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Document and Entity Information
6 Months Ended
Dec. 23, 2012
Jan. 25, 2013
Document Information [Line Items]
Document Type 10-Q
Amendment Flag false
Document Period End Date Dec 23, 2012
Document Fiscal Year Focus 2013
Document Fiscal Period Focus Q2
Trading Symbol LRCX
Entity Registrant Name LAM RESEARCH CORP
Entity Central Index Key 0000707549
Current Fiscal Year End Date --06-29
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 162,346,938
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CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
ASSETS
Cash and cash equivalents $ 1,190,189 $ 1,564,752 [1]
Short-term investments 1,330,498 1,297,931 [1]
Accounts receivable, less allowance for doubtful accounts of $5,425 as of December 23, 2012 and $5,248 as of June 24, 2012 590,925 765,818 [1]
Inventories 530,272 632,853 [1]
Deferred income taxes 139,300 47,782 [1]
Prepaid expenses and other current assets 65,224 105,973 [1]
Total current assets 3,846,408 4,415,109 [1]
Property and equipment, net 590,547 584,596 [1]
Restricted cash and investments 166,166 166,335 [1]
Deferred income taxes 344
Goodwill 1,454,920 1,446,303 [1]
Intangible assets, net 1,153,301 1,240,427 [1]
Other assets 151,478 151,882 [1]
Total assets 7,363,164 8,004,652 [1]
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable 156,237 258,778 [1]
Accrued expenses and other current liabilities 498,787 492,178 [1]
Deferred profit 168,994 164,833 [1]
Current portion of long-term debt, convertible notes, and capital leases 1,464 511,139 [1]
Total current liabilities 825,482 1,426,928 [1]
Long-term debt, convertible notes, and capital leases 1,286,729 761,783 [1]
Income taxes payable 260,063 274,240 [1]
Other long-term liabilities 294,300 219,577 [1]
Total liabilities 2,666,574 2,682,528 [1]
Commitments and contingencies       [1]
Senior convertible notes (Note 13) 190,343 [1]
Stockholders' equity:
Preferred stock, at par value of $0.001 per share; authorized- 5,000 shares; none outstanding       [1]
Common stock, at par value of $0.001 per share; authorized - 400,000 shares; issued and outstanding- 165,846 shares as of December 23, 2012 and 186,656 shares as of June 24, 2012 166 187 [1]
Additional paid-in capital 5,190,192 4,943,539 [1]
Treasury stock, at cost; 84,260 shares as of December 23, 2012 and 62,068 shares as of June 24, 2012 (3,337,269) (2,636,936) [1]
Accumulated other comprehensive loss (24,484) (33,818) [1]
Retained earnings 2,867,985 2,858,809 [1]
Total stockholders' equity 4,696,590 5,131,781 [1]
Total liabilities and stockholders' equity $ 7,363,164 $ 8,004,652 [1]
[1] Derived from audited financial statements
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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Accounts receivable, allowance for doubtful accounts $ 5,425 $ 5,248 [1]
Preferred stock, par value $ 0.001 $ 0.001 [1]
Preferred stock, shares authorized 5,000 5,000 [1]
Preferred stock, shares outstanding       [1]
Common stock, par value $ 0.001 $ 0.001 [1]
Common stock, shares authorized 400,000 400,000 [1]
Common stock, shares issued 165,846 186,656 [1]
Common stock, shares outstanding 165,846 186,656 [1]
Treasury stock, shares 84,260 62,068 [1]
[1] Derived from audited financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Revenue $ 860,886 $ 583,981 $ 1,767,774 $ 1,264,417
Cost of goods sold 545,472 350,014 1,118,474 746,567
Cost of goods sold-restructuring (859) (859)
Total cost of goods sold 545,472 349,155 1,118,474 745,708
Gross margin 315,414 234,826 649,300 518,709
Research and development 165,951 104,024 329,262 206,583
Selling, general and administrative 144,400 83,256 298,263 163,456
Restructuring and impairments 1,021 1,021 1,725
Total operating expenses 311,372 187,280 628,546 371,764
Operating income 4,042 47,546 20,754 146,945
Other expense, net (13,390) (7,785) (23,328) (19,858)
Income (loss) before income taxes (9,348) 39,761 (2,574) 127,087
Income tax expense (benefit) (15,756) 6,549 (11,750) 22,037
Net income $ 6,408 $ 33,212 $ 9,176 $ 105,050
Net income per share:
Basic net income per share $ 0.04 $ 0.28 $ 0.05 $ 0.87
Diluted net income per share $ 0.04 $ 0.27 $ 0.05 $ 0.86
Number of shares used in per share calculations:
Basic 170,699 119,739 175,314 121,435
Diluted 173,027 120,873 177,490 122,382
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Net income $ 6,408 $ 33,212 $ 9,176 $ 105,050
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 8,969 (16,979) 4,844 (31,889)
Cash flow hedges:
Change in unrealized gain (loss) 2,347 (3,581) 1,628 (11,793)
Reclassification adjustment for losses (gains) included in net income 363 2,906 2,289 5,513
Net change 2,710 (675) 3,917 (6,280)
Available-for-sale investments:
Change in unrealized gain (loss) (1,497) 898 1,192 39
Reclassification adjustment for gains included in net income (923) (97) (942) (392)
Net change (2,420) 801 250 (353)
Postretirement benefit plan actuarial losses, net 164 157 323 (4,369)
Other comprehensive income (loss), net of tax 9,423 (16,696) 9,334 (42,891)
Comprehensive income $ 15,831 $ 16,516 $ 18,510 $ 62,159
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,176 $ 105,050
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 153,204 43,732
Deferred income taxes (19,337) (633)
Restructuring and impairment charges 1,021 866
Impairment of investment 1,724
Equity-based compensation expense 48,441 35,968
Income tax benefit on equity-based compensation plans 1,129
Excess tax benefit on equity-based compensation plans (2,155)
Amortization of convertible note discount 15,595 13,264
Other, net 24,723 2,506
Changes in operating assets and liabilities 209,665 54,465
Net cash provided by operating activities 442,488 255,916
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (82,889) (42,414)
Cash paid for business acquisition (8,716)
Purchases of available-for-sale securities (628,074) (234,576)
Sales and maturities of available-for-sale securities 588,186 145,123
Purchase of equity method investment (10,740)
Receipt of loan payment 8,375
Proceeds from sale of assets 660 2,677
Transfer of restricted cash and investments 179 20
Net cash used for investing activities (130,654) (131,535)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations (780) (3,140)
Excess tax benefit on equity-based compensation plans 2,155
Net cash paid in advance for stock repurchase contracts (23,995)
Treasury stock purchases (710,089) (92,695)
Reissuances of treasury stock related to employee stock purchase plan 9,925 8,858
Proceeds from issuance of common stock 7,534 1,475
Net cash used for financing activities (693,410) (107,342)
Effect of exchange rate changes on cash 7,013 (2,243)
Net increase (decrease) in cash and cash equivalents (374,563) 14,796
Cash and cash equivalents at beginning of period 1,564,752 [1] 1,492,132
Cash and cash equivalents at end of period $ 1,190,189 $ 1,506,928
[1] Derived from audited financial statements
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BASIS OF PRESENTATION
6 Months Ended
Dec. 23, 2012
BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 24, 2012, which are included in the Annual Report on Form 10-K as of and for the year ended June 24, 2012 (the “2012 Form 10-K”). The Company’s Forms 10-K, Forms 10-Q and Forms 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 Forms 10-K, Forms 10-Q and Forms 8-K on its corporate website at http://investor.lamresearch.com .

The consolidated financial statements include the accounts of Lam Research Corporation and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. We use the equity method to account for equity investments in instances in which we own common stock or similar interests and have the ability to exercise significant influence, but not control, over the investee. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2013 and includes 53 weeks. The quarters ended December 23, 2012 (the “December 2012 quarter”) and December 25, 2011 (the “December 2011 quarter”) each included 13 weeks.

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RECENT ACCOUNTING PRONOUNCEMENTS
6 Months Ended
Dec. 23, 2012
RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting Standards Board (“FASB”) issued new authoritative guidance that increases the prominence of items reported in other comprehensive income (“OCI”) by eliminating the option to present components of OCI as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this guidance in the September 2012 quarter. The implementation of this authoritative guidance did not have an impact on the Company’s financial position or results of operations, but did change the presentation of the Company’s financial statements.

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EQUITY-BASED COMPENSATION PLANS
6 Months Ended
Dec. 23, 2012
EQUITY-BASED COMPENSATION PLANS

NOTE 3 — EQUITY-BASED COMPENSATION PLANS

The Company has stock plans that provide for grants of equity-based awards to eligible participants, including stock options and restricted stock units (“RSUs”), of Lam Research common stock (“Common Stock”). An option is a right to purchase the Company’s stock at a set price. An RSU award is an agreement to issue shares of the Company’s stock at the time of vesting. The Company’s options and RSU awards typically vest over a period of three years or less, although awards assumed in connection with the Novellus acquisition have vesting terms up to four 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 and related income tax benefit in the Condensed Consolidated Statements of Operations:

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in millions)  

Equity-based compensation expense

   $ 24.0       $ 18.2       $ 48.4       $ 36.0   

Income tax benefit related to equity-based compensation expense

   $ 3.3       $ 2.1       $ 9.0       $ 4.8   

The estimated fair value of the Company’s stock-based awards, less expected forfeitures, is amortized over the awards’ vesting term on a straight-line basis. The increase in stock compensation expense during the three and six months ended December 23, 2012 as compared to the three and six months ended December 25, 2011 was primarily due to the increased number of RSUs and stock options outstanding as a result of awards assumed in connection with the Novellus acquisition.

Stock Options and RSUs

The 2007 Stock Incentive Plan provides for grants of equity-based awards to eligible participants. In June 2012, as part of the Novellus acquisition, Lam also assumed the Novellus Systems, Inc. 2011 Stock Incentive Plan (together with the 2007 Stock Incentive Plan, collectively the “Plans”), which provides for grants of equity-based awards to eligible participants. As of December 23, 2012, there were a total of 8,369,202 shares reserved to cover options and RSUs issued and outstanding under the Plans. As of December 23, 2012, there were an additional 14,351,909 shares reserved and available for future equity-based awards under the Plans.

 

A summary of stock option activity under the Plans as of December 23, 2012 and changes during the six months then ended is presented below:

 

Options

   Shares
(in thousands)
    Weighted-
Average
Exercise Price
     Weighted-Average
Remaining
Contractual Term

(years)
     Aggregate Intrinsic
Value as of

December 23, 2012
(in thousands)
 

Outstanding at June 24, 2012

     3,902      $ 25.14         4.79      

Exercised

     (342   $ 22.04         

Forfeited or expired

     (32   $ 24.37         
  

 

 

         

Outstanding at December 23, 2012

     3,528      $ 25.45         4.38       $ 38,111   
  

 

 

         

Exercisable at December 23, 2012

     2,999      $ 25.25         3.80       $ 32,982   
  

 

 

         

The total intrinsic value of options exercised during the three months ended December 23, 2012 and December 25, 2011 was $4.1 million and $0.9 million, respectively. The total intrinsic value of options exercised during the six months ended December 23, 2012 and December 25, 2011 was $4.7 million and $1.1 million, respectively. As of December 23, 2012, there was $7.2 million of total unrecognized compensation cost related to unvested stock options granted and outstanding; that cost is expected to be recognized over a weighted average remaining vesting period of 1.7 years.

A summary of the Company’s RSUs as of December 23, 2012 and changes during the six months then ended is presented below:

 

     Shares     Average Grant-  

Unvested Restricted Stock Units

   (in thousands)     Date Fair Value  

Unvested at June 24, 2012

     4,331      $ 41.01   

Granted

     1,612      $ 35.01   

Vested

     (987   $ 40.46   

Forfeited

     (115   $ 39.96   
  

 

 

   

Unvested at December 23, 2012

     4,841      $ 39.13   
  

 

 

   

The fair value of the Company’s RSUs was calculated based upon the fair market value of the Company’s stock at the date of grant. As of December 23, 2012, there was $131.8 million of total unrecognized compensation expense related to unvested RSUs granted; that expense is expected to be recognized over a weighted average remaining period of 2.1 years.

ESPP

The 1999 Employee Stock Purchase Plan (as amended and restated, the “1999 ESPP”) allows employees to designate a portion of their base compensation to be withheld through payroll deductions and used to purchase the Company’s Common Stock at a purchase price per share equal to the lower of 85% of the fair market value of the Company’s Common Stock on the first or last day of the applicable purchase period. Each offering period generally lasts up to 12 months and includes up to three interim purchase dates. As of December 23, 2012, there were a total of 10,304,484 shares available for issuance under the 1999 ESPP.

Purchase rights under the 1999 ESPP were valued using the Black-Scholes model assuming no expected dividends and the following weighted-average assumptions for the six months ended December 23, 2012:

 

     Six Months Ended  
     December 23,  
     2012  

Expected term (years)

     0.7   

Expected stock price volatility

     33.26

Risk-free interest rate

     0.16

As of December 23, 2012, there was $5.8 million of unrecognized compensation expense related to the 1999 ESPP, which is expected to be recognized over a remaining period of approximately 8 months.

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FINANCIAL INSTRUMENTS
6 Months Ended
Dec. 23, 2012
FINANCIAL INSTRUMENTS

NOTE 4 — FINANCIAL INSTRUMENTS

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

Fair Value

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

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

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

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

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

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis:

 

            Fair Value Measurement at December 23, 2012  
            Quoted Prices in             Significant  
            Active Markets for      Significant Other      Unobservable  
            Identical Assets      Observable Inputs      Inputs  
     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Assets

           

Short-Term Investments

           

Money Market Funds

   $ 884,982       $ 884,982       $ —         $ —     

Municipal Notes and Bonds

     270,486         —           270,486         —     

US Treasury and Agencies

     177,584         173,974         3,610         —     

Government-Sponsored Enterprises

     94,120         —           94,120         —     

Foreign Government Bonds

     20,568         —           20,568         —     

Corporate Notes and Bonds

     805,112         164,885         640,227         —     

Mortgage Backed Securities—Residential

     32,608         —           32,608         —     

Mortgage Backed Securities—Commercial

     96,405         —           96,405         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Short-Term Investments

   $ 2,381,865       $ 1,223,841       $ 1,158,024       $ —     

Equities

     4,545         4,545         —           —     

Mutual Funds

     20,940         20,940         —           —     

Derivative Assets

     3,645         —           3,645         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,410,995       $ 1,249,326       $ 1,161,669       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Derivative Liabilities

   $ 715       $ —         $ 465       $ 250   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The amounts in the table above are reported in the Consolidated Balance Sheet as of December 23, 2012 as follows:

 

     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Reported Within:

           

Cash Equivalents

   $ 886,482       $ 884,982       $ 1,500       $ —     

Short-Term Investments

     1,330,498         173,974         1,156,524         —     

Restricted Cash and Investments

     164,885         164,885         —           —     

Prepaid Expenses and Other Current Assets

     3,645         —           3,645         —     

Other Assets

     25,485         25,485         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,410,995       $ 1,249,326       $ 1,161,669       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Accrued Expenses and Other Current Liabilities

   $ 465       $ —         $ 465       $ —     

Other Non-current Liabilities

     250         —           —           250   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities

   $ 715       $ —         $ 465       $ 250   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis:

 

            Fair Value Measurement at June 24, 2012  
     Total      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 
     (In thousands)  

Assets

           

Short-Term Investments

           

Money Market Funds

   $ 1,318,812       $ 1,318,812       $ —         $ —     

Municipal Notes and Bonds

     322,567         —           322,567         —     

US Treasury and Agencies

     137,446         130,624         6,822         —     

Government-Sponsored Enterprises

     123,268         —           123,268         —     

Foreign Government Bond

     6,358         —           6,358         —     

Corporate Notes and Bonds

     768,901         164,885         604,016         —     

Mortgage Backed Securities—Residential

     25,972         —           25,972         —     

Mortgage Backed Securities—Commercial

     84,853         —           84,853         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Short-Term Investments

   $ 2,788,177       $ 1,614,321       $ 1,173,856       $ —     

Equities

     5,913         5,913         —           —     

Mutual Funds

     17,754         17,754         —           —     

Derivative Assets

     5,020         —           5,020         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,816,864       $ 1,637,988       $ 1,178,876       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Derivative Liabilities

   $ 4,529       $ —         $ 4,328       $ 201   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The amounts in the table above are reported in the Consolidated Balance Sheet as of June 24, 2012 as follows:

 

     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Reported Within:

           

Cash Equivalents

   $ 1,325,361       $ 1,318,812       $ 6,549       $ —     

Short-Term Investments

     1,297,931         130,624         1,167,307         —     

Restricted Cash and Investments

     164,885         164,885         —           —     

Prepaid Expenses and Other Current Assets

     5,020         —           5,020         —     

Other Assets

     23,667         23,667         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,816,864       $ 1,637,988       $ 1,178,876       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Accrued Expenses and Other Current Liabilities

   $ 4,328       $ —         $ 4,328       $ —     

Other Non-current Liabilities

     201         —           —           201   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities

   $ 4,529       $ —         $ 4,328       $ 201   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company’s primary financial instruments include its cash, cash equivalents, short-term investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and capital leases, and foreign currency related derivatives. The estimated fair value of cash, accounts receivable and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of capital lease obligations approximate their carrying value as the substantial majority of these obligations have interest rates that adjust to market rates on a periodic basis. Refer to Note 13 for additional information regarding the fair value of the Company’s convertible notes.

