9,820)						7,861						(13,852)
Cash flow hedges:
Net unrealized (losses) gains during the period			(18,618)						12,792						185						3,787
Net losses (gains) reclassified into net income			1,273						(7,904)						(8,024)						(11,446)
			(17,345)						4,888						(7,839)						(7,659)
Available-for-sale investments:
Net unrealized gains (losses) during the period			490						(785)						570						(3,190)
Net losses (gains) reclassified into net income			—						345						(53)						1,490
			490						(440)						517						(1,700)
Defined benefit plans, net change in unrealized component			279						(1,006)						572						(807)
Other comprehensive income (loss), net of tax			24,894						(6,378)						1,111						(24,018)
Comprehensive income			$	1,493,401					$	1,188,452					$	2,895,497					$	2,350,556

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 4

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

			December 25, 2022						June 26, 2022
			(unaudited)						(1)
ASSETS
Cash and cash equivalents			$	4,484,716					$	3,522,001
Investments			103,130						135,731
Accounts receivable, less allowance of $5,411 as of December 25, 2022, and $5,606 as of June 26, 2022			4,070,088						4,313,818
Inventories			4,819,966						3,966,294
Prepaid expenses and other current assets			230,888						347,391
Total current assets			13,708,788						12,285,235
Property and equipment, net			1,863,155						1,647,587
Restricted cash and investments			251,344						251,534
Goodwill			1,620,437						1,515,113
Intangible assets, net			184,781						101,850
Other assets			1,577,876						1,394,313
Total assets			$	19,206,381					$	17,195,632
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable			$	919,408					$	1,011,208
Accrued expenses and other current liabilities			2,068,370						1,974,272
Deferred profit			1,551,918						1,571,898
Current portion of long-term debt and finance lease obligations			7,226						7,381
Total current liabilities			4,546,922						4,564,759
Long-term debt and finance lease obligations, less current portion			4,996,057						4,998,449
Income taxes payable			862,405						931,117
Other long-term liabilities			496,362						422,941
Total liabilities			10,901,746						10,917,266
Commitments and contingencies
Stockholders’ equity:
Preferred stock, at par value of $0.001 per share; authorized, 5,000 shares, none outstanding			—						—
Common stock, at par value of $0.001 per share; authorized, 400,000 shares as of December 25, 2022 and June 26, 2022; issued and outstanding, 135,403 shares as of December 25, 2022, and 136,975 shares as of June 26, 2022			135						137
Additional paid-in capital			7,606,149						7,414,916
Treasury stock, at cost; 158,775 shares as of December 25, 2022, and 157,087 shares as of June 26, 2022			(20,071,931)						(19,481,429)
Accumulated other comprehensive loss			(108,871)						(109,982)
Retained earnings			20,879,153						18,454,724
Total stockholders’ equity			8,304,635						6,278,366
Total liabilities and stockholders’ equity			$	19,206,381					$	17,195,632

(1)Derived from audited financial statements

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 5

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

			Six Months Ended
			December 25, 2022						December 26, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	2,894,386					$	2,374,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			161,165						161,579
Deferred income taxes			(140,296)						(26,573)
Equity-based compensation expense			144,194						120,933
Other, net			9,978						(75,204)
Changes in operating assets and liabilities			(739,652)						(657,279)
Net cash provided by operating activities			2,329,775						1,898,030
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets			(303,441)						(274,920)
Business acquisitions, net of cash acquired			(119,955)						—
Purchases of available-for-sale securities			—						(268,457)
Proceeds from maturities of available-for-sales securities			32,438						134,096
Proceeds from sales of available-for-sale securities			—						1,197,575
Other, net			(4,092)						(5,518)
Net cash (used for) provided by investing activities			(395,050)						782,776
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt			(18,936)						(8,036)
Treasury stock purchases			(566,055)						(1,651,568)
Dividends paid			(441,595)						(396,647)
Reissuance of treasury stock related to employee stock purchase plan			44,996						46,380
Proceeds from issuance of common stock			7,673						4,193
Other, net			764						(17)
Net cash used for financing activities			(973,153)						(2,005,695)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			953						(8,454)
Net increase in cash, cash equivalents, and restricted cash			962,525						666,657
Cash, cash equivalents, and restricted cash at beginning of period			3,773,535						4,670,750
Cash, cash equivalents, and restricted cash at end of period			$	4,736,060					$	5,337,407
Schedule of non-cash transactions:
Accrued payables for stock repurchases			$	30,125					$	20,103
Accrued payables for capital expenditures			94,494						96,425
Dividends payable			233,977						210,587
Transfers of finished goods inventory to property and equipment			56,932						55,322
Reconciliation of cash, cash equivalents, and restricted cash			December 25, 2022						December 26, 2021
Cash and cash equivalents			$	4,484,716					$	5,086,544
Restricted cash and cash equivalents			251,344						250,863
Total cash, cash equivalents, and restricted cash			$	4,736,060					$	5,337,407

