|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
94-2634797
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
4650 Cushing Parkway
Fremont, California
|
|
94538
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
|
|
|
Page No.
|
|
|
|
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
ITEM 1.
|
Financial Statements
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||
Revenue
|
$
|
1,882,299
|
|
|
$
|
1,425,534
|
|
|
$
|
3,514,718
|
|
|
$
|
3,025,577
|
|
Cost of goods sold
|
1,035,502
|
|
|
799,024
|
|
|
1,951,724
|
|
|
1,676,704
|
|
||||
Gross margin
|
846,797
|
|
|
626,510
|
|
|
1,562,994
|
|
|
1,348,873
|
|
||||
Research and development
|
246,804
|
|
|
220,754
|
|
|
482,044
|
|
|
454,963
|
|
||||
Selling, general and administrative
|
160,165
|
|
|
166,922
|
|
|
325,175
|
|
|
319,648
|
|
||||
Total operating expenses
|
406,969
|
|
|
387,676
|
|
|
807,219
|
|
|
774,611
|
|
||||
Operating income
|
439,828
|
|
|
238,834
|
|
|
755,775
|
|
|
574,262
|
|
||||
Other expense, net
|
(55,023
|
)
|
|
(29,935
|
)
|
|
(78,177
|
)
|
|
(57,056
|
)
|
||||
Income before income taxes
|
384,805
|
|
|
208,899
|
|
|
677,598
|
|
|
517,206
|
|
||||
Income tax (expense) benefit
|
(52,014
|
)
|
|
14,081
|
|
|
(80,972
|
)
|
|
(5,547
|
)
|
||||
Net income
|
$
|
332,791
|
|
|
$
|
222,980
|
|
|
$
|
596,626
|
|
|
$
|
511,659
|
|
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
2.05
|
|
|
$
|
1.41
|
|
|
$
|
3.69
|
|
|
$
|
3.23
|
|
Diluted
|
$
|
1.81
|
|
|
$
|
1.28
|
|
|
$
|
3.28
|
|
|
$
|
2.94
|
|
Number of shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
162,659
|
|
|
158,424
|
|
|
161,633
|
|
|
158,388
|
|
||||
Diluted
|
183,543
|
|
|
174,242
|
|
|
181,780
|
|
|
174,308
|
|
||||
Cash dividend declared per common share
|
$
|
0.45
|
|
|
$
|
0.30
|
|
|
$
|
0.75
|
|
|
$
|
0.60
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||
Net income
|
$
|
332,791
|
|
|
$
|
222,980
|
|
|
$
|
596,626
|
|
|
$
|
511,659
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(14,428
|
)
|
|
(1,022
|
)
|
|
(9,927
|
)
|
|
(8,844
|
)
|
||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Net unrealized gains during the period
|
15,225
|
|
|
3,703
|
|
|
12,804
|
|
|
3,159
|
|
||||
Net (gains) losses reclassified into earnings
|
(502
|
)
|
|
(3,220
|
)
|
|
11,448
|
|
|
(2,879
|
)
|
||||
|
14,723
|
|
|
483
|
|
|
24,252
|
|
|
280
|
|
||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Net unrealized losses during the period
|
(13,585
|
)
|
|
(5,133
|
)
|
|
(16,308
|
)
|
|
(2,385
|
)
|
||||
Net losses (gains) reclassified into earnings
|
91
|
|
|
(244
|
)
|
|
994
|
|
|
(224
|
)
|
||||
|
(13,494
|
)
|
|
(5,377
|
)
|
|
(15,314
|
)
|
|
(2,609
|
)
|
||||
Defined benefit plans, net change in unrealized component
|
122
|
|
|
93
|
|
|
245
|
|
|
188
|
|
||||
Other comprehensive loss, net of tax
|
(13,077
|
)
|
|
(5,823
|
)
|
|
(744
|
)
|
|
(10,985
|
)
|
||||
Comprehensive income
|
$
|
319,714
|
|
|
$
|
217,157
|
|
|
$
|
595,882
|
|
|
$
|
500,674
|
|
|
December 25,
2016 |
|
June 26,
2016 |
|
||||
(unaudited)
|
|
(1)
|
|
|||||
ASSETS
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,503,960
|
|
|
$
|
5,039,322
|
|
|
Investments
|
3,329,425
|
|
|
1,788,612
|
|
|
||
Accounts receivable, less allowance for doubtful accounts of $5,038 as of December 25, 2016 and $5,155 as of June 26, 2016
|
1,426,307
|
|
|
1,262,145
|
|
|
||
Inventories
|
1,018,891
|
|
|
971,911
|
|
|
||
Prepaid expenses and other current assets
|
225,291
|
|
|
151,160
|
|
(2)
|
||
Total current assets
|
8,503,874
|
|
|
9,213,150
|
|
|
||
Property and equipment, net
|
672,553
|
|
|
639,608
|
|
|
||
Restricted cash and investments
|
255,175
|
|
|
250,421
|
|
|
||
Goodwill
|
1,385,684
|
|
|
1,386,276
|
|
|
||
Intangible assets, net
|