Investments

The following tables summarize the Company’s investments (in thousands):

 

    December 23, 2012     June 24, 2012  
    Cost     Unrealized
Gain
    Unrealized
(Loss)
    Fair Value     Cost     Unrealized
Gain
    Unrealized
(Loss)
    Fair Value  

Cash

  $ 304,988      $ —        $ —        $ 304,988      $ 240,841      $ —        $ —        $ 240,841   

Fixed Income Money Market Funds

    884,982        —          —          884,982        1,318,812        —          —          1,318,812   

Municipal Notes and Bonds

    269,347        1,185        (46     270,486        321,001        1,574        (8     322,567   

US Treasury and Agencies

    177,520        92        (28     177,584        137,516        43        (113     137,446   

Government-Sponsored Enterprises

    93,953        169        (2     94,120        123,269        67        (68     123,268   

Foreign Government Bonds

    20,470        103        (5     20,568        6,315        43        —          6,358   

Corporate Notes and Bonds

    802,788        2,603        (279     805,112        767,847        1,443        (389     768,901   

Mortgage Backed Securities—Residential

    32,558        107        (57     32,608        25,857        121        (6     25,972   

Mortgage Backed Securities—Commercial

    96,118        673        (386     96,405        84,682        555        (384     84,853   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Cash and Short -Term Investments

  $ 2,682,724      $ 4,932      $ (803   $ 2,686,853      $ 3,026,140      $ 3,846      $ (968   $ 3,029,018   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Publicly Traded Equity Security

  $ 9,321      $ —        $ (4,776   $ 4,545      $ 9,320      $ —        $ (3,407   $ 5,913   

Private Equity Security

    5,000        —          —          5,000        5,000        —          —          5,000   

Mutual Funds

    19,635        1,305        —          20,940        17,459        366        (71     17,754   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Financial Instruments

  $ 2,716,680      $ 6,237      $ (5,579   $ 2,717,338      $ 3,057,919      $ 4,212      $ (4,446   $ 3,057,685   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reported Within

               

Cash and Cash Equivalents

  $ 1,190,189      $ —        $ —        $ 1,190,189      $ 1,564,752      $ —        $ —        $ 1,564,752   

Short-Term Investments

    1,326,369        4,932        (803     1,330,498        1,295,053        3,846        (968     1,297,931   

Restricted Cash and Investments

    166,166        —          —          166,166        166,335        —          —          166,335   

Other assets

    33,956        1,305        (4,776     30,485        31,779        366        (3,478     28,667   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,716,680      $ 6,237      $ (5,579   $ 2,717,338      $ 3,057,919      $ 4,212      $ (4,446   $ 3,057,685   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales and pay-downs are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company also considers whether changes in the credit ratings of the issuer could impact the assessment of fair value. The Company did not recognize any losses on investments due to other-than-temporary impairments during the three or six months ended December 23, 2012 or the three months ended December 25, 2011. The Company recognized a $1.7 million other-than-temporary impairment of a strategic private equity investment during the six months ended December 25, 2011. Additionally, gross realized gains and gross realized (losses) from sales of investments were approximately $0.9 million and $(0.3) million, respectively, in the three months ended December 23, 2012 and $0.1 million and $(0.2) million, respectively, in the three months ended December 25, 2011. Gross realized gains and gross realized (losses) from sales of investments were approximately $1.1 million and $(0.7) million, respectively, in the six months ended December 23, 2012 and $0.2 million and $(0.3) million, respectively, in the six months ended December 25, 2011.

 

The following is an analysis of the Company’s fixed income securities in unrealized loss positions (in thousands):

 

     December 23, 2012  
     Unrealized Losses     Unrealized Losses               
     Less Than 12 Months     12 Months or Greater     Total  
     Fair Value      Gross
Unrealized
Loss
    Fair Value      Gross
Unrealized
Loss
    Fair Value      Gross
Unrealized
Loss
 

Short-Term Investments

               

Municipal Notes and Bonds

   $ 39,212       $ (46   $ —         $ —        $ 39,212       $ (46

US Treasury and Agencies

     33,860         (28     —           —          33,860         (28

Government-Sponsored Enterprises

     3,513         (2     —           —          3,513         (2

Foreign Government Bonds

     7,601         (5     —           —          7,601         (5

Corporate Notes and Bonds

     184,816         (279     295         —          185,111         (279

Mortgage Backed Securities—Residential

     3,746         (57     —           —          3,746         (57

Mortgage Backed Securities—Commercial

     53,576         (348     2,056         (38     55,632         (386
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Short-Term Investments

   $ 326,324       $ (765   $ 2,351       $ (38   $ 328,675       $ (803
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

The amortized cost and fair value of cash equivalents, short-term investments, and restricted cash and investments with contractual maturities are as follows as of December 23, 2012:

 

     Cost      Estimated Fair
Value
 
     (in thousands)  

Due in one year or less

   $ 1,299,524       $ 1,299,915   

Due after one year through five years

     905,888         909,053   

Due in more than five years

     172,324         172,897   
  

 

 

    

 

 

 
   $ 2,377,736       $ 2,381,865   
  

 

 

    

 

 

 

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

Derivative Instruments and Hedging

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

Cash Flow Hedges

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

At inception and at each quarter end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis. Changes in the fair value of foreign currency forward contracts due to changes in time value are excluded from the assessment of effectiveness and are recognized in revenue in the current period. The change in time value related to these contracts was not material for all reported periods. To qualify for hedge accounting, the hedge relationship must meet criteria relating both to the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured. There were no gains or losses during the three or six months ended December 23, 2012 or December 25, 2011 associated with ineffectiveness or forecasted transactions that failed to occur.

 

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. When derivative instruments are designated and qualify as effective cash flow hedges, the Company recognizes effective changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, with the exception of excluded time value and hedge ineffectiveness recognized, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that the underlying hedged forecasted transactions will occur, the Company may not be able to account for its derivative instruments as cash flow hedges. If this were to occur, future changes in the fair values of the Company’s derivative instruments would be recognized in earnings. Additionally, related amounts previously recorded in other comprehensive income would be reclassified to income immediately. At December 23, 2012, the Company had gains of $3.7 million accumulated in other comprehensive income, which it expects to reclassify from other comprehensive income into earnings over the next 12 months.

Balance Sheet Hedges

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

As of December 23, 2012, the Company had the following outstanding foreign currency forward contracts that were entered into under its cash flow and balance sheet hedge program:

 

     Derivatives Designated as
Hedging Instruments:
     Derivatives Not Designated as
Hedging Instruments:
 
     (in thousands)  
     Buy Contracts      Sell Contracts      Buy Contracts      Sell Contracts  

Foreign Currency Forward Contracts

           

Japanese Yen

   $ —         $ 47,126       $ —         $ 42,593   

Swiss Francs

     —           —           16,159         —     

British Pound Sterling

     —           —           4,614         —     

Euro

     60,477         —           782         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 60,477       $ 47,126       $ 21,555       $ 42,593   
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of derivative instruments in the Company’s Consolidated Balance Sheet as of December 23, 2012 was as follows:

 

     Fair Value of Derivative Instruments  
     Asset Derivatives      Liability Derivatives  
     Balance Sheet
Location
     Fair Value      Balance Sheet
Location
     Fair Value  
     (in thousands)  

Derivatives designated as hedging instruments:

           

Foreign exchange forward contracts

    
 
Prepaid expense
and other assets
  
  
   $ 3,458         Accrued liabilities       $ 70   

Derivatives not designated as hedging instruments:

           

Foreign exchange forward contracts

    
 
Prepaid expense
and other assets
  
  
   $ 187         Accrued liabilities       $ 395   
     

 

 

       

 

 

 

Total derivatives

      $ 3,645          $ 465   
     

 

 

       

 

 

 

 

The fair value of derivative instruments in the Company’s Consolidated Balance Sheet as of June 24, 2012 was as follows:

 

    Fair Value of Derivative Instruments  
    Asset Derivatives     Liability Derivatives  
    Balance Sheet
Location
    Fair Value     Balance Sheet
Location
    Fair Value  
    (in thousands)  

Derivatives designated as hedging instruments:

       

Foreign exchange forward contracts

   
 
Prepaid expense
and other assets
  
  
  $ 3,358        Accrued liabilities      $ 3,403   

Derivatives not designated as hedging instruments:

       

Foreign exchange forward contracts

   
 
Prepaid expense
and other assets
  
  
  $ 1,662        Accrued liabilities      $ 925   
   

 

 

     

 

 

 

Total derivatives

    $ 5,020        $ 4,328   
   

 

 

     

 

 

 

The effect of derivative instruments designated as cash flow hedges on the Company’s Consolidated Statements of Operations was as follows:

 

    Three Months Ended December 23, 2012     Six Months Ended December 23, 2012  
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
 
    (in thousands)  

Derivatives Designated as Hedging Instruments:

               

Foreign exchange forward contracts

  $ 2,347      $ (363   $ 8      $ (26   $ 1,628      $ (2,289   $      $ (47

 

    Three Months Ended December 25, 2011     Six Months Ended December 25, 2011  
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
 
    (in thousands)  

Derivatives Designated as Hedging Instruments:

               

Foreign exchange forward contracts

  $ (3,581   $ (2,906   $ (1   $ 223      $ (11,793   $ (5,513   $ (2   $ 754   

 

(1) Amount recognized in other comprehensive income (loss) (effective portion).
(2) Amount of gain (loss) reclassified from accumulated other comprehensive income into income (loss) (effective portion) located in revenue.
(3) Amount of gain (loss) recognized in income on derivative (ineffective portion) located in other expense, net.
(4) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) located in other expense, net.

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

 

     Three Months Ended     Six Months Ended  
     December 23,
2012
     December 25,
2011
    December 23,
2012
     December 25,
2011
 
     Gain (Loss)
Recognized (5)
     Gain (Loss)
Recognized (5)
    Gain (Loss)
Recognized (5)
     Gain (Loss)
Recognized (5)
 
     (in thousands)  

Derivatives Not Designated as Hedging Instruments:

          

Foreign exchange forward contracts

   $ 5,667       $ (20,411   $ 286       $ (42,823

 

(5) Amount of gain (loss) recognized in income located in other income (expense), net.

 

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short term investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit in 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 over-all portfolio of available-for-sale securities must maintain an average minimum rating of “AA- or Aa3” as rated by Standard and Poor’s or Moody’s Investor Services, respectively. 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 the foreign currency forward contracts that are used to mitigate the effect of exchange rate fluctuations and on contracts related to structured share repurchase agreements. 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 statements and payment performance. In general, the Company does not require collateral on sales.

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INVENTORIES
6 Months Ended
Dec. 23, 2012
INVENTORIES

NOTE 5 — INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or market. Shipments to Japanese customers, to whom 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 23,      June 24,  
     2012      2012  
     (in thousands)  

Raw materials

   $ 307,806       $ 342,283   

Work-in-process

     78,459         118,566   

Finished goods

     144,007         172,004   
  

 

 

    

 

 

 
   $ 530,272       $ 632,853   
  

 

 

    

 

 

 

During the three months and six ended December 23, 2012, the Company incurred charges of $15.5 million and $18.7 million resulting from the write-off of inventory related to the decision to stop future development of certain product configurations and transition them to a sustaining mode with existing customers. These charges were included in cost of goods sold in the Condensed Consolidated Statement of Operations.

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PROPERTY AND EQUIPMENT, NET
6 Months Ended
Dec. 23, 2012
PROPERTY AND EQUIPMENT, NET

NOTE 6 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consists of the following:

 

     December 23,     June 24,  
     2012     2012  
     (in thousands)  

Manufacturing, engineering and office equipment

   $ 487,647      $ 468,739   

Computer equipment and software

     111,255        104,919   

Land

     65,289        65,228   

Buildings

     238,581        231,536   

Leasehold improvements

     63,025        54,327   

Furniture and fixtures

     20,957        19,770   
  

 

 

   

 

 

 
     986,754        944,519   

Less: accumulated depreciation and amortization

     (396,207     (359,923
  

 

 

   

 

 

 
   $ 590,547      $ 584,596   
  

 

 

   

 

 

 

The Company’s long lived assets held for use, including property, plant, and equipment and intangible assets, are measured at fair value when an impairment exists. Long lived assets held for use are assessed for impairment when events occur that indicate a potential impairment. The Company did not record an impairment of long lived assets held for use during the three or six months ended December 23, 2012 or December 25, 2011.

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GOODWILL AND INTANGIBLE ASSETS
6 Months Ended
Dec. 23, 2012
GOODWILL AND INTANGIBLE ASSETS

NOTE 7 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

There was no significant change in the goodwill balance during the six months ended December 23, 2012. Of the $1,455 million goodwill balance as of December 23, 2012, $69.7 million is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

The Company’s goodwill is measured at fair value when an impairment exists. Goodwill is assessed at least annually for impairment. The Company did not record impairments of goodwill during the three or six months ended December 23, 2012 or December 25, 2011.

Intangible Assets

The following table provides details of the Company’s intangible assets, including the impact of foreign currency translation adjustments, as of December 23, 2012 (in thousands, except years):

 

     Gross      Accumulated
Amortization
    Net      Weighted-
Average Useful
Life (years)
 

Customer relationships

   $ 615,771       $ (67,568   $ 548,203         9.04   

Existing technology

     643,032         (94,079     548,953         6.97   

Patents

     32,053         (19,911     12,142         6.05   

Backlog

     10,000         (5,548     4,452         1.00   

Other intangible assets

     35,216         (34,765     451         4.10   
  

 

 

    

 

 

   

 

 

    

Intangible assets subject to amortization

     1,336,072         (221,871     1,114,201      

In process research and development

     30,000           30,000      

Development rights

     9,100           9,100      
  

 

 

      

 

 

    

Intangible assets not subject to amortization

     39,100           39,100      
  

 

 

    

 

 

   

 

 

    

Total intangible assets

   $ 1,375,172       $ (221,871   $ 1,153,301      
  

 

 

    

 

 

   

 

 

    

 

The following table provides details of the Company’s intangible assets, including the impact of foreign currency translation adjustments, as of June 24, 2012 (in thousands, except years):

 

     Gross      Accumulated
Amortization
    Net      Weighted-
Average Useful
Life (years)
 

Customer relationships

   $ 615,411       $ (32,041   $ 583,370         9.04   

Existing technology

     642,311         (48,378     593,933         6.97   

Patents

     30,870         (17,525     13,345         6.05   

Backlog

     10,000         (548     9,452         1.00   

Other intangible assets

     35,216         (33,989     1,227         4.10   
  

 

 

    

 

 

   

 

 

    

Intangible assets subject to amortization

     1,333,808         (132,481     1,201,327      

In process research and development

     30,000           30,000      

Development rights

     9,100           9,100      
  

 

 

      

 

 

    

Intangible assets not subject to amortization

     39,100           39,100      
  

 

 

    

 

 

   

 

 

    

Total intangible assets

   $ 1,372,908       $ (132,481   $ 1,240,427      
  

 

 

    

 

 

   

 

 

    

The Company recognized $44.7 million and $4.5 million in intangible asset amortization expense during the three months ended December 23, 2012 and December 25, 2011, respectively. The Company recognized $89.3 million and $9.0 million in intangible asset amortization expense during the six months ended December 23, 2012 and December 25, 2011, respectively.