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 6

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

			Three Months Ended
			December 25, 2022
			Common Stock Shares						Common Stock						Additional Paid-in Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Retained Earnings						Total
Balance at September 25, 2022			136,374						$	136					$	7,492,822					$	(19,591,249)					$	(133,765)					$	19,644,623					$	7,412,567
Issuance of common stock			31						—						877						—						—						—						877
Purchase of treasury stock			(1,133)						(1)						—						(486,312)						—						—						(486,313)
Reissuance of treasury stock			131						—						39,366						5,630						—						—						44,996
Equity-based compensation expense			—						—						73,084						—						—						—						73,084
Net income			—						—						—						—						—						1,468,507						1,468,507
Other comprehensive income			—						—						—						—						24,894						—						24,894
Cash dividends declared ($1.725 per common share)			—						—						—						—						—						(233,977)						(233,977)
Balance at December 25, 2022			135,403						$	135					$	7,606,149					$	(20,071,931)					$	(108,871)					$	20,879,153					$	8,304,635
			Six Months Ended
			December 25, 2022
			Common Stock Shares						Common Stock						Additional Paid-in Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Retained Earnings						Total
Balance at June 26, 2022			136,975						$	137					$	7,414,916					$	(19,481,429)					$	(109,982)					$	18,454,724					$	6,278,366
Issuance of common stock			116						—						7,673						—						—						—						7,673
Purchase of treasury stock			(1,819)						(2)						—						(596,132)						—						—						(596,134)
Reissuance of treasury stock			131						—						39,366						5,630						—						—						44,996
Equity-based compensation expense			—						—						144,194						—						—						—						144,194
Net income			—						—						—						—						—						2,894,386						2,894,386
Other comprehensive income			—						—						—						—						1,111						—						1,111
Cash dividends declared ($3.450 per common share)			—						—						—						—						—						(469,957)						(469,957)
Balance at December 25, 2022			135,403						$	135					$	7,606,149					$	(20,071,931)					$	(108,871)					$	20,879,153					$	8,304,635
See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 7

			Three Months Ended
			December 26, 2021
			Common Stock Shares						Common Stock						Additional Paid-in Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Retained Earnings						Total
Balance at September 26, 2021			140,811						$	141					$	7,111,803					$	(16,863,573)					$	(81,768)					$	15,653,440					$	5,820,043
Issuance of common stock			52						—						3,451						—						—						—						3,451
Purchase of treasury stock			(685)						(1)						—						(434,791)						—						—						(434,792)
Reissuance of treasury stock			97						—						42,271						4,109						—						—						46,380
Equity-based compensation expense			—						—						62,834						—						—						—						62,834
Net income			—						—						—						—						—						1,194,830						1,194,830
Other comprehensive loss			—						—						—						—						(6,378)						—						(6,378)
Cash dividends declared ($1.50 per common share)			—						—						—						—						—						(210,587)						(210,587)
Balance at December 26, 2021			140,275						$	140					$	7,220,359					$	(17,294,255)					$	(88,146)					$	16,637,683					$	6,475,781
			Six Months Ended
			December 26, 2021
			Common Stock Shares						Common Stock						Additional Paid-in Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Retained Earnings						Total
Balance at June 27, 2021			142,501						$	143					$	7,052,962					$	(15,646,701)					$	(64,128)					$	14,684,912					$	6,027,188
Issuance of common stock			99						—						4,193						—						—						—						4,193
Purchase of treasury stock			(2,422)						(3)						—						(1,651,663)						—						—						(1,651,666)
Reissuance of treasury stock			97						—						42,271						4,109						—						—						46,380
Equity-based compensation expense			—						—						120,933						—						—						—						120,933
Net income			—						—						—						—						—						2,374,574						2,374,574
Other comprehensive loss			—						—						—						—						(24,018)						—						(24,018)
Cash dividends declared ($3.00 per common share)			—						—						—						—						—						(421,803)						(421,803)
Balance at December 26, 2021			140,275						$	140					$	7,220,359					$	(17,294,255)					$	(88,146)					$	16,637,683					$	6,475,781

