8-KOther EventsExhibits & Filings

LAM RESEARCH CORP 8-K Report, Corporate Update (May 5, 2011)

Filed May 5, 2011For Securities:LRCX

Summary

Lam Research Corporation announced on May 5, 2011, its intention to offer $700 million in convertible senior notes, split into two tranches maturing in May 2016 and May 2018. These notes are intended for qualified institutional buyers and can be converted into cash up to the principal amount, with any excess converted into Lam Research common stock. The specific terms, including interest rate and conversion rate, are subject to market negotiations. Notably, the company plans to use a portion of the proceeds to repurchase between 1 million and 3 million shares of its common stock. This buyback, potentially executed concurrently with the note offering, could influence the stock price and the effective conversion price of the notes. The remaining proceeds are earmarked for general corporate purposes, including working capital, capital expenditures, potential acquisitions, and further share repurchases under its existing program.

Key Highlights

  • 1Lam Research proposes to offer $700 million in convertible senior notes, divided into $350 million tranches due May 2016 and May 2018.
  • 2The notes will be convertible into cash (up to principal) and Lam Research common stock (for excess value).
  • 3Proceeds will partially fund a stock repurchase program, aiming to buy back 1 to 3 million shares.
  • 4The stock repurchase is expected to occur in privately negotiated transactions, potentially impacting the stock price and conversion price.
  • 5Convertible note hedge and warrant transactions are planned with initial purchasers to mitigate dilution from potential stock conversion.
  • 6Remaining proceeds are allocated for general corporate purposes, including working capital, capital expenditures, and potential acquisitions.
  • 7The offering is subject to market conditions and negotiations with initial purchasers.

Frequently Asked Questions

The primary purpose is to raise capital. A significant portion of the proceeds is intended for general corporate purposes, including working capital and capital expenditures. Additionally, a portion will be used to repurchase common stock and to fund convertible note hedge and warrant transactions.

The company intends to repurchase between 1 to 3 million shares of its common stock, potentially impacting the market price of the stock. This repurchase could result in a higher effective conversion price for the convertible notes, which might be seen as a protective measure for the company against excessive dilution but could also affect the attractiveness of the notes for investors.

These are financial instruments typically used by companies issuing convertible debt. The note hedge aims to offset potential dilution from the conversion of notes into common stock, while the warrants allow the company to issue additional shares at a set price. The net effect is to limit the company's exposure to share price appreciation upon conversion.

The interest rate, conversion rate, offering price, and other specific terms of the convertible notes will be determined through negotiations between Lam Research and the initial purchasers of the notes, and are subject to market conditions.