The estimated future amortization expense of purchased intangible assets as of December 23, 2012 is as follows (in thousands):

 

Fiscal Year

   Amount  

2013 (6 months)

   $ 87,174   

2014

     161,136   

2015

     152,897   

2016

     151,074   

2017

     150,844   

Thereafter

     411,076   
  

 

 

 
   $ 1,114,201   
  

 

 

 
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
6 Months Ended
Dec. 23, 2012
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 8 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

 

     December 23,      June 24,  
     2012      2012  
     (in thousands)  

Accrued compensation

   $ 305,747       $ 274,165   

Warranty reserves

     56,191         63,988   

Income and other taxes payable

     17,954         24,745   

Other

     118,895         129,280   
  

 

 

    

 

 

 
   $ 498,787       $ 492,178   
  

 

 

    

 

 

 
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OTHER EXPENSE, NET
6 Months Ended
Dec. 23, 2012
OTHER EXPENSE, NET

NOTE 9 — OTHER EXPENSE, NET

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

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
     (in thousands)  

Interest income

   $ 4,376      $ 2,472      $ 8,176      $ 5,061   

Interest expense

     (14,975     (9,346     (30,119     (18,606

Gains (losses) on deferred compensation plan related assets

     1,234        (348     3,975        (2,213

Foreign exchange losses

     (3,274     (142     (3,642     (1,232

Other, net

     (751     (421     (1,718     (2,868
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (13,390   $ (7,785   $ (23,328   $ (19,858
  

 

 

   

 

 

   

 

 

   

 

 

 
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INCOME TAX EXPENSE
6 Months Ended
Dec. 23, 2012
INCOME TAX EXPENSE

NOTE 10 — INCOME TAX EXPENSE

The Company recorded an income tax benefit of $(15.8) million and $(11.8) million for the three and six months ended December 23, 2012, respectively. The income tax benefit yielded an effective tax rate of 168.6% and 456.4% for the three and six months ended December 23, 2012, respectively.

The differences between the U.S. federal statutory tax rate of 35% and the Company’s effective tax rates for the three and six months ended December 23, 2012 were primarily due to the recognition of previously unrecognized tax benefits due to lapse of statute of limitations and successful resolution of certain tax matters, the geographic mix of income, and the treatment of discrete items in determining the effective tax rate, partially offset by the tax effect of non-deductible stock-based compensation. The effective tax rates recorded during the three and six months ended December 23, 2012 included the tax impact of discrete items, which were recorded during the quarter in which they occurred. During the three and six months ended December 23, 2012, tax discrete items primarily consisted of: (1) a tax benefit of $30.5 million and $30.9 million for the three months and six months, respectively, from the recognition of previously unrecognized tax benefits due to lapse of statutes of limitation and successful resolution of certain tax matters, and (2) the effective tax rate impact of integration and impairment expenses of $28.3 million and $45.3 million for the three months and six months, respectively, for which little tax benefit is derived.

The total gross unrecognized tax benefits as of each date noted below were as follows:

 

     December 23,      June 24,  
     2012      2012  
     (in millions)  

Total gross unrecognized tax benefits

   $ 333.9       $ 343.8   

If the gross unrecognized tax benefits were recognized in a future period, it would result in a net tax benefit of $264.4 million and a reduction of the effective tax rate.

The Company recognizes interest expense and penalties related to the above unrecognized tax benefits within income tax expense (benefit). As of December 23, 2012, the Company had accrued approximately $24.7 million for the payment of gross interest and penalties, relating to unrecognized tax benefits, compared to $25.2 million as of June 24, 2012.

The Internal Revenue Service (“IRS”) is examining the Company’s U.S. income tax returns for fiscal years 2008 and 2009. As of December 23, 2012, no significant adjustments have been proposed by the IRS. The IRS has completed its audit of Novellus’ calendar year 2006 through calendar year 2008 tax returns. No significant adjustments were proposed by the IRS. The Company is also subject to audits by foreign tax authorities. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur.

The Company files U.S. federal, U.S. state, and foreign income tax returns. As of December 23, 2012, tax years 2003-2012 remain subject to examination in the jurisdictions where the Company operates.

The Company is in various stages of the 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 twelve-month period the Company may experience a significant increase or decrease in its unrecognized tax benefits. It is not possible to determine either the magnitude or the range of any increase or decrease at this time.

 

Realization of the Company’s net deferred tax assets is based upon the weight of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such assets will be realized with the exception of $55.2 million related to certain California and foreign deferred tax assets. However, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. If the valuation allowance related to deferred tax assets were released as of December 23, 2012, approximately $55.2 million would be credited to the statement of operations.

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NET INCOME PER SHARE
6 Months Ended
Dec. 23, 2012
NET INCOME PER SHARE

NOTE 11 — 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, RSUs, and convertible notes. The following table reconciles the numerators and denominators of the basic and diluted computations for net income per share.

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in thousands, except per share data)  

Numerator:

           

Net income

   $ 6,408       $ 33,212       $ 9,176       $ 105,050   
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Basic average shares outstanding

     170,699         119,739         175,314         121,435   

Effect of potential dilutive securities:

           

Employee stock plans

     2,328         1,134         2,176         947   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted average shares outstanding

     173,027         120,873         177,490         122,382   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share—basic

   $ 0.04       $ 0.28       $ 0.05       $ 0.87   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share—diluted

   $ 0.04       $ 0.27       $ 0.05       $ 0.86   
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in thousands)  

Number of potential dilutive securities excluded

     1,543         90         1,551         841   
  

 

 

    

 

 

    

 

 

    

 

 

 

In addition to the above, diluted shares outstanding do not include any effect resulting from warrants, assumed conversion of the Notes, or note hedges (as described in Note 13) as their impact would have been anti-dilutive.

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ACCUMULATED OTHER COMPREHENSIVE LOSS
6 Months Ended
Dec. 23, 2012
ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 12 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The balance of accumulated other comprehensive loss, on an after-tax basis where applicable, is as follows:

 

     December 23,     June 24,  
     2012     2012  
     (in thousands)  

Accumulated foreign currency translation adjustment

   $ (17,637   $ (22,481

Accumulated unrealized gain (loss) on cash flow hedges

     3,705        (212

Accumulated unrealized gain (loss) on available-for-sale investments

     (58     (308

Unrealized components of post retirement benefit plan

     (10,494     (10,817
  

 

 

   

 

 

 

Accumulated other comprehensive loss

   $ (24,484   $ (33,818
  

 

 

   

 

 

 
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LONG TERM DEBT
6 Months Ended
Dec. 23, 2012
LONG TERM DEBT

NOTE 13 — LONG TERM DEBT

The following table reflects the carrying value of the Company’s convertible notes and other long-term debt as of December 23, 2012 and June 24, 2012:

 

     December 23,     June 24,  
     2012     2012  
     (in millions)  

0.50% Notes due 2016

   $ 450.0      $ 450.0   

Less: Unamortized interest discount

     (53.1     (60.3
  

 

 

   

 

 

 

Net carrying amount of 0.50% Notes due 2016

     396.9        389.7   
  

 

 

   

 

 

 

1.25% Notes due 2018

     450.0        450.0   

Less: Unamortized interest discount

     (83.7     (90.4
  

 

 

   

 

 

 

Net carrying amount of 1.25% Notes due 2018

     366.3        359.6   
  

 

 

   

 

 

 

2.625% Notes due 2041

     699.9        699.9   

Less: Unamortized interest discount

     (188.6     (190.3
  

 

 

   

 

 

 

Net carrying amount of 2.625% Notes due 2041

     511.3        509.6   
  

 

 

   

 

 

 

Total debt

     1,274.5        1,258.9   
  

 

 

   

 

 

 

Less: current portion of debt

     —          (509.6
  

 

 

   

 

 

 

Long-term debt

   $ 1,274.5      $ 749.3   
  

 

 

   

 

 

 

Convertible Senior Notes

In May 2011, the Company issued and sold $450.0 million in aggregate principal amount of 0.50% Convertible Senior Notes due May 2016 (the “2016 Notes”) at par. At the same time, the Company issued and sold $450.0 million in aggregate principal amount of 1.25% Convertible Senior Notes due May 2018 (the “2018 Notes”) at par. The 2016 Notes and the 2018 Notes may be converted, under certain circumstances, based on an initial conversion rate of 15.8687 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $63.02 per share of common stock).The net proceeds to the Company from the sale of the 2016 Notes and the 2018 Notes were $835.5 million. The Company pays cash interest at an annual rate of 0.5% and 1.25%, respectively, on the 2016 Notes and the 2018 Notes, payable semi-annually on May 15 and November 15 of each year.

In June 2012, with the acquisition of Novellus Systems, Inc. (see Note 16), the Company assumed $700.0 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 2041 (the “2041 Notes,” and collectively with the 2016 Notes and the 2018 Notes, the “Notes”). The 2041 Notes may be converted, under certain circumstances, based on an initial conversion rate of 28.4781 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $35.11 per share of common stock). The Company pays cash interest at an annual rate of 2.625%, payable semi-annually on May 15 and November 15 of each year. The 2041 Notes also have a contingent interest payment provision that may require us to pay additional interest based on certain thresholds, beginning with the semi-annual interest payment commencing on May 15, 2021, and upon the occurrence of certain events, as outlined in the indenture governing the 2041 Notes. The maximum amount of the contingent interest will accrue at a rate of 2.1% per annum, excluding any potential impact from dividends deemed payable to holders of the 2041 Notes. The contingent interest payment provision has been identified as an embedded derivative, to be accounted for separately, and is recorded at fair value at the end of each reporting period in other non-current liabilities, with any gains and losses recorded in interest expense, within the Condensed Consolidated Statements of Operations.

In connection with the acquisition of Novellus in June 2012, the 2041 Notes could have been converted into the Company’s common stock at any time from and after the later of (1) the date that was 30 scheduled trading days immediately prior to the anticipated closing date of the merger and (2) the date on which we delivered to the note holders notice of the merger, until 35 business days after the actual closing date of the merger, or July 24, 2012. Accordingly, the carrying amount of the 2041 Notes was classified in current liabilities in our Consolidated Balance Sheet as of June 24, 2012. The excess of the amount of cash payable, if converted, over the carrying amount of the 2041 Notes was classified as temporary equity as of June 24, 2012. When the conversion period closed, on July 24, 2012, all 2041 Notes not converted were reclassified back to noncurrent liabilities and the temporary equity was reclassified to permanent equity. During the period ending June 24, 2012, 65 of the 2041 Notes, with a total par value of $65,000, were converted at the note holders’ option. In conjunction with the conversion, 137 shares of common stock were issued.

The Company separately accounts for the liability and equity components of the Notes. The initial debt components of the 2016 Notes, the 2018 Notes, and the 2041 Notes were valued at $373.8 million, $345.1 million, and $509.5 million, respectively, based on the present value of the future cash flows using discount rates of 4.29%, 5.27%, and 4.28%, respectively, the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without the conversion feature. The carrying values of the equity components of the 2016 Notes, the 2018 Notes, and the 2041 Notes were $76.2 million, $104.9 million, and $328.1 million, respectively as of December 23, 2012. The effective interest rates on the liability components of the 2016 Notes, the 2018 Notes, and the 2041 Notes for the three months ended December 23, 2012 were 4.29%, 5.27%, and 4.28% respectively. The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the discount on the liability component of the Notes during the three and six months ended December 23, 2012 and December 25, 2011.

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in millions)  

Contractual interest coupon

   $ 6.6       $ 1.9         13.1         3.9   

Amortization of interest discount

     7.8         6.7         15.6         13.3   

Amortization of issuance costs

     0.6         0.6         1.2         1.2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest cost recognized

   $ 15.0       $ 9.2       $ 29.9       $ 18.4   
  

 

 

    

 

 

    

 

 

    

 

 

 

The remaining bond discount of the 2016 Notes of $53.1 million as of December 23, 2012 will be amortized over their remaining life, which is approximately 3.4 years. The remaining bond discount of the 2018 Notes of $83.7 million as of December 23, 2012 will be amortized over their remaining life, which is approximately 5.4 years. The remaining bond discount of the 2041 Notes of $188.6 million as of December 23, 2012 will be amortized over their remaining life, which is approximately 28.4 years. As of December 23, 2012, the if-converted value of the 2016 Notes and the 2018 Notes did not exceed the aggregate principal amount. As of December 23, 2012, the if-converted value of the 2041 Notes exceeded the aggregate principal amount by $22.5 million.

Convertible Note Hedges and Warrants

Concurrently with the issuance of the 2016 Notes and the 2018 Notes, the Company purchased convertible note hedges and sold warrants. The separate convertible note hedge and warrant transactions are collectively structured to reduce the potential future economic dilution associated with the conversion of the 2016 Notes and the 2018 Notes and to increase the effective initial conversion price to $71.34 and $76.10 per share, respectively. Each of these components is discussed separately below:

Concurrent with the issuance of the 2016 Notes, the Company sold warrants to purchase up to approximately 7.1 million shares of the Company’s common stock at an exercise price of $71.34 per share. The warrants expire on a series of dates between August 15, 2016 and October 21, 2016. At expiration, the Company may, at its option, elect to settle the warrants on a net share basis. As of December 23, 2012, the warrants had not been exercised and remained outstanding. In addition, counterparties agreed to sell to the Company up to approximately 7.1 million shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the 2016 Notes in full, at a price of $63.02 per share. The convertible note hedge transaction will be settled in net shares and will terminate upon the earlier of the maturity date of the 2016 Notes or the first day none of the 2016 Notes remains outstanding due to conversion or otherwise. Settlement of the convertible note hedge in net shares, based on the number of shares issued upon conversion of the 2016 Notes, on the expiration date would result in the Company receiving net shares equivalent to the number of shares issuable by the Company upon conversion of the 2016 Notes.

Concurrent with the issuance of the 2018 Notes, the Company sold warrants to purchase up to approximately 7.1 million shares of the Company’s common stock at an exercise price of $76.10 per share. The warrants expire on a series of dates between August 15, 2018 and October 23, 2018. At expiration, the Company may, at its option, elect to settle the warrants on a net share basis. As of December 23, 2012, the warrants had not been exercised and remained outstanding. In addition, counterparties agreed to sell to the Company up to approximately 7.1 million shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the 2018 Notes in full, at a price of $63.02 per share. The convertible note hedge transaction will be settled in net shares and will terminate upon the earlier of the maturity date of the 2018 Notes or the first day none of the 2018 Notes remains outstanding due to conversion or otherwise. Settlement of the convertible note hedge in net shares, based on the number of shares issued upon conversion of the 2018 Notes, on the expiration date would result in the Company receiving net shares equivalent to the number of shares issuable by the Company upon conversion of the 2018 Notes.

Fair Value of Notes

As of December 23, 2012, the face values of the 2016 Notes, the 2018 Notes, and the 2041 Notes were $450.0 million, $450.0 million, and $699.9 million, respectively. As of December 23, 2012, the fair values of the 2016 Notes, the 2018 Notes, and the 2041 Notes, which includes the debt and equity components, were approximately $432.0 million, $446.4 million, and $880.2 million respectively, based on quoted market prices (level 1 inputs within the fair value hierarchy).

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COMMITMENTS
6 Months Ended
Dec. 23, 2012
COMMITMENTS

NOTE 14 — COMMITMENTS

Capital Leases

Capital leases reflect building and office equipment leases. The amounts in the table below include the interest portion of payment obligations.

The Company’s contractual cash obligations relating to its existing capital leases, including interest, as of December 23, 2012 were as follows:

 

     Capital  
     Leases  
     (in thousands)  

Payments due by period:

  

One year

   $ 1,685   

Two years

     1,565   

Three years

     1,497   

Four years

     9,636   

Five years

     —     

Over 5 years

     —     
  

 

 

 

Total

     14,383   

Less: Interest on capital leases

     649   
  

 

 

 

Less: Current portion of capital leases

     1,464   
  

 

 

 

Long-tern portion of capital leases

   $ 12,270   
  

 

 

 

Operating Leases and Related Guarantees

The Company leases certain of its administrative, R&D and manufacturing facilities, regional sales/service offices and certain equipment under non-cancelable operating leases. Certain of the Company’s facility leases for buildings located at its Fremont, California headquarters 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.

On December 18, 2007, the Company entered into two operating leases regarding certain improved properties in Livermore, California. These leases were amended on April 3, 2008 and July 9, 2008 (as so amended, the “Livermore Leases”). On December 21, 2007, the Company entered into a series of four amended and restated operating leases (the “New Fremont Leases,” and collectively with the Livermore Leases, the “Operating Leases”) with regard to certain improved properties at the Company’s headquarters in Fremont, California.

The Operating Leases have a term of approximately seven years ending on the first business day in January 2015. The Company may, at its discretion and with 30 days’ notice, elect to purchase the property that is the subject of the Operating Lease for an amount approximating the sum required to pay the amount of the lessor’s investment in the property and any accrued but unpaid rent.

The Company is required, pursuant to the terms of the Operating Leases, to maintain collateral in an aggregate of approximately $164.9 million in separate interest-bearing accounts as security for the Company’s obligations under the Operating Leases. This amount is recorded as restricted cash in the Company’s Consolidated Balance Sheet as of as of December 23, 2012.