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 8

LAM RESEARCH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 25, 2022

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 26, 2022, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 26, 2022 (the “2022 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov. The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at https://investor.lamresearch.com. The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.

The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 25, 2023 and includes 52 weeks. The quarters ended December 25, 2022 (the “December 2022 quarter”) and December 26, 2021 included 13 weeks.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted or Effective

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “ Reference Rate Reform (Topic 848),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” extending the relief offered in this series of ASUs through December 31, 2024.

In December 2022, the Company executed Amendment No. 1 To Second Amended and Restated Credit Agreement, the primary purpose of which was to change the reference rate for borrowings under the Credit Agreement by replacing LIBOR with the Secured Overnight Financing Rate (“SOFR”). The Company applied practical expedients provided in Topic 848 allowing for the changes in contractual terms to be accounted for prospectively. These modifications had no significant impact on our financial statements. Refer to Note 12 - Long-term debt and other borrowings for further information regarding the terms of the Credit Agreement.

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities (e.g., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” as if the acquirer had originated the contracts. The guidance is applied prospectively to acquisitions occurring on or after the effective date. The Company early adopted ASU No. 2021-08 during the quarter ended December 25, 2022. The adoption of the new standard did not have a material impact on the Company’s Condensed Consolidated financial statements.

Updates Not Yet Effective

There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

Lam Research Corporation 2023 Q2 10-Q 9

NOTE 3 — REVENUE

Deferred Revenue

Revenue of $190.2 million and $1,732.7 million included in deferred profit at June 26, 2022 was recognized during the three and six months ended December 25, 2022, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of December 25, 2022 and when the Company expects to recognize the amounts as revenue:

			Less than 1 Year						1-3 Years						More than 3 Years						Total
			(In thousands)
Deferred revenue			$	1,753,188					$	228,288		(1)			$	2,557		(1)			$	1,984,033

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

Disaggregation of Revenue

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

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

The following table presents the Company’s revenues disaggregated between system and its customer support-related revenue:

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(In thousands)
System revenue			$	3,547,518					$	2,740,173					$	6,729,505					$	5,665,056
Customer support-related revenue and other			1,730,051						1,486,431						3,622,185						2,866,013
			$	5,277,569					$	4,226,604					$	10,351,690					$	8,531,069

System revenue includes sales of new leading-edge equipment in deposition, etch and clean markets.

Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Company’s Reliant product line.

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

			Three Months Ended												Six Months Ended
December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(In thousands)
China			$	1,263,507					$	1,080,973					$	2,793,982					$	2,688,683
Korea			1,077,052						1,068,220						1,932,430						1,986,357
Taiwan			991,173						773,121						2,112,119						1,411,187
Japan			575,945						513,936						1,034,638						982,667
Southeast Asia			528,836						364,382						1,069,900						729,630
United States			503,238						244,798						808,215						473,009
Europe			337,818						181,174						600,406						259,536
			$	5,277,569					$	4,226,604					$	10,351,690					$	8,531,069

Lam Research Corporation 2023 Q2 10-Q 10

The following table presents the percentages of leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets the Company serves:

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
Memory			50		%				58		%				50		%				61		%
Foundry			31		%				31		%				33		%				28		%
Logic/integrated device manufacturing			19		%				11		%				17		%				11		%

NOTE 4 — EQUITY-BASED COMPENSATION PLANS

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

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

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(in thousands)
Equity-based compensation expense			$	73,084					$	62,834					$	144,194					$	120,933
Income tax benefit recognized related to equity-based compensation expense			$	8,676					$	9,014					$	20,204					$	17,222

NOTE 5 — OTHER INCOME (EXPENSE), NET

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

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(in thousands)
Interest income			$	26,125					$	2,372					$	41,181					$	7,050
Interest expense			(46,661)						(46,765)						(92,713)						(91,821)
Gains (losses) on deferred compensation plan-related assets, net			10,871						(56)						(1,855)						7,381
Foreign exchange (losses) gains, net			(10,114)						731						(3,293)						714
Other, net			(8,455)						61,717						(14,649)						65,818
			$	(28,234)					$	17,999					$	(71,329)					$	(10,858)

Other, net includes an unrealized gain totaling $46.6 million associated with an equity investee that became publicly traded during the three and six months ended December 26, 2021. Refer to Note 8 - Financial Instruments for additional information regarding the Company’s investments.

Lam Research Corporation 2023 Q2 10-Q 11

NOTE 6 — INCOME TAX EXPENSE

The Company’s provision for income taxes and effective tax rate are as follows:

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(in thousands, except percentages)
Income tax expense			$	183,421					$	161,308					$	412,287					$	324,940
Effective tax rate			11.1		%				11.9		%				12.5		%				12.0		%

The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate for the three and six months ended December 25, 2022 and December 26, 2021 was primarily due to income in lower tax jurisdictions.

The Internal Revenue Service (“IRS”) has examined the Company’s U.S. federal income tax return for the fiscal year ended June 24, 2018. As of September 25, 2022, the IRS has proposed adjustments resulting in a tax liability increase of approximately $50.0 million, which was previously reserved. The Company has agreed to pay the amount and has made a partial cash settlement in the September quarter with the remaining settlement expected to be paid based on the IRS requirements.

The IRS is examining the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2019, and June 28, 2020. As of December 25, 2022, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.

The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $18.4 million.

NOTE 7 — NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the treasury stock method, for dilutive stock options, restricted stock units, and convertible notes. The following table reconciles the inputs to the basic and diluted computations for net income per share.

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(in thousands, except per share data)
Numerator:
Net income			$	1,468,507					$	1,194,830					$	2,894,386					$	2,374,574
Denominator:
Basic average shares outstanding			136,018						140,630						136,455						141,187
Effect of potential dilutive securities:
Employee stock plans			321						900						319						884
Diluted average shares outstanding			136,339						141,530						136,774						142,071
Net income per share - basic			$	10.80					$	8.50					$	21.21					$	16.82
Net income per share - diluted			$	10.77					$	8.44					$	21.16					$	16.71

For purposes of computing diluted net income per share, weighted-average common shares do not include potentially dilutive securities that are anti-dilutive under the treasury stock method. The impact from potentially dilutive securities, including options and RSUs, was not material for the three and six months ended December 25, 2022 and December 26, 2021.

Lam Research Corporation 2023 Q2 10-Q 12

NOTE 8 — FINANCIAL INSTRUMENTS

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

The Company periodically invests in equity securities. For equity investments that do not have a readily determinable fair value, the Company records them using either 1) the measurement alternative which measures the equity investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes; or 2) the equity method whereby the Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag. The equity method is utilized when the Company does not have the ability to control the investee but is deemed to have the ability to exercise significant influence over the investee’s operating or financial policies. For equity investments that have a readily determinable fair value, the Company records them at fair market value on a recurring basis based upon quoted market prices. Realized and unrealized gains and losses resulting from application of the measurement alternative, the impact of the application of the equity method to the Company’s equity investments, and recognition of changes in fair market value, as applicable, are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

Fair Value

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

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

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

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

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

The Company engages with pricing vendors to provide fair values for a majority of its Level 1 and Level 2 investments. The vendors provide either a quoted market price or use observable inputs without applying significant adjustments in their pricing. Significant observable inputs include interest rates and yield curves observable at commonly quoted intervals, volatility and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the foreign currency rates, forward rate curves, currency volatility and interest rates and considers nonperformance risk of the Company and its counterparties.