When the terms of the Operating Leases expire, the property subject to that Operating Lease may be remarketed. The Company has guaranteed to the lessor that each property will have a certain minimum residual value. The aggregate guarantee made by the Company under the Operating Leases is generally no more than approximately $141.7 million; however, under certain default circumstances, the guarantee with regard to an Operating Lease may be 100% of the lessor’s aggregate investment in the applicable property, which in no case will exceed $164.9 million, in the aggregate.

The Company recognized at lease inception $0.6 million in estimated liabilities related to the Operating Leases, which represents the fair value guarantee premium that would be required had the guarantee been issued in a standalone transaction. These liabilities are recorded in other long-term liabilities with the offsetting entry recorded as prepaid rent in other assets. The balances in prepaid rent and the guarantee liability are amortized to the Condensed Consolidated Statement of Operations on a straight line basis over the life of the leases. If it becomes probable that the Company will be required to make a payment under the residual guarantee, the Company will increase its liability with a corresponding increase to prepaid rent and amortize the increased prepaid rent over the remaining lease term with no corresponding reduction in the liability. As of December 23, 2012, the unamortized portion of the fair value of the residual value guarantees remaining in other long-term liabilities and prepaid rent was $0.1 million.

 

Other Guarantees

The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements. The Company has entered into certain insurance contracts that may limit its exposure to such indemnifications. As of December 23, 2012, the Company had not recorded any liability on its Consolidated Financial Statements in connection with these indemnifications, as it does not believe, based on information available, that it is probable that any amounts will be paid under these guarantees.

Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services subject to its indemnification obligations. The Company does not believe, based on information available, 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 23, 2012, the maximum potential amount of future payments that we could be required to make under these arrangements and letters of credit was $21.4 million. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid.

Warranties

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

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

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
     (in thousands)  

Balance at beginning of period

   $ 67,836      $ 36,160      $ 70,161      $ 40,951   

Warranties issued during the period

     14,856        8,421        34,548        16,353   

Settlements made during the period

     (21,484     (11,925     (45,859     (23,146

Changes in liability for pre-existing warranties

     1,714        78        4,072        (1,424
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 62,922      $ 32,734      $ 62,922      $ 32,734   
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: Long-term portion

     (6,731     —          (6,731     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Accrued warranty, curent

   $ 56,191      $ 32,734      $ 56,191      $ 32,734   
  

 

 

   

 

 

   

 

 

   

 

 

 
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RESTRUCTURING AND IMPAIRMENTS
6 Months Ended
Dec. 23, 2012
RESTRUCTURING AND IMPAIRMENTS

NOTE 15 — RESTRUCTURING AND IMPAIRMENTS

Prior to incurring charges under the restructuring plans discussed below, management approved and announced the specific actions to be taken under each plan. Severance packages were communicated to affected employees in sufficient detail that the employees could determine their type and amount of benefit. The termination of the affected employees occurred as soon as practical after the restructuring plans were announced. The amount of remaining future lease payments for facilities the Company ceased to use and included in the restructuring charges is based on management’s estimates using known prevailing real estate market conditions at that time based, in part, on the opinions of independent real estate experts. Leasehold improvements relating to the vacated buildings were written off, as these items will have no future economic benefit to the Company and have been abandoned.

Accounting for restructuring activities, as compared to regular operating cost management activities, requires an evaluation of formally committed and approved plans. Restructuring activities have comparatively greater strategic significance and materiality and may involve exit activities, whereas regular cost containment activities are more tactical in nature and are rarely characterized by formal and integrated action plans or exiting a particular product, facility, or service.

The following table summarizes restructuring and impairment charges and adjustments during the three and six months ended December 23, 2012 and December 25, 2011. In addition to charges incurred under specific restructuring plans, the Company incurred asset impairment charges of $1.7 million related to a decline in the market value of certain facilities.

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
                 (in thousands)  

June 2008 Plan

   $ —        $ (859   $ —        $ (859

March 2009 Plan

     (1,440     —          (1,440     —     

Adjustments to restructuring liability assumed in acquisition

     2,461        —          2,461        —     

Asset impairments outside of specific restructuring plans

     —          —          —          1,725   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and impairment charges (adjustments)

   $ 1,021      $ (859   $ 1,021      $ 866   
  

 

 

   

 

 

   

 

 

   

 

 

 

The amounts in the table above were recorded in the Consolidated Statements of Operations for the respective periods as follows:

 

     Three Months Ended     Six Months Ended  
     December 23,      December 25,     December 23,      December 25,  
     2012      2011     2012      2011  
                  (in thousands)  

Cost of goods sold

   $ —         $ (859   $ —         $ (859

Operating expense

     1,021         —          1,021         1,725   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total restructuring and impairment charges (adjustments)

   $ 1,021       $ (859   $ 1,021       $ 866   
  

 

 

    

 

 

   

 

 

    

 

 

 

June 2008 Plan

During the June 2008 quarter, the Company incurred restructuring expenses related to the integration of SEZ and overall streamlining of the Company’s combined Clean Product Group (“June 2008 Plan”). During the three months ended December 25, 2011 the Company released $0.9 million related to a recorded obligation not realized for a previously restructured product line. There were no remaining liabilities related to the June 2008 Plan as of either December 23, 2012 or June 24, 2012.

March 2009 Plan

Beginning in the March 2009 quarter, the Company incurred restructuring expenses designed to align the Company’s cost structure with its outlook for the current economic environment and future business opportunities (“March 2009 Plan”). During the three and six months ended December 23, 2012, the Company released charges of $1.4 million primarily as the result of changes in sublease assumptions for a previously restructured building. There were no charges incurred under the March 2009 Plan during the three or six months ended December 25, 2011. Total charges incurred through December 23, 2012 under the March 2009 Plan were $59.9 million.

Below is a table summarizing activity relating to the March 2009 Plan during the six months ended December 23, 2012:

 

     Facilities  
     (in thousands)  

Balance at June 24, 2012

   $ 27,749   

Fiscal year 2013 release

     (1,440
  

 

 

 

Balance at December 23, 2012

   $ 26,309   
  

 

 

 

This balance expected to be paid by the end of fiscal year 2015.

Acquired Restructuring Liabilities

In addition to restructuring plans initiated by the Company, a restructuring liability of $11.2 million was assumed in the Novellus acquisition, related to future rent obligations on unoccupied facilities. During the three months ended December 23, 2012, the Company incurred charges of $2.5 million as the result of changes in sublease assumptions for a previously restructured building. No other restructuring expenses have been recognized related to this obligation subsequent to the Novellus acquisition. The liability balance as of December 23, 2012 was $12.2 million.

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BUSINESS COMBINATIONS
6 Months Ended
Dec. 23, 2012
BUSINESS COMBINATIONS

NOTE 16 – BUSINESS COMBINATIONS

On June 4, 2012 (“the acquisition date”), the Company acquired all of the outstanding common shares of Novellus in an all-stock transaction valued at approximately $3.0 billion. The results of Novellus’ operations have been included in the consolidated financial statements from the date of acquisition. Lam’s primary reasons for this acquisition were to complement existing product offerings and to provide opportunities for revenue and cost synergies. Novellus’ primary business focus is to develop, manufacture, sell and support equipment used in the fabrication of integrated circuits, commonly called semiconductors. Customers for this equipment manufacture semiconductors for sale or for incorporation in their own products, or provide semiconductor-manufacturing services to third parties. Novellus also develops, manufactures, sells and supports grinding, lapping and polishing equipment for a broad spectrum of industrial applications.

Consideration Transferred

The table below details the consideration transferred to acquire Novellus:

 

     Conversion      Estimated  

(in thousands, except per share amounts)

   Calculation      Fair Value  

Lam common stock issued at merger

     82,689      

Per share price of Lam common stock as of June 4, 2012

   $ 35.99       $ 2,975,977   
  

 

 

    

Estimated fair value of vested Lam equivalent restricted stock (1)

      $ 9,599   

Estimated fair value of vested Lam equivalent stock options (2)

        41,412   
     

 

 

 

Estimated purchase price consideration

      $ 3,026,988   
     

 

 

 

 

(1) The fair value of Lam Research equivalent restricted stock as of the acquisition date was estimated based upon the per share price of Lam Research common stock as of June 4, 2012, and giving effect to the exchange ratio of 1.125.
(2) The fair value of the Lam Research equivalent stock options as of the acquisition date was estimated using the Black-Scholes valuation model. Assumptions used are the same as those for acquired awards as disclosed in Note 11 of Notes to Condensed Consolidated Financial Statements.

Net Assets Acquired

The transaction has been accounted for using the acquisition method of accounting which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the assets acquired and liabilities assumed as of the acquisition date:

 

     June 4, 2012  
     (in thousands)  

Cash and investments

   $ 1,059,859   

Accounts receivable

     241,924   

Inventory

     309,213   

Other current assets

     56,314   

Property and equipment

     289,126   

Intangible assets

     1,219,100   

Goodwill

     1,277,121   

Other long-term assets

     35,826   
  

 

 

 

Total assets acquired

     4,488,483   

Accounts payable

     (83,028

Accrued expenses and other current liabilities

     (196,677

Deferred revenue

     (20,388

Debt

     (509,805

Other long-term liabilities

     (323,471

Convertible notes—equity component

     (328,126
  

 

 

 

Net assets acquired

   $ 3,026,988   
  

 

 

 

The goodwill recognized is attributable primarily to expected synergies and other benefits that the Company believes will result from combining the operations of Novellus with the operations of Lam. The $1.3 billion goodwill that was acquired is not expected to be deductible for income tax purposes. As of December 23, 2012, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Novellus.

 

Preliminary Pre-Acquisition Contingencies Assumed

The Company evaluated and continues to evaluate pre-acquisition contingencies relating to Novellus that existed as of the acquisition date. The Company determined that certain of these pre-acquisition contingencies are probable in nature and estimable as of the acquisition date and, accordingly, has preliminarily recorded the best estimates for these contingencies as a part of the purchase price allocation for Novellus. The Company continues to gather information for and evaluate these pre-acquisition contingencies, primarily related to tax positions that were assumed from Novellus. If changes are made to the amounts recorded or additional pre-acquisition contingencies are identified during the remainder of the measurement period, such amounts will be included in the purchase price allocation during the measurement period and, subsequently, in the Company’s results of operations.

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STOCK REPURCHASE PROGRAM
6 Months Ended
Dec. 23, 2012
STOCK REPURCHASE PROGRAM

NOTE 17 — STOCK REPURCHASE PROGRAM

On December 14, 2011, the Board of Directors authorized the repurchase of up to $1.6 billion of Company common stock, which replaces the previous repurchase 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. Repurchases will be funded using the Company’s available cash. 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*
     Amount Available
Under Repurchase
Program
 
     (in thousands, except per share data)  

Available balance as of June 24, 2012

            $ 911,933   

Quarter ended September 23, 2012

     11,970       $ 344,001       $ 34.79       $ 567,932   

Quarter ended December 23, 2012

     10,190         354,029       $ 34.74         213,903   

 

* Average price paid per share excludes accelerated share repurchases for which cost was incurred in fiscal year 2012, but shares were received in fiscal year 2013. See Collared Accelerated Share Repurchases section below for details regarding average price associated with these transactions.

In addition to shares repurchased under Board authorized repurchase program shown above, during the six months ended December 23, 2012, the Company acquired 322,000 shares at a total cost of $11.4 million which the Company withheld through net share 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 plans.

As part of its share repurchase program, the Company may from time-to-time enter into structured share repurchase arrangements with financial institutions using general corporate funds. Such arrangements entered into or settled during the six months ended December 23, 2012 included the following.

Collared Accelerated Share Repurchases

During the year ended June 24, 2012, the Company entered into two share repurchase transactions under one master repurchase arrangement. Under these collared accelerated share repurchase transactions (“ASRs”), the Company made up-front cash payments of $375 million and $200 million, respectively, three days after the respective trade date in exchange for an initial delivery of 6.6 million and 3.9 million shares of its common stock, respectively. The number of shares to ultimately be repurchased by the Company is based generally on the volume-weighted average price (“VWAP”) of the Company’s common stock during the term of the ASR minus a pre-determined discount set at inception of the ASR, subject to collar provisions that provide a minimum and maximum number of shares that the Company could repurchase under the agreements.

The minimum and maximum thresholds for each transaction are established based on the average of the VWAP prices for the Company’s common stock during an initial hedge period. The Company received incremental shares on top of the initial shares delivered such that the total number of shares received after the initial hedge period equaled 8.8 million and 4.8 million shares, equivalent to the minimum number of shares to be delivered under the terms of the ASRs, respectively. The ASRs were scheduled to end on or before December 18, 2012 and October 9, 2012, respectively. However, each ASR is subject to acceleration at the option of the counterparty at any time after June 27, 2012 and July 19, 2012, respectively. At the conclusion of the ASRs, the Company may receive additional shares based on the VWAP of the Company’s common stock during the term of the agreement minus the pre-determined fixed discount, such that the total number of shares received under the ASRs does not exceed the maximum of 10.8 million and 6.6 million shares, respectively.

 

The Company accounted for each ASR as two separate transactions: (a) as shares of common stock acquired in a treasury stock transaction recorded on the acquisition date and (b) as a forward contract indexed to the Company’s own common stock and classified in stockholders’ equity. As such, the Company accounted for the shares that it received under the ASRs as a repurchase of its common stock for the purpose of calculating earnings per common share. The Company has determined that the forward contract indexed to the Company’s common stock met all of the applicable criteria for equity classification in accordance with the Derivatives and Hedging topic of the FASB ASC, and, therefore, the ASRs were not accounted for as derivative instruments. As of June 24, 2012, the aggregate repurchase price of $575.0 million is reflected as Treasury stock, at cost, in the Consolidated Balance Sheet.

The counterparty designated July 6, 2012 as the accelerated termination date, at which time the Company settled the $375 million ASR and received an additional 1.3 million shares of common stock in addition to the minimum shares already received, which represented a weighted average share price of approximately $36.80 for the transaction period. The counterparty designated July 25, 2012 as the accelerated termination date, at which time the Company settled the $200 million ASR and received an additional 0.7 million shares of common stock in addition to the minimum shares already received, which represented a weighted average share price of approximately $36.12 for the transaction period.

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LEGAL PROCEEDINGS
6 Months Ended
Dec. 23, 2012
LEGAL PROCEEDINGS

NOTE 18 — LEGAL PROCEEDINGS

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. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company believes that the amount of any such additional loss would be immaterial to the Company’s business, financial condition, and results of operations.