The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and leases, and foreign currency related derivative instruments. The estimated fair value of cash, time deposits, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of lease obligations approximate their carrying value as the majority of these obligations have interest rates that adjust to market rates on a periodic basis. The fair value of the Company’s senior notes is based on the quoted price (level 2); the fair value of the Company's senior notes have not changed materially to that disclosed in Note 14, “Long Term Debt and Other Borrowings,” to the Company’s Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K.

Equity Investments measured at fair value on a non-recurring basis

As of December 25, 2022, and June 26, 2022, equity investments of $121.3 million and $125.2 million, respectively, were reported in other assets in the Condensed Consolidated Balance Sheets.

Lam Research Corporation 2023 Q2 10-Q 13

With the exception of one equity investee that became publicly traded during the three and six months ended December 26, 2021, net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three and six months ended December 25, 2022, and December 26, 2021. Refer to Note 5 - Other Income (Expense), net for additional information regarding the gain associated with an equity investee that became publicly traded in the three and six months ended December 26, 2021.

Debt and Equity Investments measured at fair value on a recurring basis

The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of December 25, 2022, and June 26, 2022:

			December 25, 2022
																											(Reported Within)
			Cost						Unrealized Gain						Unrealized (Loss)						Fair Value						Cash and Cash Equivalents						Investments						Restricted Cash & Investments						Other Assets
			(in thousands)
Level 1:
Money market funds			$	1,034,870					$	—					$	—					$	1,034,870					$	1,033,219					$	—					$	—					$	1,651
Mutual funds			81,889						12,051						(2,801)						91,139						—						—						—						91,139
Level 1 Total			1,116,759						12,051						(2,801)						1,126,009						1,033,219						—						—						92,790
Level 2:
Corporate notes and bonds			104,585						4						(1,459)						103,130						—						103,130						—						—
Level 2 Total			104,585						4						(1,459)						103,130						—						103,130						—						—
Total subject to fair value hierarchy			$	1,221,344					$	12,055					$	(4,260)					$	1,229,139
Cash																					$	2,022,649					$	2,021,333					$	—					$	1,316					$	—
Time deposits																					1,680,192						1,430,164						—						250,028						—
Total																					$	4,931,980					$	4,484,716					$	103,130					$	251,344					$	92,790

			June 26, 2022
																											(Reported Within)
			Cost						Unrealized Gain						Unrealized (Loss)						Fair Value						Cash and Cash Equivalents						Investments						Restricted Cash & Investments						Other Assets
			(in thousands)
Level 1:
Money market funds			$	712,076					$	—					$	—					$	712,076					$	712,076					$	—					$	—					$	—
Mutual funds			84,851						12,027						(1,659)						95,219						—						—						—						95,219
Level 1 Total			796,927						12,027						(1,659)						807,295						712,076						—						—						95,219
Level 2:
Corporate notes and bonds			137,859						—						(2,128)						135,731						—						135,731						—						—
Level 2 Total			137,859						—						(2,128)						135,731						—						135,731						—						—
Total subject to fair value hierarchy			$	934,786					$	12,027					$	(3,787)					$	943,026
Cash																					$	1,017,253					$	1,015,747					$	—					$	1,506					$	—
Time deposits																					2,044,206						1,794,178						—						250,028						—
Total																					$	4,004,485					$	3,522,001					$	135,731					$	251,534					$	95,219

The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments.

The Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement. Where such sales are not likely to occur, the Company considers whether a portion of the loss is the result of a credit loss. To the extent such losses are the result of credit losses, those amounts are recognized in the income statement. All other differences between fair value and amortized cost are recognized in other comprehensive income. No such losses were recognized through the income statement during the three and six months ended December 25, 2022 and December 26, 2021.