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EQUITY-BASED COMPENSATION PLANS (Tables)
6 Months Ended
Dec. 23, 2012
Recognized or Realized Equity Based Compensation Expenses and Benefits

The Company recognized the following equity-based compensation expense and related income tax benefit in the Condensed Consolidated Statements of Operations:

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in millions)  

Equity-based compensation expense

   $ 24.0       $ 18.2       $ 48.4       $ 36.0   

Income tax benefit related to equity-based compensation expense

   $ 3.3       $ 2.1       $ 9.0       $ 4.8   
Summary of Stock Option Activity

A summary of stock option activity under the Plans as of December 23, 2012 and changes during the six months then ended is presented below:

 

Options

   Shares
(in thousands)
    Weighted-
Average
Exercise Price
     Weighted-Average
Remaining
Contractual Term

(years)
     Aggregate Intrinsic
Value as of

December 23, 2012
(in thousands)
 

Outstanding at June 24, 2012

     3,902      $ 25.14         4.79      

Exercised

     (342   $ 22.04         

Forfeited or expired

     (32   $ 24.37         
  

 

 

         

Outstanding at December 23, 2012

     3,528      $ 25.45         4.38       $ 38,111   
  

 

 

         

Exercisable at December 23, 2012

     2,999      $ 25.25         3.80       $ 32,982   
  

 

 

         
Summary of Restricted Stock Units

A summary of the Company’s RSUs as of December 23, 2012 and changes during the six months then ended is presented below:

 

     Shares     Average Grant-  

Unvested Restricted Stock Units

   (in thousands)     Date Fair Value  

Unvested at June 24, 2012

     4,331      $ 41.01   

Granted

     1,612      $ 35.01   

Vested

     (987   $ 40.46   

Forfeited

     (115   $ 39.96   
  

 

 

   

Unvested at December 23, 2012

     4,841      $ 39.13   
  

 

 

   
Schedule Of ESPP Weighted-Average Assumptions

Purchase rights under the 1999 ESPP were valued using the Black-Scholes model assuming no expected dividends and the following weighted-average assumptions for the six months ended December 23, 2012:

 

     Six Months Ended  
     December 23,  
     2012  

Expected term (years)

     0.7   

Expected stock price volatility

     33.26

Risk-free interest rate

     0.16
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FINANCIAL INSTRUMENTS (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis:

 

            Fair Value Measurement at December 23, 2012  
            Quoted Prices in             Significant  
            Active Markets for      Significant Other      Unobservable  
            Identical Assets      Observable Inputs      Inputs  
     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Assets

           

Short-Term Investments

           

Money Market Funds

   $ 884,982       $ 884,982       $ —         $ —     

Municipal Notes and Bonds

     270,486         —           270,486         —     

US Treasury and Agencies

     177,584         173,974         3,610         —     

Government-Sponsored Enterprises

     94,120         —           94,120         —     

Foreign Government Bonds

     20,568         —           20,568         —     

Corporate Notes and Bonds

     805,112         164,885         640,227         —     

Mortgage Backed Securities—Residential

     32,608         —           32,608         —     

Mortgage Backed Securities—Commercial

     96,405         —           96,405         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Short-Term Investments

   $ 2,381,865       $ 1,223,841       $ 1,158,024       $ —     

Equities

     4,545         4,545         —           —     

Mutual Funds

     20,940         20,940         —           —     

Derivative Assets

     3,645         —           3,645         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,410,995       $ 1,249,326       $ 1,161,669       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Derivative Liabilities

   $ 715       $ —         $ 465       $ 250   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis:

 

            Fair Value Measurement at June 24, 2012  
     Total      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 
     (In thousands)  

Assets

           

Short-Term Investments

           

Money Market Funds

   $ 1,318,812       $ 1,318,812       $ —         $ —     

Municipal Notes and Bonds

     322,567         —           322,567         —     

US Treasury and Agencies

     137,446         130,624         6,822         —     

Government-Sponsored Enterprises

     123,268         —           123,268         —     

Foreign Government Bond

     6,358         —           6,358         —     

Corporate Notes and Bonds

     768,901         164,885         604,016         —     

Mortgage Backed Securities—Residential

     25,972         —           25,972         —     

Mortgage Backed Securities—Commercial

     84,853         —           84,853         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Short-Term Investments

   $ 2,788,177       $ 1,614,321       $ 1,173,856       $ —     

Equities

     5,913         5,913         —           —     

Mutual Funds

     17,754         17,754         —           —     

Derivative Assets

     5,020         —           5,020         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,816,864       $ 1,637,988       $ 1,178,876       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Derivative Liabilities

   $ 4,529       $ —         $ 4,328       $ 201   
  

 

 

    

 

 

    

 

 

    

 

 

 
Schedule Of Assets And Liabilities Measured At Fair Value As Reported In Consolidated Balance Sheet

The amounts in the table above are reported in the Consolidated Balance Sheet as of December 23, 2012 as follows:

 

     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Reported Within:

           

Cash Equivalents

   $ 886,482       $ 884,982       $ 1,500       $ —     

Short-Term Investments

     1,330,498         173,974         1,156,524         —     

Restricted Cash and Investments

     164,885         164,885         —           —     

Prepaid Expenses and Other Current Assets

     3,645         —           3,645         —     

Other Assets

     25,485         25,485         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,410,995       $ 1,249,326       $ 1,161,669       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Accrued Expenses and Other Current Liabilities

   $ 465       $ —         $ 465       $ —     

Other Non-current Liabilities

     250         —           —           250   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities

   $ 715       $ —         $ 465       $ 250   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The amounts in the table above are reported in the Consolidated Balance Sheet as of June 24, 2012 as follows:

 

     Total      (Level 1)      (Level 2)      (Level 3)  
     (In thousands)  

Reported Within:

           

Cash Equivalents

   $ 1,325,361       $ 1,318,812       $ 6,549       $ —     

Short-Term Investments

     1,297,931         130,624         1,167,307         —     

Restricted Cash and Investments

     164,885         164,885         —           —     

Prepaid Expenses and Other Current Assets

     5,020         —           5,020         —     

Other Assets

     23,667         23,667         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,816,864       $ 1,637,988       $ 1,178,876       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Accrued Expenses and Other Current Liabilities

   $ 4,328       $ —         $ 4,328       $ —     

Other Non-current Liabilities

     201         —           —           201   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities

   $ 4,529       $ —         $ 4,328       $ 201   
  

 

 

    

 

 

    

 

 

    

 

 

 
Summary of Investment

The following tables summarize the Company’s investments (in thousands):

 

    December 23, 2012     June 24, 2012  
    Cost     Unrealized
Gain
    Unrealized
(Loss)
    Fair Value     Cost     Unrealized
Gain
    Unrealized
(Loss)
    Fair Value  

Cash

  $ 304,988      $ —        $ —        $ 304,988      $ 240,841      $ —        $ —        $ 240,841   

Fixed Income Money Market Funds

    884,982        —          —          884,982        1,318,812        —          —          1,318,812   

Municipal Notes and Bonds

    269,347        1,185        (46     270,486        321,001        1,574        (8     322,567   

US Treasury and Agencies

    177,520        92        (28     177,584        137,516        43        (113     137,446   

Government-Sponsored Enterprises

    93,953        169        (2     94,120        123,269        67        (68     123,268   

Foreign Government Bonds

    20,470        103        (5     20,568        6,315        43        —          6,358   

Corporate Notes and Bonds

    802,788        2,603        (279     805,112        767,847        1,443        (389     768,901   

Mortgage Backed Securities—Residential

    32,558        107        (57     32,608        25,857        121        (6     25,972   

Mortgage Backed Securities—Commercial

    96,118        673        (386     96,405        84,682        555        (384     84,853   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Cash and Short -Term Investments

  $ 2,682,724      $ 4,932      $ (803   $ 2,686,853      $ 3,026,140      $ 3,846      $ (968   $ 3,029,018   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Publicly Traded Equity Security

  $ 9,321      $ —        $ (4,776   $ 4,545      $ 9,320      $ —        $ (3,407   $ 5,913   

Private Equity Security

    5,000        —          —          5,000        5,000        —          —          5,000   

Mutual Funds

    19,635        1,305        —          20,940        17,459        366        (71     17,754   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Financial Instruments

  $ 2,716,680      $ 6,237      $ (5,579   $ 2,717,338      $ 3,057,919      $ 4,212      $ (4,446   $ 3,057,685   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reported Within

               

Cash and Cash Equivalents

  $ 1,190,189      $ —        $ —        $ 1,190,189      $ 1,564,752      $ —        $ —        $ 1,564,752   

Short-Term Investments

    1,326,369        4,932        (803     1,330,498        1,295,053        3,846        (968     1,297,931   

Restricted Cash and Investments

    166,166        —          —          166,166        166,335        —          —          166,335   

Other assets

    33,956        1,305        (4,776     30,485        31,779        366        (3,478     28,667   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,716,680      $ 6,237      $ (5,579   $ 2,717,338      $ 3,057,919      $ 4,212      $ (4,446   $ 3,057,685   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Schedule Of Fixed Income Securities In Unrealized Loss Positions

The following is an analysis of the Company’s fixed income securities in unrealized loss positions (in thousands):

 

     December 23, 2012  
     Unrealized Losses     Unrealized Losses               
     Less Than 12 Months     12 Months or Greater     Total  
     Fair Value      Gross
Unrealized
Loss
    Fair Value      Gross
Unrealized
Loss
    Fair Value      Gross
Unrealized
Loss
 

Short-Term Investments

               

Municipal Notes and Bonds

   $ 39,212       $ (46   $ —         $ —        $ 39,212       $ (46

US Treasury and Agencies

     33,860         (28     —           —          33,860         (28

Government-Sponsored Enterprises

     3,513         (2     —           —          3,513         (2

Foreign Government Bonds

     7,601         (5     —           —          7,601         (5

Corporate Notes and Bonds

     184,816         (279     295         —          185,111         (279

Mortgage Backed Securities—Residential

     3,746         (57     —           —          3,746         (57

Mortgage Backed Securities—Commercial

     53,576         (348     2,056         (38     55,632         (386
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Short-Term Investments

   $ 326,324       $ (765   $ 2,351       $ (38   $ 328,675       $ (803
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
Schedule Of Amortized Cost And Fair Value Of Cash Equivalents, Short-Term Investments, And Restricted Cash And Investments With Contractual Maturities

The amortized cost and fair value of cash equivalents, short-term investments, and restricted cash and investments with contractual maturities are as follows as of December 23, 2012:

 

     Cost      Estimated Fair
Value
 
     (in thousands)  

Due in one year or less

   $ 1,299,524       $ 1,299,915   

Due after one year through five years

     905,888         909,053   

Due in more than five years

     172,324         172,897   
  

 

 

    

 

 

 
   $ 2,377,736       $ 2,381,865   
  

 

 

    

 

 

 
Schedule Of Outstanding Foreign Currency Forward Contracts

As of December 23, 2012, the Company had the following outstanding foreign currency forward contracts that were entered into under its cash flow and balance sheet hedge program:

 

     Derivatives Designated as
Hedging Instruments:
     Derivatives Not Designated as
Hedging Instruments:
 
     (in thousands)  
     Buy Contracts      Sell Contracts      Buy Contracts      Sell Contracts  

Foreign Currency Forward Contracts

           

Japanese Yen

   $ —         $ 47,126       $ —         $ 42,593   

Swiss Francs

     —           —           16,159         —     

British Pound Sterling

     —           —           4,614         —     

Euro

     60,477         —           782         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 60,477       $ 47,126       $ 21,555       $ 42,593   
  

 

 

    

 

 

    

 

 

    

 

 

 
Schedule Of Fair Value Of Derivatives Instruments

The fair value of derivative instruments in the Company’s Consolidated Balance Sheet as of December 23, 2012 was as follows:

 

     Fair Value of Derivative Instruments  
     Asset Derivatives      Liability Derivatives  
     Balance Sheet
Location
     Fair Value      Balance Sheet
Location
     Fair Value  
     (in thousands)  

Derivatives designated as hedging instruments:

           

Foreign exchange forward contracts

    
 
Prepaid expense
and other assets
  
  
   $ 3,458         Accrued liabilities       $ 70   

Derivatives not designated as hedging instruments:

           

Foreign exchange forward contracts

    
 
Prepaid expense
and other assets
  
  
   $ 187         Accrued liabilities       $ 395   
     

 

 

       

 

 

 

Total derivatives

      $ 3,645          $ 465   
     

 

 

       

 

 

 

 

The fair value of derivative instruments in the Company’s Consolidated Balance Sheet as of June 24, 2012 was as follows:

 

    Fair Value of Derivative Instruments  
    Asset Derivatives     Liability Derivatives  
    Balance Sheet
Location
    Fair Value     Balance Sheet
Location
    Fair Value  
    (in thousands)  

Derivatives designated as hedging instruments:

       

Foreign exchange forward contracts

   
 
Prepaid expense
and other assets
  
  
  $ 3,358        Accrued liabilities      $ 3,403   

Derivatives not designated as hedging instruments:

       

Foreign exchange forward contracts

   
 
Prepaid expense
and other assets
  
  
  $ 1,662        Accrued liabilities      $ 925   
   

 

 

     

 

 

 

Total derivatives

    $ 5,020        $ 4,328   
   

 

 

     

 

 

 
Schedule Of Derivative Instruments In Statements Of Operations

The effect of derivative instruments designated as cash flow hedges on the Company’s Consolidated Statements of Operations was as follows:

 

    Three Months Ended December 23, 2012     Six Months Ended December 23, 2012  
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
 
    (in thousands)  

Derivatives Designated as Hedging Instruments:

               

Foreign exchange forward contracts

  $ 2,347      $ (363   $ 8      $ (26   $ 1,628      $ (2,289   $      $ (47

 

    Three Months Ended December 25, 2011     Six Months Ended December 25, 2011  
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
    Gain (Loss)
Recognized
(Effective
Portion) (1)
    Gain (Loss)
Recognized
(Effective
Portion) (2)
    Gain (Loss)
Recognized
(Ineffective
Portion) (3)
    Gain (Loss)
Recognized
(Excluded from
Effectiveness
Testing) (4)
 
    (in thousands)  

Derivatives Designated as Hedging Instruments:

               

Foreign exchange forward contracts

  $ (3,581   $ (2,906   $ (1   $ 223      $ (11,793   $ (5,513   $ (2   $ 754   

 

(1) Amount recognized in other comprehensive income (loss) (effective portion).
(2) Amount of gain (loss) reclassified from accumulated other comprehensive income into income (loss) (effective portion) located in revenue.
(3) Amount of gain (loss) recognized in income on derivative (ineffective portion) located in other expense, net.
(4) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) located in other expense, net.

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

 

     Three Months Ended     Six Months Ended  
     December 23,
2012
     December 25,
2011
    December 23,
2012
     December 25,
2011
 
     Gain (Loss)
Recognized (5)
     Gain (Loss)
Recognized (5)
    Gain (Loss)
Recognized (5)
     Gain (Loss)
Recognized (5)
 
     (in thousands)  

Derivatives Not Designated as Hedging Instruments:

          

Foreign exchange forward contracts

   $ 5,667       $ (20,411   $ 286       $ (42,823

 

(5) Amount of gain (loss) recognized in income located in other income (expense), net.
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INVENTORIES (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Inventories

Inventories consist of the following:

 

     December 23,      June 24,  
     2012      2012  
     (in thousands)  

Raw materials

   $ 307,806       $ 342,283   

Work-in-process

     78,459         118,566   

Finished goods

     144,007         172,004   
  

 

 

    

 

 

 
   $ 530,272       $ 632,853   
  

 

 

    

 

 

 
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PROPERTY AND EQUIPMENT, NET (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Property And Equipment, Net

Property and equipment, net, consists of the following:

 

     December 23,     June 24,  
     2012     2012  
     (in thousands)  

Manufacturing, engineering and office equipment

   $ 487,647      $ 468,739   

Computer equipment and software

     111,255        104,919   

Land

     65,289        65,228   

Buildings

     238,581        231,536   

Leasehold improvements

     63,025        54,327   

Furniture and fixtures

     20,957        19,770   
  

 

 

   

 

 

 
     986,754        944,519   

Less: accumulated depreciation and amortization

     (396,207     (359,923
  

 

 

   

 

 

 
   $ 590,547      $ 584,596   
  

 

 

   

 

 

 
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GOODWILL AND INTANGIBLE ASSETS (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Intangible Assets

The following table provides details of the Company’s intangible assets, including the impact of foreign currency translation adjustments, as of December 23, 2012 (in thousands, except years):

 

     Gross      Accumulated
Amortization
    Net      Weighted-
Average Useful
Life (years)
 

Customer relationships

   $ 615,771       $ (67,568   $ 548,203         9.04   

Existing technology

     643,032         (94,079     548,953         6.97   

Patents

     32,053         (19,911     12,142         6.05   

Backlog

     10,000         (5,548     4,452         1.00   

Other intangible assets

     35,216         (34,765     451         4.10   
  

 

 

    

 

 

   

 

 

    

Intangible assets subject to amortization

     1,336,072         (221,871     1,114,201      

In process research and development

     30,000           30,000      

Development rights

     9,100           9,100      
  

 

 

      

 

 

    

Intangible assets not subject to amortization

     39,100           39,100      
  

 

 

    

 

 

   

 

 

    

Total intangible assets

   $ 1,375,172       $ (221,871   $ 1,153,301      
  

 

 

    

 

 

   

 

 

    

 

The following table provides details of the Company’s intangible assets, including the impact of foreign currency translation adjustments, as of June 24, 2012 (in thousands, except years):

 

     Gross      Accumulated
Amortization
    Net      Weighted-
Average Useful
Life (years)
 

Customer relationships

   $ 615,411       $ (32,041   $ 583,370         9.04   

Existing technology

     642,311         (48,378     593,933         6.97   

Patents

     30,870         (17,525     13,345         6.05   

Backlog

     10,000         (548     9,452         1.00   

Other intangible assets

     35,216         (33,989     1,227         4.10   
  

 

 

    

 

 

   

 

 

    

Intangible assets subject to amortization

     1,333,808         (132,481     1,201,327      

In process research and development

     30,000           30,000      

Development rights

     9,100           9,100      
  

 

 

      

 

 

    

Intangible assets not subject to amortization

     39,100           39,100      
  

 

 

    

 

 

   

 

 

    

Total intangible assets

   $ 1,372,908       $ (132,481   $ 1,240,427      
  

 

 

    

 

 

   

 

 

    
Estimated Future Amortization Expense Of Purchased Intangible Assets

The estimated future amortization expense of purchased intangible assets as of December 23, 2012 is as follows (in thousands):

 

Fiscal Year

   Amount  

2013 (6 months)

   $ 87,174   

2014

     161,136   

2015

     152,897   

2016

     151,074   

2017

     150,844   

Thereafter

     411,076   
  

 

 

 
   $ 1,114,201   
  

 

 

 
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Accrued Expenses And Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

 

     December 23,      June 24,  
     2012      2012  
     (in thousands)  

Accrued compensation

   $ 305,747       $ 274,165   

Warranty reserves

     56,191         63,988   

Income and other taxes payable

     17,954         24,745   

Other

     118,895         129,280   
  

 

 

    

 

 

 
   $ 498,787       $ 492,178   
  

 

 

    

 

 

 
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OTHER EXPENSE, NET (Tables)
6 Months Ended
Dec. 23, 2012
Components Of Other Expense, Net

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

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
     (in thousands)  

Interest income

   $ 4,376      $ 2,472      $ 8,176      $ 5,061   

Interest expense

     (14,975     (9,346     (30,119     (18,606

Gains (losses) on deferred compensation plan related assets

     1,234        (348     3,975        (2,213

Foreign exchange losses

     (3,274     (142     (3,642     (1,232

Other, net

     (751     (421     (1,718     (2,868
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (13,390   $ (7,785   $ (23,328   $ (19,858
  

 

 

   

 

 

   

 

 

   

 

 

 
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INCOME TAX EXPENSE (Tables)
6 Months Ended
Dec. 23, 2012
Total Gross Unrecognized Tax Benefits

The total gross unrecognized tax benefits as of each date noted below were as follows:

 

     December 23,      June 24,  
     2012      2012  
     (in millions)  

Total gross unrecognized tax benefits

   $ 333.9       $ 343.8   
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NET INCOME PER SHARE (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Numerators And Denominators Of Basic And Diluted Computations For Net Income Per Share

The following table reconciles the numerators and denominators of the basic and diluted computations for net income per share.

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in thousands, except per share data)  

Numerator:

           

Net income

   $ 6,408       $ 33,212       $ 9,176       $ 105,050   
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Basic average shares outstanding

     170,699         119,739         175,314         121,435   

Effect of potential dilutive securities:

           

Employee stock plans

     2,328         1,134         2,176         947   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted average shares outstanding

     173,027         120,873         177,490         122,382   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share—basic

   $ 0.04       $ 0.28       $ 0.05       $ 0.87   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share—diluted

   $ 0.04       $ 0.27       $ 0.05       $ 0.86   
  

 

 

    

 

 

    

 

 

    

 

 

 
Schedule Of Potentially Dilutive Securities Excluded From EPS Calculations

The following potentially dilutive securities were excluded:

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in thousands)  

Number of potential dilutive securities excluded

     1,543         90         1,551         841   
  

 

 

    

 

 

    

 

 

    

 

 

 
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Accumulated Other Comprehensive Loss

The balance of accumulated other comprehensive loss, on an after-tax basis where applicable, is as follows:

 

     December 23,     June 24,  
     2012     2012  
     (in thousands)  

Accumulated foreign currency translation adjustment

   $ (17,637   $ (22,481

Accumulated unrealized gain (loss) on cash flow hedges

     3,705        (212

Accumulated unrealized gain (loss) on available-for-sale investments

     (58     (308

Unrealized components of post retirement benefit plan

     (10,494     (10,817
  

 

 

   

 

 

 

Accumulated other comprehensive loss

   $ (24,484   $ (33,818
  

 

 

   

 

 

 
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LONG TERM DEBT (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Carrying Value Of Convertible Notes And Other Long-Term Debt

The following table reflects the carrying value of the Company’s convertible notes and other long-term debt as of December 23, 2012 and June 24, 2012:

 

     December 23,     June 24,  
     2012     2012  
     (in millions)  

0.50% Notes due 2016

   $ 450.0      $ 450.0   

Less: Unamortized interest discount

     (53.1     (60.3
  

 

 

   

 

 

 

Net carrying amount of 0.50% Notes due 2016

     396.9        389.7   
  

 

 

   

 

 

 

1.25% Notes due 2018

     450.0        450.0   

Less: Unamortized interest discount

     (83.7     (90.4
  

 

 

   

 

 

 

Net carrying amount of 1.25% Notes due 2018

     366.3        359.6   
  

 

 

   

 

 

 

2.625% Notes due 2041

     699.9        699.9   

Less: Unamortized interest discount

     (188.6     (190.3
  

 

 

   

 

 

 

Net carrying amount of 2.625% Notes due 2041

     511.3        509.6   
  

 

 

   

 

 

 

Total debt

     1,274.5        1,258.9   
  

 

 

   

 

 

 

Less: current portion of debt

     —          (509.6
  

 

 

   

 

 

 

Long-term debt

   $ 1,274.5      $ 749.3   
  

 

 

   

 

 

 
Schedule Of Recognized Interest Cost Relating To Both Contractual Interest Coupon And Amortization Of The Discount On The Liability Component Of The Notes

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the discount on the liability component of the Notes during the three and six months ended December 23, 2012 and December 25, 2011.

 

     Three Months Ended      Six Months Ended  
     December 23,      December 25,      December 23,      December 25,  
     2012      2011      2012      2011  
     (in millions)  

Contractual interest coupon

   $ 6.6       $ 1.9         13.1         3.9   

Amortization of interest discount

     7.8         6.7         15.6         13.3   

Amortization of issuance costs

     0.6         0.6         1.2         1.2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest cost recognized

   $ 15.0       $ 9.2       $ 29.9       $ 18.4   
  

 

 

    

 

 

    

 

 

    

 

 

 
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COMMITMENTS (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Contractual Cash Obligations Relating To Capital Leases

The Company’s contractual cash obligations relating to its existing capital leases, including interest, as of December 23, 2012 were as follows:

 

     Capital  
     Leases  
     (in thousands)  

Payments due by period:

  

One year

   $ 1,685   

Two years

     1,565   

Three years

     1,497   

Four years

     9,636   

Five years

     —     

Over 5 years

     —     
  

 

 

 

Total

     14,383   

Less: Interest on capital leases

     649   
  

 

 

 

Less: Current portion of capital leases

     1,464   
  

 

 

 

Long-tern portion of capital leases

   $ 12,270   
  

 

 

 
Schedule Of Changes In Product Warranty Reserves

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

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
     (in thousands)  

Balance at beginning of period

   $ 67,836      $ 36,160      $ 70,161      $ 40,951   

Warranties issued during the period

     14,856        8,421        34,548        16,353   

Settlements made during the period

     (21,484     (11,925     (45,859     (23,146

Changes in liability for pre-existing warranties

     1,714        78        4,072        (1,424
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 62,922      $ 32,734      $ 62,922      $ 32,734   
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: Long-term portion

     (6,731     —          (6,731     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Accrued warranty, curent

   $ 56,191      $ 32,734      $ 56,191      $ 32,734   
  

 

 

   

 

 

   

 

 

   

 

 

 
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RESTRUCTURING AND IMPAIRMENTS (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Restructuring And Asset Impairment Charges And Reversals

The following table summarizes restructuring and impairment charges and adjustments during the three and six months ended December 23, 2012 and December 25, 2011. In addition to charges incurred under specific restructuring plans, the Company incurred asset impairment charges of $1.7 million related to a decline in the market value of certain facilities.

 

     Three Months Ended     Six Months Ended  
     December 23,     December 25,     December 23,     December 25,  
     2012     2011     2012     2011  
                 (in thousands)  

June 2008 Plan

   $ —        $ (859   $ —        $ (859

March 2009 Plan

     (1,440     —          (1,440     —     

Adjustments to restructuring liability assumed in acquisition

     2,461        —          2,461        —     

Asset impairments outside of specific restructuring plans

     —          —          —          1,725   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total restructuring and impairment charges (adjustments)

   $ 1,021      $ (859   $ 1,021      $ 866   
  

 

 

   

 

 

   

 

 

   

 

 

 
Schedule Of Restructuring And Asset Impairment Charges Recorded In Consolidated Statements Of Operations

The amounts in the table above were recorded in the Consolidated Statements of Operations for the respective periods as follows:

 

     Three Months Ended     Six Months Ended  
     December 23,      December 25,     December 23,      December 25,  
     2012      2011     2012      2011  
                  (in thousands)  

Cost of goods sold

   $ —         $ (859   $ —         $ (859

Operating expense

     1,021         —          1,021         1,725   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total restructuring and impairment charges (adjustments)

   $ 1,021       $ (859   $ 1,021       $ 866   
  

 

 

    

 

 

   

 

 

    

 

 

 
March 2009 Plan
Schedule of Restructuring Reserve

Below is a table summarizing activity relating to the March 2009 Plan during the six months ended December 23, 2012:

 

     Facilities  
     (in thousands)  

Balance at June 24, 2012

   $ 27,749   

Fiscal year 2013 release

     (1,440
  

 

 

 

Balance at December 23, 2012

   $ 26,309   
  

 

 

 
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BUSINESS COMBINATIONS (Tables)
6 Months Ended
Dec. 23, 2012
Consideration Transferred to Acquire Novellus

The table below details the consideration transferred to acquire Novellus:

 

     Conversion      Estimated  

(in thousands, except per share amounts)

   Calculation      Fair Value  

Lam common stock issued at merger

     82,689      

Per share price of Lam common stock as of June 4, 2012

   $ 35.99       $ 2,975,977   
  

 

 

    

Estimated fair value of vested Lam equivalent restricted stock (1)

      $ 9,599   

Estimated fair value of vested Lam equivalent stock options (2)

        41,412   
     

 

 

 

Estimated purchase price consideration

      $ 3,026,988   
     

 

 

 

 

(1) The fair value of Lam Research equivalent restricted stock as of the acquisition date was estimated based upon the per share price of Lam Research common stock as of June 4, 2012, and giving effect to the exchange ratio of 1.125.
(2) The fair value of the Lam Research equivalent stock options as of the acquisition date was estimated using the Black-Scholes valuation model. Assumptions used are the same as those for acquired awards as disclosed in Note 11 of Notes to Condensed Consolidated Financial Statements.
Summary of Assets Acquired and Liabilities Assumed

The following table summarizes the assets acquired and liabilities assumed as of the acquisition date:

 

     June 4, 2012  
     (in thousands)  

Cash and investments

   $ 1,059,859   

Accounts receivable

     241,924   

Inventory

     309,213   

Other current assets

     56,314   

Property and equipment

     289,126   

Intangible assets

     1,219,100   

Goodwill

     1,277,121   

Other long-term assets

     35,826   
  

 

 

 

Total assets acquired

     4,488,483   

Accounts payable

     (83,028

Accrued expenses and other current liabilities

     (196,677

Deferred revenue

     (20,388

Debt

     (509,805

Other long-term liabilities

     (323,471

Convertible notes—equity component

     (328,126
  

 

 

 

Net assets acquired

   $ 3,026,988   
  

 

 

 
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STOCK REPURCHASE PROGRAM (Tables)
6 Months Ended
Dec. 23, 2012
Schedule Of Repurchases Under Repurchase Program

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

 

Period

   Total Number of
Shares
Repurchased
     Total Cost of
Repurchase
     Average Price Paid
Per Share*
     Amount Available
Under Repurchase
Program
 
     (in thousands, except per share data)  

Available balance as of June 24, 2012

            $ 911,933   

Quarter ended September 23, 2012

     11,970       $ 344,001       $ 34.79       $ 567,932   

Quarter ended December 23, 2012

     10,190         354,029       $ 34.74         213,903   

 