Lam Research Corporation 2023 Q2 10-Q 14

Gross realized gains/(losses) from sales of investments were insignificant in the three and six months ended December 25, 2022 and December 26, 2021.

The following is an analysis of the Company’s investments in unrealized loss positions:

			December 25, 2022
			Unrealized Losses Less than 12 Months												Unrealized Losses 12 Months or Greater												Total
			Fair Value						Gross Unrealized Loss						Fair Value						Gross Unrealized Loss						Fair Value						Gross Unrealized Loss
			(in thousands)
Mutual funds			$	29,021					$	(2,526)					$	1,468					$	(275)					$	30,489					$	(2,801)
Corporate notes and bonds			80,426						(1,215)						18,526						(244)						98,952						(1,459)
			$	109,447					$	(3,741)					$	19,994					$	(519)					$	129,441					$	(4,260)

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of December 25, 2022:

			Cost						Fair Value
			(in thousands)
Due in one year or less			$	2,790,470					$	2,789,635
Due after one year through five years			27,526						26,906
			$	2,817,996					$	2,816,541

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

Derivative Instruments and Hedging

The Company’s hedging strategies and policies are unchanged from those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K. The financial statement impacts from derivative instruments and hedging activities were not material as of and for the three and six months ended December 25, 2022 and December 26, 2021.

Concentrations of Credit Risk

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

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

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

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

Lam Research Corporation 2023 Q2 10-Q 15

NOTE 9 — INVENTORIES

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

			December 25, 2022						June 26, 2022
			(in thousands)
Raw materials			$	3,156,162					$	2,401,490
Work-in-process			384,390						471,348
Finished goods			1,279,414						1,093,456
			$	4,819,966					$	3,966,294

NOTE 10 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

The balance of goodwill is approximately $1.6 billion and $1.5 billion as of December 25, 2022 and June 26, 2022, respectively. As of December 25, 2022 and June 26, 2022, $62.0 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law. Refer to Note 17 - Business Combinations for additional information regarding the Company’s goodwill balance.

Intangible Assets

The following table provides the Company’s intangible assets, other than goodwill:

			December 25, 2022																		June 26, 2022
			Gross						Accumulated Amortization						Net						Gross						Accumulated Amortization						Net
			(in thousands)
Customer relationships			$	644,102					$	(629,176)					$	14,926					$	633,252					$	(627,376)					$	5,876
Existing technology			717,247						(668,279)						48,968						676,924						(664,278)						12,646
Patents and other intangible assets			191,676						(100,870)						90,806						167,821						(84,493)						83,328
Intangible assets subject to amortization			1,553,025						(1,398,325)						154,700						1,477,997						(1,376,147)						101,850
In process research and development			30,081						—						30,081						—						—						—
Total intangible assets			$	1,583,106					$	(1,398,325)					$	184,781					$	1,477,997					$	(1,376,147)					$	101,850

The Company recognized $12.2 million and $19.5 million in intangible asset amortization expense during the three months ended December 25, 2022 and December 26, 2021, respectively. The Company recognized $23.8 million and $38.6 million in intangible asset amortization expense during the six months ended December 25, 2022 and December 26, 2021, respectively.

The estimated future amortization expense of intangible assets as of December 25, 2022, is reflected in the table below. The table excludes $27.7 million of capitalized costs for internal-use software that have not been placed into service.

Fiscal Year			Amount
			(in thousands)
2023 (remaining 6 months)			$	23,642
2024			35,098
2025			23,094
2026			14,289
2027			11,657
Thereafter			19,237
			$	127,017

Refer to Note 17 - Business Combinations for additional information regarding the Company’s intangible assets.