* Average price paid per share excludes accelerated share repurchases for which cost was incurred in fiscal year 2012, but shares were received in fiscal year 2013. See Collared Accelerated Share Repurchases section below for details regarding average price associated with these transactions.
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Equity Based Compensation Plans - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and RSUs issued and outstanding under stock plans 8,369,202 8,369,202
Shares available for future issuance under stock incentive plan and Novellus System 14,351,909 14,351,909
The total intrinsic value of options exercised $ 4.1 $ 0.9 $ 4.7 $ 1.1
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock units vesting period, years 3
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining period for recognition, years 8 months
Unrecognized compensation expense 5.8 5.8
Number of shares available for purchase under ESPP 10,304,484 10,304,484
ESPP purchase price per share as percentage of fair market value 85.00%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, stock option 7.2 7.2
Weighted average remaining period for recognition, years 1 year 8 months 12 days
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining period for recognition, years 2 years 1 month 6 days
Unrecognized compensation expense $ 131.8 $ 131.8
Novellus Systems Incorporated
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and restricted stock units vesting period, years 4
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Schedule of Recognized Equity Based Compensation Expense and Related Income Tax Benefit (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense $ 24 $ 18.2 $ 48.4 $ 36
Income tax benefit related to equity-based compensation expense $ 3.3 $ 2.1 $ 9 $ 4.8
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Summary of Stock Option Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended 12 Months Ended
Dec. 23, 2012
Jun. 24, 2012
Options Outstanding Number of Shares
Beginning balance 3,902
Exercised (342)
Forfeited or expired (32)
Ending balance 3,528 3,902
Exercisable at December 23, 2012 2,999
Weighted-Average Exercise Price
Beginning balance $ 25.14
Exercised $ 22.04
Forfeited or expired $ 24.37
Ending balance $ 25.45 $ 25.14
Exercisable at December 23, 2012 $ 25.25
Weighted-Average Remaining Contractual Term (in years)
Outstanding at June 24, 2012 4 years 4 months 17 days 4 years 9 months 15 days
Outstanding at December 23, 2012 4 years 4 months 17 days 4 years 9 months 15 days
Exercisable at December 23, 2012 3 years 9 months 18 days
Aggregate Intrinsic Value
Outstanding at December 23, 2012 $ 38,111
Exercisable at December 23, 2012 $ 32,982
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Summary of Restricted Stock Units (Detail) (Restricted Stock Units (RSUs), USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Dec. 23, 2012
Restricted Stock Units (RSUs)
Unvested Restricted Stock Units
Beginning balance 4,331
Granted 1,612
Vested (987)
Forfeited (115)
Ending balance 4,841
Weighted-Average Grant Date Fair Value
Beginning of Period $ 41.01
Granted $ 35.01
Vested $ 40.46
Forfeited $ 39.96
Ending of Period $ 39.13
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Schedule of ESPP Weighted-Average Assumptions (Detail)
6 Months Ended
Dec. 23, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years) 8 months 12 days
Expected stock price volatility 33.26%
Risk-free interest rate 0.16%
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Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Financial Instruments [Line Items]
Fair value $ 1,330,498 $ 1,297,931
Derivative Assets 3,645 5,020
Total Assets 2,410,995 2,816,864
Derivative Liabilities 715 4,529
Money Market Funds
Financial Instruments [Line Items]
Fair value 884,982 1,318,812
Municipal Notes And Bonds
Financial Instruments [Line Items]
Fair value 270,486 322,567
US Treasury and Agencies
Financial Instruments [Line Items]
Fair value 177,584 137,446
Government-Sponsored Enterprises
Financial Instruments [Line Items]
Fair value 94,120 123,268
Foreign Government Debt Securities
Financial Instruments [Line Items]
Fair value 20,568 6,358
Corporate Notes And Bonds
Financial Instruments [Line Items]
Fair value 805,112 768,901
Mortgage Backed Securities- Residential
Financial Instruments [Line Items]
Fair value 32,608 25,972
Mortgage Backed Securities - Commercial
Financial Instruments [Line Items]
Fair value 96,405 84,853
Total Short Term Investments
Financial Instruments [Line Items]
Fair value 2,381,865 2,788,177
Publicly Traded Equity Securities
Financial Instruments [Line Items]
Fair value 4,545 5,913
Mutual Funds
Financial Instruments [Line Items]
Fair value 20,940 17,754
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Instruments [Line Items]
Fair value 173,974 130,624
Total Assets 1,249,326 1,637,988
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money Market Funds
Financial Instruments [Line Items]
Fair value 884,982 1,318,812
Quoted Prices in Active Markets for Identical Assets (Level 1) | US Treasury and Agencies
Financial Instruments [Line Items]
Fair value 173,974 130,624
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Notes And Bonds
Financial Instruments [Line Items]
Fair value 164,885 164,885
Quoted Prices in Active Markets for Identical Assets (Level 1) | Total Short Term Investments
Financial Instruments [Line Items]
Fair value 1,223,841 1,614,321
Quoted Prices in Active Markets for Identical Assets (Level 1) | Publicly Traded Equity Securities
Financial Instruments [Line Items]
Fair value 4,545 5,913
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual Funds
Financial Instruments [Line Items]
Fair value 20,940 17,754
Significant Other Observable Inputs (Level 2)
Financial Instruments [Line Items]
Fair value 1,156,524 1,167,307
Derivative Assets 3,645 5,020
Total Assets 1,161,669 1,178,876
Derivative Liabilities 465 4,328
Significant Other Observable Inputs (Level 2) | Municipal Notes And Bonds
Financial Instruments [Line Items]
Fair value 270,486 322,567
Significant Other Observable Inputs (Level 2) | US Treasury and Agencies
Financial Instruments [Line Items]
Fair value 3,610 6,822
Significant Other Observable Inputs (Level 2) | Government-Sponsored Enterprises
Financial Instruments [Line Items]
Fair value 94,120 123,268
Significant Other Observable Inputs (Level 2) | Foreign Government Debt Securities
Financial Instruments [Line Items]
Fair value 20,568 6,358
Significant Other Observable Inputs (Level 2) | Corporate Notes And Bonds
Financial Instruments [Line Items]
Fair value 640,227 604,016
Significant Other Observable Inputs (Level 2) | Mortgage Backed Securities- Residential
Financial Instruments [Line Items]
Fair value 32,608 25,972
Significant Other Observable Inputs (Level 2) | Mortgage Backed Securities - Commercial
Financial Instruments [Line Items]
Fair value 96,405 84,853
Significant Other Observable Inputs (Level 2) | Total Short Term Investments
Financial Instruments [Line Items]
Fair value 1,158,024 1,173,856
Significant Unobservable Inputs (Level 3)
Financial Instruments [Line Items]
Derivative Liabilities $ 250 $ 201
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Schedule of Assets and Liabilities Measured at Fair Value as Reported in Consolidated Balance Sheet (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Financial Instruments [Line Items]
Cash Equivalents $ 886,482 $ 1,325,361
Short-Term Investments 1,330,498 1,297,931
Restricted Cash and Investments 164,885 164,885
Prepaid Expenses and Other Current Assets 3,645 5,020
Other Assets 25,485 23,667
Total Assets 2,410,995 2,816,864
Accrued Expenses and Other Current Liabilities 465 4,328
Other Non-current Liabilities 250 201
Total Liabilities 715 4,529
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Instruments [Line Items]
Cash Equivalents 884,982 1,318,812
Short-Term Investments 173,974 130,624
Restricted Cash and Investments 164,885 164,885
Other Assets 25,485 23,667
Total Assets 1,249,326 1,637,988
Significant Other Observable Inputs (Level 2)
Financial Instruments [Line Items]
Cash Equivalents 1,500 6,549
Short-Term Investments 1,156,524 1,167,307
Prepaid Expenses and Other Current Assets 3,645 5,020
Total Assets 1,161,669 1,178,876
Accrued Expenses and Other Current Liabilities 465 4,328
Total Liabilities 465 4,328
Significant Unobservable Inputs (Level 3)
Financial Instruments [Line Items]
Other Non-current Liabilities 250 201
Total Liabilities $ 250 $ 201
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Summary of Investments (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Financial Instruments [Line Items]
Fair Value $ 1,330,498 $ 1,297,931
Cash
Financial Instruments [Line Items]
Cost 304,988 240,841
Fair Value 304,988 240,841
Fixed Income Money Market Funds
Financial Instruments [Line Items]
Cost 884,982 1,318,812
Fair Value 884,982 1,318,812
Municipal Notes And Bonds
Financial Instruments [Line Items]
Cost 269,347 321,001
Unrealized Gain 1,185 1,574
Unrealized (Loss) (46) (8)
Fair Value 270,486 322,567
US Treasury and Agencies
Financial Instruments [Line Items]
Cost 177,520 137,516
Unrealized Gain 92 43
Unrealized (Loss) (28) (113)
Fair Value 177,584 137,446
Government-Sponsored Enterprises
Financial Instruments [Line Items]
Cost 93,953 123,269
Unrealized Gain 169 67
Unrealized (Loss) (2) (68)
Fair Value 94,120 123,268
Foreign Governments Bonds
Financial Instruments [Line Items]
Cost 20,470 6,315
Unrealized Gain 103 43
Unrealized (Loss) (5)
Fair Value 20,568 6,358
Corporate Notes And Bonds
Financial Instruments [Line Items]
Cost 802,788 767,847
Unrealized Gain 2,603 1,443
Unrealized (Loss) (279) (389)
Fair Value 805,112 768,901
Mortgage Backed Securities- Residential
Financial Instruments [Line Items]
Cost 32,558 25,857
Unrealized Gain 107 121
Unrealized (Loss) (57) (6)
Fair Value 32,608 25,972
Mortgage Backed Securities - Commercial
Financial Instruments [Line Items]
Cost 96,118 84,682
Unrealized Gain 673 555
Unrealized (Loss) (386) (384)
Fair Value 96,405 84,853
Total Cash And Short Term Investments
Financial Instruments [Line Items]
Cost 2,682,724 3,026,140
Unrealized Gain 4,932 3,846
Unrealized (Loss) (803) (968)
Fair Value 2,686,853 3,029,018
Publicly Traded Equity Securities
Financial Instruments [Line Items]
Cost 9,321 9,320
Unrealized (Loss) (4,776) (3,407)
Fair Value 4,545 5,913
Private Equity Securities
Financial Instruments [Line Items]
Cost 5,000 5,000
Fair Value 5,000 5,000
Mutual Funds
Financial Instruments [Line Items]
Cost 19,635 17,459
Unrealized Gain 1,305 366
Unrealized (Loss) (71)
Fair Value 20,940 17,754
Total Financial Instruments
Financial Instruments [Line Items]
Cost 2,716,680 3,057,919
Unrealized Gain 6,237 4,212
Unrealized (Loss) (5,579) (4,446)
Fair Value 2,717,338 3,057,685
Cash and Cash Equivalents
Financial Instruments [Line Items]
Cost 1,190,189 1,564,752
Fair Value 1,190,189 1,564,752
Short-term Investments
Financial Instruments [Line Items]
Cost 1,326,369 1,295,053
Unrealized Gain 4,932 3,846
Unrealized (Loss) (803) (968)
Fair Value 1,330,498 1,297,931
Restricted Cash And Investments
Financial Instruments [Line Items]
Cost 166,166 166,335
Fair Value 166,166 166,335
Other Assets
Financial Instruments [Line Items]
Cost 33,956 31,779
Unrealized Gain 1,305 366
Unrealized (Loss) (4,776) (3,478)
Fair Value 30,485 28,667
Total
Financial Instruments [Line Items]
Cost 2,716,680 3,057,919
Unrealized Gain 6,237 4,212
Unrealized (Loss) (5,579) (4,446)
Fair Value $ 2,717,338 $ 3,057,685
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Financial Instruments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Financial Instruments [Line Items]
Other than temporary impairment included in net realized gains (losses) $ 1.7
Gains realized from sales of investments 0.9 0.1 1.1 0.2
Losses realized from sales of investments (0.3) (0.2) (0.7) (0.3)
Investment classified as short term, maturity period 1 year 1 year
Gains (losses) accumulated in Other Comprehensive Income expects to reclassify from Other Comprehensive Income into earnings $ 3.7 $ 3.7
Minimum
Financial Instruments [Line Items]
Foreign currency forward contract, expiration period 12 months 12 months
Maximum
Financial Instruments [Line Items]
Foreign currency forward contract, expiration period 24 months 24 months
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Schedule of Fixed Income Securities in Unrealized Loss Positions (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value $ 326,324
Unrealized Losses Less Than 12 Months - Unrealized (765)
Unrealized Losses 12 Months or Greater - Fair Value 2,351
Unrealized Losses 12 Months or Greater - Unrealized (38)
Total - Fair Value 328,675
Total - Unrealized (803)
Municipal Notes And Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 39,212
Unrealized Losses Less Than 12 Months - Unrealized (46)
Total - Fair Value 39,212
Total - Unrealized (46)
US Treasury and Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 33,860
Unrealized Losses Less Than 12 Months - Unrealized (28)
Total - Fair Value 33,860
Total - Unrealized (28)
Government-Sponsored Enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 3,513
Unrealized Losses Less Than 12 Months - Unrealized (2)
Total - Fair Value 3,513
Total - Unrealized (2)
Foreign Governments Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 7,601
Unrealized Losses Less Than 12 Months - Unrealized (5)
Total - Fair Value 7,601
Total - Unrealized (5)
Corporate Notes And Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 184,816
Unrealized Losses Less Than 12 Months - Unrealized (279)
Unrealized Losses 12 Months or Greater - Fair Value 295
Total - Fair Value 185,111
Total - Unrealized (279)
Mortgage Backed Securities- Residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 3,746
Unrealized Losses Less Than 12 Months - Unrealized (57)
Total - Fair Value 3,746
Total - Unrealized (57)
Mortgage Backed Securities - Commercial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized Losses Less Than 12 Months - Fair Value 53,576
Unrealized Losses Less Than 12 Months - Unrealized (348)
Unrealized Losses 12 Months or Greater - Fair Value 2,056
Unrealized Losses 12 Months or Greater - Unrealized (38)
Total - Fair Value 55,632
Total - Unrealized $ (386)
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Schedule of Amortized Cost and Fair Value of Cash Equivalents and Short Term Investments and Restricted Cash and Investments with Contractual Maturities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Due in less than one year, Cost $ 1,299,524
Due in less than one year, Estimated Fair Value 1,299,915
Due after one year through five years, Cost 905,888
Due after one year through five years, Estimated Fair Value 909,053
Due in more than five years, Cost 172,324
Due in more than five years, Estimated Fair Value 172,897
Cost 2,377,736
Estimated Fair Value 1,330,498 1,297,931
Total Short Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated Fair Value $ 2,381,865
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Schedule of Outstanding Foreign Currency Forward Contracts (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Buy Contracts
Derivative [Line Items]
Derivatives Designated as Hedging Instruments $ 60,477
Derivatives Not Designated as Hedging Instruments 21,555
Buy Contracts | Swiss Franc
Derivative [Line Items]
Derivatives Not Designated as Hedging Instruments 16,159
Buy Contracts | British Pound Sterling
Derivative [Line Items]
Derivatives Not Designated as Hedging Instruments 4,614
Buy Contracts | Euro
Derivative [Line Items]
Derivatives Designated as Hedging Instruments 60,477
Derivatives Not Designated as Hedging Instruments 782
Sell Contracts
Derivative [Line Items]
Derivatives Designated as Hedging Instruments 47,126
Derivatives Not Designated as Hedging Instruments 42,593
Sell Contracts | Japanese Yen
Derivative [Line Items]
Derivatives Designated as Hedging Instruments 47,126
Derivatives Not Designated as Hedging Instruments $ 42,593
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Schedule of Fair Value of Derivatives Instruments (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives, Fair Value $ 3,645 $ 5,020
Liability Derivatives, Fair Value 465 4,328
Derivatives Designated As Hedging Instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives, Fair Value 3,458 3,358
Liability Derivatives, Fair Value 70 3,403
Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives, Fair Value 187 1,662
Liability Derivatives, Fair Value $ 395 $ 925
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Schedule of Derivative Instruments Designated as Cash Flow Hedges in Statements of Operations (Detail) (Foreign Exchange Forward Contracts, USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Foreign Exchange Forward Contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (Loss) Recognized (Effective Portion) $ 2,347 [1] $ (3,581) [1] $ 1,628 [1] $ (11,793) [1]
Gain (Loss) Recognized (Effective Portion) (363) [2] (2,906) [2] (2,289) [2] (5,513) [2]
Gain (Loss) Recognized (Ineffective Portion) 8 [3] (1) [3] (2) [3]
Gain (Loss) Recognized (Excluded from Effectiveness Testing) (26) [4] 223 [4] (47) [4] 754 [4]
Gain (Loss) Recognized $ 5,667 [5] $ (20,411) [5] $ 286 [5] $ (42,823) [5]
[1] Amount recognized in other comprehensive income (loss) (effective portion).
[2] Amount of gain (loss) reclassified from accumulated other comprehensive income into income (loss) (effective portion) located in revenue.
[3] Amount of gain (loss) recognized in income on derivative (ineffective portion) located in other expense, net.
[4] Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) located in other expense, net.
[5] Amount of gain (loss) recognized in income located in other income (expense), net.
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Schedule of Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Schedule of Inventory [Line Items]
Raw materials $ 307,806 $ 342,283
Work-in-process 78,459 118,566
Finished goods 144,007 172,004
Total inventories $ 530,272 $ 632,853 [1]
[1] Derived from audited financial statements
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Inventories - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 23, 2012
Inventory Disclosure [Line Items]
Inventory Write-off $ 15.5 $ 18.7
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Schedule of Property and Equipment Net (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Property, Plant and Equipment [Line Items]
Manufacturing, engineering and office equipment $ 487,647 $ 468,739
Computer equipment and software 111,255 104,919
Land 65,289 65,228
Buildings 238,581 231,536
Leasehold improvements 63,025 54,327
Furniture and fixtures 20,957 19,770
Property and equipment, gross 986,754 944,519
Less: accumulated depreciation and amortization (396,207) (359,923)
Property and equipment, net $ 590,547 $ 584,596 [1]
[1] Derived from audited financial statements
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Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Jun. 24, 2012
Goodwill And Intangible Assets [Line Items]
Goodwill $ 1,454,920,000 $ 1,454,920,000 $ 1,446,303,000 [1]
Tax deductible goodwill 69,700,000 69,700,000
Intangible asset amortization expense $ 44,700,000 $ 4,500,000 $ 89,300,000 $ 9,000,000
[1] Derived from audited financial statements
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Schedule of Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Sep. 23, 2012
Jun. 24, 2012
Dec. 23, 2012
In Process Research And Development
Jun. 24, 2012
In Process Research And Development
Dec. 23, 2012
Developed Technology Rights
Jun. 24, 2012
Developed Technology Rights
Sep. 23, 2012
Customer Relationships
Jun. 24, 2012
Customer Relationships
Sep. 23, 2012
Existing Technology
Jun. 24, 2012
Existing Technology
Sep. 23, 2012
Patents
Jun. 24, 2012
Patents
Sep. 23, 2012
Backlog
Jun. 24, 2012
Backlog
Sep. 23, 2012
Other Intangible Assets
Jun. 24, 2012
Other Intangible Assets
Goodwill And Intangible Assets [Line Items]
Gross intangible assets subject to amortization $ 1,336,072 $ 1,333,808 $ 615,771 $ 615,411 $ 643,032 $ 642,311 $ 32,053 $ 30,870 $ 10,000 $ 10,000 $ 35,216 $ 35,216
Total gross intangible assets 1,375,172 1,372,908
Accumulated Amortization (221,871) (221,871) (132,481) (67,568) (32,041) (94,079) (48,378) (19,911) (17,525) (5,548) (548) (34,765) (33,989)
Net intangible assets subject to amortization 1,114,201 1,114,201 1,201,327 548,203 583,370 548,953 593,933 12,142 13,345 4,452 9,452 451 1,227
Intangible assets, net 1,153,301 1,240,427 [1]
Intangible assets not subject to amortization 39,100 39,100 30,000 30,000 9,100 9,100
Intangible assets not subject to amortization $ 39,100 $ 39,100 $ 30,000 $ 30,000 $ 9,100 $ 9,100
Weighted- Average Useful Life (years) 9 years 15 days 9 years 15 days 6 years 11 months 19 days 6 years 11 months 19 days 6 years 18 days 6 years 18 days 1 year 1 year 4 years 1 month 6 days 4 years 1 month 6 days
[1] Derived from audited financial statements
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Estimated Future Amortization Expense of Purchased Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Sep. 23, 2012
Jun. 24, 2012
Expected Amortization Expense [Line Items]
2013 (6 months) $ 87,174
2014 161,136
2015 152,897
2016 151,074
2017 150,844
Thereafter 411,076
Net intangible assets subject to amortization $ 1,114,201 $ 1,114,201 $ 1,201,327
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Schedule of Accrued Expenses and Other Current Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Schedule of Accrued Liabilities [Line Items]
Accrued compensation $ 305,747 $ 274,165
Warranty reserves 56,191 63,988
Income and other taxes payable 17,954 24,745
Other 118,895 129,280
Accrued expenses and other current liabilities $ 498,787 $ 492,178 [1]
[1] Derived from audited financial statements
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Components of Other Income Expense (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Component Of Other Expense Income Nonoperating [Line Items]
Interest income $ 4,376 $ 2,472 $ 8,176 $ 5,061
Interest expense (14,975) (9,346) (30,119) (18,606)
Gains (losses) on deferred compensation plan related assets 1,234 (348) 3,975 (2,213)
Foreign exchange losses (3,274) (142) (3,642) (1,232)
Other, net (751) (421) (1,718) (2,868)
Other income (expense), net $ (13,390) $ (7,785) $ (23,328) $ (19,858)
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Income Tax Expense - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Dec. 23, 2012
Jun. 24, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Income Taxes [Line Items]
Income tax expense $ (15,756,000) $ 6,549,000 $ (11,750,000) $ 22,037,000
Effective income tax rate 168.60% 456.40%
Federal statutory tax rate 35.00% 35.00%
Unrecognized tax benefits that would result in tax benefit and reduction of effective tax rate 264,400,000 264,400,000
Gross interest and penalties, relating to unrecognized tax benefits accrued 24,700,000 25,200,000
Valuation of allowance related to deferred tax rate 55,200,000 55,200,000
Recognition of Previously Unrecognized Tax Benefits
Income Taxes [Line Items]
Income tax expense, discrete items 30,500,000 30,900,000
Integration and Impairment Expenses
Income Taxes [Line Items]
Income tax expense, discrete items $ 28,300,000 $ 45,300,000
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Total Gross Unrecognized Tax Benefits (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Income Tax Contingency [Line Items]
Total gross unrecognized tax benefits $ 333.9 $ 343.8
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Schedule of Numerators and Denominators of Basic and Diluted Computations for Net Income Per Share (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items]
Net income $ 6,408 $ 33,212 $ 9,176 $ 105,050
Basic average shares outstanding 170,699 119,739 175,314 121,435
Employee stock plans 2,328 1,134 2,176 947
Diluted average shares outstanding 173,027 120,873 177,490 122,382
Net income per share-basic $ 0.04 $ 0.28 $ 0.05 $ 0.87
Net income per share-diluted $ 0.04 $ 0.27 $ 0.05 $ 0.86
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Schedule of Potentially Dilutive Securities Excluded from EPS Calculations (Detail)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of potential dilutive securities excluded 1,543 90 1,551 841
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Schedule of Accumulated Other Comprehensive Loss (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated foreign currency translation adjustment $ (17,637) $ (22,481)
Accumulated unrealized gain (loss) on cash flow hedges 3,705 (212)
Accumulated unrealized gain (loss) on available-for-sale investments (58) (308)
Unrealized components of post retirement benefit plan (10,494) (10,817)
Accumulated other comprehensive loss $ (24,484) $ (33,818) [1]
[1] Derived from audited financial statements
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Schedule of Carrying Value of Convertible Notes and Other Long Term Debt (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 23, 2012
Jun. 24, 2012
May 31, 2011
Debt Instrument [Line Items]
Total long-term debt $ 1,274.5 $ 1,258.9
Less: current portion of debt (509.6)
Long-term debt 1,274.5 749.3
0.50% Convertible Senior Notes Due 2016
Debt Instrument [Line Items]
Notes due 450 450 450
Less: Unamortized interest discount (53.1) (60.3)
Net carrying amount of Notes 396.9 389.7
1.25% Convertible Senior Notes Due 2018
Debt Instrument [Line Items]
Notes due 450 450 450
Less: Unamortized interest discount (83.7) (90.4)
Net carrying amount of Notes 366.3 359.6
2.625% Convertible Senior Notes maturing in 2041
Debt Instrument [Line Items]
Notes due 699.9 699.9
Less: Unamortized interest discount (188.6) (190.3)
Net carrying amount of Notes $ 511.3 $ 509.6
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Schedule of Carrying Value of Convertible Notes and Other Long Term Debt (Parenthetical) (Detail)
3 Months Ended
Dec. 23, 2012
Jun. 24, 2012
May 31, 2011
0.50% Convertible Senior Notes Due 2016
Debt Instrument [Line Items]
Convertible notes interest rate percentage 0.50% 0.50% 0.50%
Debt instruments maturity date 2016
1.25% Convertible Senior Notes Due 2018
Debt Instrument [Line Items]
Convertible notes interest rate percentage 1.25% 1.25% 1.25%
Debt instruments maturity date 2018
2.625% Convertible Senior Notes maturing in 2041
Debt Instrument [Line Items]
Convertible notes interest rate percentage 2.63% 2.63%
Debt instruments maturity date 2041
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Long Term Debt - Additional Information (Detail) (USD $)
1 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2011
May 31, 2011
0.50% Convertible Senior Notes Due 2016
Dec. 23, 2012
0.50% Convertible Senior Notes Due 2016
Dec. 23, 2012
0.50% Convertible Senior Notes Due 2016
Jun. 24, 2012
0.50% Convertible Senior Notes Due 2016
May 31, 2011
1.25% Convertible Senior Notes Due 2018
Dec. 23, 2012
1.25% Convertible Senior Notes Due 2018
Dec. 23, 2012
1.25% Convertible Senior Notes Due 2018
Jun. 24, 2012
1.25% Convertible Senior Notes Due 2018
Jun. 24, 2012
2.625% Convertible Senior Notes maturing in 2041
Note
Dec. 23, 2012
2.625% Convertible Senior Notes maturing in 2041
Jun. 24, 2012
2.625% Convertible Senior Notes maturing in 2041
Dec. 23, 2012
2.625% Convertible Senior Notes maturing in 2041
Jun. 04, 2012
2.625% Convertible Senior Notes maturing in 2041
Debt Instrument [Line Items]
Notes due $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 450,000,000 $ 699,900,000 $ 699,900,000 $ 699,900,000 $ 699,900,000
Convertible notes interest rate percentage 0.50% 0.50% 0.50% 0.50% 1.25% 1.25% 1.25% 1.25% 2.63% 2.63% 2.63% 2.63%
Initial conversion rate of common stock shares 15.8687 15.8687 28.4781
Convertible Senior Notes conversion price $ 63.02 $ 63.02 $ 35.11 $ 35.11
Principal amount of convertible debt conversion increments 1,000 1,000 1,000
Net proceeds from the sale of Convertible Senior Notes 835,500,000
Debt instruments maturity date 2016 2018 2041
Maximum amount of contingent interest rate 2.10%
Number of Debt converted to shares of common stock 65
Debt converted, par value 65,000
Debt converted, number of common shares issued 137
Initial carrying value of liability component of convertible notes 373,800,000 345,100,000 509,500,000
Discount rate used to determine liability fair value 4.29% 4.29% 5.27% 5.27% 4.28%
Carrying value of equity components 76,200,000 76,200,000 104,900,000 104,900,000 328,100,000 328,100,000
Unamortized discount balance 53,100,000 53,100,000 60,300,000 83,700,000 83,700,000 90,400,000 190,300,000 188,600,000 190,300,000 188,600,000
Remaining life of bond discount, years 3 years 4 months 24 days 5 years 4 months 24 days 28 years 4 months 24 days
If-converted value in excess of aggregate principal amount 22,500,000
Warrant conversion price 71.34 76.1
Shares issued under warrants 7,100,000 7,100,000
Shares of common stock agreed to sell 7,100,000 7,100,000
Fair value of notes $ 432,000,000 $ 432,000,000 $ 446,400,000 $ 446,400,000 $ 880,200,000 $ 880,200,000
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Schedule of Recognized Interest Cost Relating to Both Contractual Interest Coupon and Amortization of Discount on Liability Component of Notes (Detail) (USD $)
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Debt Instrument [Line Items]
Amortization of interest discount $ 15,595,000 $ 13,264,000
2016, 2018 and 2041 Senior Notes
Debt Instrument [Line Items]
Contractual interest coupon 6,600,000 1,900,000 13,100,000 3,900,000
Amortization of interest discount 7,800,000 6,700,000 15,600,000 13,300,000
Amortization of issuance costs 600,000 600,000 1,200,000 1,200,000
Total interest cost recognized $ 15,000,000 $ 9,200,000 $ 29,900,000 $ 18,400,000
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Schedule of Contractual Cash Obligations relating to Existing Capital Leases (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Schedule of Capital Lease Obligations [Line Items]
One year $ 1,685
Two years 1,565
Three years 1,497
Four years 9,636
Five years   
Over 5 years   
Total 14,383
Less: Interest on capital leases 649
Less: Current portion of capital leases 1,464
Long-tern portion of capital leases $ 12,270
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Commitments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Dec. 23, 2012
Y
D
Commitments [Line Items]
Number of operating leases 2
Approximate Operating Lease term, years 7
Operating Leases expiration year 2015-01
Operating Lease purchase option notification period, days 30
Operating Lease residual value of guarantee, maximum $ 141.7
Maximum percentage of aggregate investment value guaranteed 100.00%
Fair value of residual value guarantee at lease inception 0.6
Unamortized portion of the fair value of residual value guarantees at lease inception 0.1
Standby Letters of Credit
Commitments [Line Items]
Guarantee Obligation Maximum Exposure 21.4
Fremont And Livermore Lease
Commitments [Line Items]
Number of operating leases 4
Guarantee Obligation Maximum Exposure $ 164.9
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Schedule of Changes in Product Warranty Reserves (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Product Warranty Liability [Line Items]
Balance at beginning of period $ 67,836 $ 36,160 $ 70,161 $ 40,951
Warranties issued during the period 14,856 8,421 34,548 16,353
Settlements made during the period (21,484) (11,925) (45,859) (23,146)
Changes in liability for pre-existing warranties 1,714 78 4,072 (1,424)
Balance at end of period 62,922 32,734 62,922 32,734
Less: Long-term portion (6,731) (6,731)
Accrued warranty, current $ 56,191 $ 32,734 $ 56,191 $ 32,734
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Restructuring and Asset Impairments - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Jun. 24, 2012
Dec. 23, 2012
Sublease
Dec. 25, 2011
June 2008 Plan
Dec. 25, 2011
June 2008 Plan
Dec. 23, 2012
March 2009 Plan
Dec. 23, 2012
March 2009 Plan
Restructuring Cost and Reserve [Line Items]
Asset impairment charges $ 1,725,000 $ 1,725,000
Restructuring charges released 859,000 859,000 1,440,000 1,440,000
Restructuring and related cost, cost incurred to date 59,900,000
Restructuring liability assumed in the Novellus acquisition 12,200,000 11,200,000
Incurred charges from changes in sublease assumptions for a previously restructured building $ 2,500,000
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Schedule of Restructuring and Asset Impairment Charges and Reversals (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Restructuring Cost and Reserve [Line Items]
Adjustments to restructuring liability assumed in acquisition $ 2,461 $ 2,461
Asset impairments outside of specific restructuring plans 1,725 1,725
Total restructuring and impairment charges (adjustments) 1,021 (859) 1,021 866
June 2008 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges released (859) (859)
March 2009 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges released $ (1,440) $ (1,440)
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Schedule Of Restructuring And Asset Impairment Charges Recorded In Consolidated Statements Of Operations (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
Dec. 25, 2011
Restructuring Cost and Reserve [Line Items]
Cost of goods sold $ (859) $ (859)
Operating expense 1,021 1,021 1,725
Total restructuring and impairment charges (adjustments) $ 1,021 $ (859) $ 1,021 $ 866
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Schedule of Restructuring Reserve (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 6 Months Ended
Dec. 23, 2012
Dec. 25, 2011
Dec. 23, 2012
March 2009 Plan
Jun. 24, 2012
March 2009 Plan
Dec. 23, 2012
March 2009 Plan
Restructuring 2012 Actions
Restructuring Cost and Reserve [Line Items]
Balance at June 24, 2012 $ 26,309 $ 27,749
Fiscal year 2013 release (1,021) (866) (1,440)
Balance at December 23, 2012 $ 26,309 $ 27,749
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Business Combinations - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 04, 2012
Business Acquisition [Line Items]
Value of acquired business $ 3,026,988
Goodwill $ 1,277,121 $ 1,277,121
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Consideration Transferred to Acquire Novellus (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Jun. 04, 2012
Dec. 23, 2012
Novellus Systems Incorporated
Dec. 23, 2012
Novellus Systems Incorporated
Common Stock
Dec. 23, 2012
Novellus Systems Incorporated
Restricted Stock Units
Dec. 23, 2012
Novellus Systems Incorporated
Stock Option
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Lam common stock issued at merger 82,689
Per share price of Lam common stock as of June 4, 2012 $ 35.99
Estimated fair value of Lam equivalent equity $ 2,975,977 $ 9,599 [1] $ 41,412 [2]
Estimated purchase price consideration $ 3,026,988 $ 3,026,988
[1] The fair value of Lam Research equivalent restricted stock as of the acquisition date was estimated based upon the per share price of Lam Research common stock as of June 4, 2012, and giving effect to the exchange ratio of 1.125.
[2] The fair value of the Lam Research equivalent stock options as of the acquisition date was estimated using the Black-Scholes valuation model. Assumptions used are the same as those for acquired awards as disclosed in Note 11 of Notes to Condensed Consolidated Financial Statements.
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Consideration Transferred to Acquire Novellus (Parenthetical) (Detail) (Novellus Systems Incorporated)
Jun. 04, 2012
Novellus Systems Incorporated
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Exchange ratio 1.125
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Summary of Assets Acquired and Liabilities Assumed (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 23, 2012
Jun. 04, 2012
Business Acquisition [Line Items]
Business combination, assets recognized $ 4,488,483
Inventory 309,213
Property and equipment 289,126
Intangible assets 1,219,100
Goodwill 1,277,121 1,277,121
Net assets acquired 3,026,988
Cash and Investments
Business Acquisition [Line Items]
Business combination, assets recognized 1,059,859
Accounts Receivable
Business Acquisition [Line Items]
Business combination, assets recognized 241,924
Other Current Assets
Business Acquisition [Line Items]
Business combination, assets recognized 56,314
Other Noncurrent Assets
Business Acquisition [Line Items]
Business combination, assets recognized 35,826
Accounts Payable
Business Acquisition [Line Items]
Business combination, liabilities recognized (83,028)
Accrued Expenses and Other Current Liabilities
Business Acquisition [Line Items]
Business combination, liabilities recognized (196,677)
Deferred tax liability
Business Acquisition [Line Items]
Business combination, liabilities recognized (20,388)
Debt
Business Acquisition [Line Items]
Business combination, liabilities recognized (509,805)
Other long-term liabilities
Business Acquisition [Line Items]
Business combination, liabilities recognized (323,471)
Convertible Notes Payable Equity Component
Business Acquisition [Line Items]
Business combination, liabilities recognized $ (328,126)
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Stock Repurchase Program - Additional Information (Detail) (USD $)
1 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 23, 2012
Sep. 23, 2012
Dec. 23, 2012
Dec. 25, 2011
Jun. 24, 2012
Jul. 31, 2012
Share Repurchase Arrangements One
Jun. 24, 2012
Share Repurchase Arrangements One
Dec. 23, 2012
Share Repurchase Arrangements One
Minimum
Dec. 23, 2012
Share Repurchase Arrangements One
Maximum
Jun. 24, 2012
Share Repurchase Arrangements One
Initial delivery
Jul. 31, 2012
Share Repurchase Arrangements Two
Jun. 24, 2012
Share Repurchase Arrangements Two
Dec. 23, 2012
Share Repurchase Arrangements Two
Minimum
Dec. 23, 2012
Share Repurchase Arrangements Two
Maximum
Jun. 24, 2012
Share Repurchase Arrangements Two
Initial delivery
Jun. 24, 2012
ASR
Stock Repurchase Program [Line Items]
Authorized repurchase of Company common stock $ 1,600,000,000
Net shares of settlements to cover tax withholding obligations 322,000
Amount paid for shares under net share settlements 11,400,000
Treasury stock purchases 710,089,000 92,695,000 375,000,000 200,000,000
Total Number of Shares Repurchased 10,190,000 11,970,000 1,300,000 8,800,000 10,800,000 6,600,000 700,000 4,800,000 6,600,000 3,900,000
Treasury stock, at cost $ 3,337,269,000 $ 3,337,269,000 $ 2,636,936,000 [1] $ 575,000,000
Treasury stock purchases, weighted average share price $ 34.74 [2] $ 34.79 [2] $ 36.8 $ 36.12
[1] Derived from audited financial statements
[2] Average price paid per share excludes accelerated share repurchases for which cost was incurred in fiscal year 2012, but shares were received in fiscal year 2013. See Collared Accelerated Share Repurchases section below for details regarding average price associated with these transactions.
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Schedule of Repurchases under Repurchase Program (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 23, 2012
Sep. 23, 2012
Jun. 24, 2012
Stock Repurchase Program [Line Items]
Total Number of Shares Repurchased 10,190 11,970
Total Cost of Repurchase $ 354,029 $ 344,001
Average Price Paid Per Share $ 34.74 [1] $ 34.79 [1]
Amount Available Under Repurchase Program $ 213,903 $ 567,932 $ 911,933
[1] Average price paid per share excludes accelerated share repurchases for which cost was incurred in fiscal year 2012, but shares were received in fiscal year 2013. See Collared Accelerated Share Repurchases section below for details regarding average price associated with these transactions.
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