Lam Research Corporation 2023 Q2 10-Q 16

NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

			December 25, 2022						June 26, 2022
			(in thousands)
Accrued compensation			$	551,639					$	481,070
Warranty reserves			284,150						232,248
Income and other taxes payable			310,656						465,601
Dividend payable			233,977						205,615
Other			687,948						589,738
			$	2,068,370					$	1,974,272

NOTE 12 — LONG-TERM DEBT AND OTHER BORROWINGS

Revolving Credit Facility

On March 12, 2014, the Company established an unsecured Credit Agreement. This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), February 25, 2019 (the “3rd Amendment”), June 17, 2021 (the “Second Amended and Restated Credit Agreement”), and December 7, 2022 (“Amendment No.1 to Second Amended and Restated Credit Agreement”). The Amendment No.1 To Second Amended and Restated Credit Agreement replaces the benchmark reference rate, LIBOR, with term SOFR equal to the term rate determined by the CME term SOFR administrator plus 0.10% (“adjusted term SOFR”), with no change to the amount or timing of contractual cash flows.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) adjusted term SOFR plus 1.0%, plus a spread of 0.00% to 0.30%, or (2) adjusted term SOFR, plus a spread of 0.805% to 1.30%, in each case plus a facility fee, with such spread and facility fee determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Such spreads and such facility fees are further subject to sustainability adjustments as described in the Amendment No.1 To Second Amended and Restated Credit Agreement, in each case based on the Company’s performance of certain energy savings and health and safety standards metrics. As of December 25, 2022, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

NOTE 13 — LEASES

The Company leases certain office spaces, manufacturing and warehouse spaces, equipment, and vehicles. While the majority of the Company’s lease arrangements are operating leases, the Company has certain leases that qualify as finance leases.

Selected Leases and Related Guarantees

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

The Company has finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”). The Company is required to maintain cash collateral in an aggregate of approximately $250.0 million in separate interest-bearing accounts as security for the Company’s obligations. These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of December 25, 2022.

During the seven-year term of the California Facility Leases and when the terms of the California Facility Leases expire, the property subject to the California Facility Leases may be re-marketed. The Company has guaranteed to the lessor that each property will have a certain minimum residual value. The aggregate maximum guarantee made by the Company under the California Facility Leases is $298.4 million.

NOTE 14 — COMMITMENTS AND CONTINGENCIES

Refer to Note 13 - Leases for details regarding guarantees surrounding selected leases.

Lam Research Corporation 2023 Q2 10-Q 17

Other Guarantees

The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements. The Company has entered into insurance contracts that are intended to limit its exposure to such indemnifications. As of December 25, 2022, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees.

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

The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business. As of December 25, 2022, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $98.6 million. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid.

In addition, the Company has entered into indemnification agreements with its directors, officers, and certain other employees, consistent with its Bylaws and Certificate of Incorporation; and under local law, the Company may be required to provide indemnification to its employees for actions within the scope of their employment. Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be covered. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification agreements or statutory obligations.

Warranties

The Company provides standard warranties on its systems. The liability amount is based on actual historical warranty spending activity by type of system, customer, and geographic region, modified for any known differences such as the impact of system reliability improvements. As of December 25, 2022, warranty reserves totaling $34.8 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

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

			Three Months Ended												Six Months Ended
			December 25, 2022						December 26, 2021						December 25, 2022						December 26, 2021
			(in thousands)
Balance at beginning of period			$	283,514					$	214,244					$	256,258					$	191,758
Warranties issued during the period			83,364						71,437						171,577						142,109
Settlements made during the period			(61,838)						(68,126)						(126,734)						(128,418)
Changes in liability for warranties issued during the period			3,210						—						1,941						—
Changes in liability for pre-existing warranties			10,719						10,833						15,927						22,939
Balance at end of period			$	318,969					$	228,388					$	318,969					$	228,388

Legal Proceedings

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

Lam Research Corporation 2023 Q2 10-Q 18

NOTE 15 — STOCK REPURCHASE PROGRAM

In May 2022, the Board of Directors authorized the Company to repurchase up to an additional $5.0 billion of Common Stock; this authorization supplements the remaining balances from any prior authorizations. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time.

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

Period			Total Number of Shares Repurchased						Total Cost of Repurchase						Average Price Paid Per Share (1)						Amount Available Under Repurchase Program
			(in thousands, except per share data)
Available balance as of June 26, 2022																					$	5,514,636
Quarter ended September 25, 2022			675			(2)			$	104,982					$	432.74					$	5,409,654
Quarter ended December 25, 2022			1,125						$	483,226					$	429.42					$	4,926,428

(1) Average price paid per share excludes the effect of accelerated share repurchase activities. See additional disclosure below regarding the Company’s accelerated share repurchase activity during the six months ended December 25, 2022.

(2) Includes shares received at final settlement of accelerated share repurchase agreements; see additional disclosures below regarding the Company’s accelerated share repurchase activity during the six months ended December 25, 2022.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and six months ended December 25, 2022, the Company acquired 8 thousand shares at a total cost of $3.1 million and 19 thousand shares at a total cost of $7.9 million, respectively, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans. The shares retained by the Company through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under the Company’s equity compensation plan.

Accelerated Share Repurchase Agreements

On June 2, 2022, the Company entered into an accelerated share repurchase agreement (the "June 2022 ASR") with two financial institutions to repurchase a total of $500 million of Common Stock. The Company took an initial delivery of approximately 717 thousand shares, which represented 75% of the prepayment amount divided by our closing stock price on June 2, 2022. The total number of shares received under the June 2022 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the June 2022 ASR occurred in September 2022, resulting in the receipt of approximately 433 thousand additional shares, which yielded a weighted-average share price of $435.20 for the transaction period.

NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss, net of tax at December 25, 2022, as well as the activity for the six months ending December 25, 2022, were as follows:

			Accumulated Foreign Currency Translation Adjustment						Accumulated Unrealized Gain or Loss on Cash flow hedges						Accumulated Unrealized Holding Gain or Loss on Available-For-Sale Investments						Accumulated Unrealized Components of Defined Benefit Plans						Total
			(in thousands)
Balance at June 26, 2022			$	(81,755)					$	(12,330)					$	(1,637)					$	(14,260)					$	(109,982)
Other comprehensive income before reclassifications			7,861						185						570						572						9,188
Gains reclassified from accumulated other comprehensive loss to net income (1)			—						(8,024)						(53)						—						(8,077)
Net current-period other comprehensive income (loss)			7,861						(7,839)						517						572						1,111
Balance at December 25, 2022			$	(73,894)					$	(20,169)					$	(1,120)					$	(13,688)					$	(108,871)

(1) Amount of after-tax gains reclassified from AOCI into net income is not material in the aggregate, or to any individual location in our Condensed Consolidated Statements of Operations.

Lam Research Corporation 2023 Q2 10-Q 19

NOTE 17 — BUSINESS COMBINATIONS

In November 2022, the Company completed two business combination transactions acquiring the outstanding shares of two separate private companies in cash transactions valued at $153.8 million as of the respective purchase dates. The Company’s preliminary assessment of acquisition date fair value of the assets acquired and liabilities assumed resulted in the recognition of $100.4 million of goodwill and $81.2 million of intangible assets; all other assets acquired and all liabilities assumed were immaterial. The preliminary fair value of net tangible liabilities assumed and intangible assets acquired was based on preliminary valuations, estimates, and assumptions which are subject to change within the measurement period (up to one year from the acquisition date). The Company expensed all associated costs, as incurred, in selling, general, and administrative expense in the Condensed Consolidated Statement of Operations for the three and six months ended December 25, 2022.

The following table is a summary of the preliminary fair value estimates of the identifiable intangible assets and their useful lives:

			Weighted-Average Useful Life						Estimated Purchase Date Fair Value
									(in thousands)
Existing technology			7 years						$	40,294
Customer relationships			8 years						10,835
In process research and development			Indefinite						30,081
									$	81,210

NOTE 18 — SUBSEQUENT EVENT

In January 2023, the Company announced its plan to reduce headcount by approximately 1,300 employees as part of restructuring activity that will commence in the three months ended March 26, 2023. The Company estimates it will incur approximately $80.0 million in connection with this activity.

Lam Research Corporation 2023 Q2 10-Q 20