487,897
|
|
|
564,921
|
|
|
||
Other assets
|
215,876
|
|
|
209,939
|
|
(2)
|
||
Total assets
|
$
|
11,521,059
|
|
|
$
|
12,264,315
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Trade accounts payable
|
$
|
445,113
|
|
|
$
|
348,199
|
|
|
Accrued expenses and other current liabilities
|
847,167
|
|
|
772,910
|
|
|
||
Deferred profit
|
407,843
|
|
|
349,199
|
|
|
||
Current portion of convertible notes and capital leases
|
957,895
|
|
|
947,733
|
|
(2)
|
||
Total current liabilities
|
2,658,018
|
|
|
2,418,041
|
|
|
||
Senior notes, convertible notes, and capital leases, less current portion
|
1,768,713
|
|
|
3,378,129
|
|
(2)
|
||
Income taxes payable
|
238,968
|
|
|
231,514
|
|
|
||
Other long-term liabilities
|
262,351
|
|
|
134,562
|
|
|
||
Total liabilities
|
4,928,050
|
|
|
6,162,246
|
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Temporary equity, convertible notes
|
197,313
|
|
|
207,552
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, at par value of $0.001 per share; authorized - 5,000 shares, none outstanding
|
—
|
|
|
—
|
|
|
||
Common stock, at par value of $0.001 per share; authorized, 400,000 shares; issued and outstanding, 162,357 shares at December 25, 2016 and 160,201 shares at June 26, 2016
|
162
|
|
|
160
|
|
|
||
Additional paid-in capital
|
5,668,325
|
|
|
5,572,898
|
|
|
||
Treasury stock, at cost; 101,502 shares at December 25, 2016 and 101,071 shares at June 26, 2016
|
(4,497,714
|
)
|
|
(4,429,317
|
)
|
|
||
Accumulated other comprehensive loss
|
(70,077
|
)
|
|
(69,333
|
)
|
|
||
Retained earnings
|
5,295,000
|
|
|
4,820,109
|
|
|
||
Total stockholders’ equity
|
6,395,696
|
|
|
5,894,517
|
|
|
||
Total liabilities and stockholders’ equity
|
$
|
11,521,059
|
|
|
$
|
12,264,315
|
|
|
|
Six Months Ended
|
||||||
December 25,
2016 |
|
December 27,
2015 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
596,626
|
|
|
$
|
511,659
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
151,627
|
|
|
142,388
|
|
||
Deferred income taxes
|
42,248
|
|
|
2,613
|
|
||
Equity-based compensation expense
|
70,850
|
|
|
68,344
|
|
||
Loss on extinguishment of debt
|
36,325
|
|
|
—
|
|
||
Amortization of note discounts and issuance costs
|
13,032
|
|
|
33,480
|
|
||
Other, net
|
15,515
|
|
|
20,563
|
|
||
Changes in operating assets and liabilities
|
(48,901
|
)
|
|
(35,505
|
)
|
||
Net cash provided by operating activities
|
877,322
|
|
|
743,542
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures and intangible assets
|
(78,492
|
)
|
|
(77,597
|
)
|
||
Purchases of available-for-sale securities
|
(2,370,910
|
)
|
|
(808,292
|
)
|
||
Sales and maturities of available-for-sale securities
|
811,732
|
|
|
819,291
|
|
||
(Issuance) repayment of notes receivable, net
|
(500
|
)
|
|
8,082
|
|
||
Transfers of restricted cash and investments
|
(4,754
|
)
|
|
—
|
|
||
Other, net
|
(7,541
|
)
|
|
(6,246
|
)
|
||
Net cash used for investing activities
|
(1,650,465
|
)
|
|
(64,762
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs
|
(1,616,641
|
)
|
|
(28,470
|
)
|
||
Treasury stock purchases
|
(69,522
|
)
|
|
(111,183
|
)
|
||
Dividends paid
|
(96,449
|
)
|
|
(95,555
|
)
|
||
Reissuance of treasury stock related to employee stock purchase plan
|
19,320
|
|
|
19,245
|
|
||
Proceeds from issuance of common stock
|
4,580
|
|
|
1,550
|
|
||
Other, net
|
(54
|
)
|
|
5,431
|
|
||
Net cash used for financing activities
|
(1,758,766
|
)
|
|
(208,982
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3,453
|
)
|
|
(3,464
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(2,535,362
|
)
|
|
466,334
|
|
||
Cash and cash equivalents at beginning of period
|
5,039,322
|
|
|
1,501,539
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,503,960
|
|
|
$
|
1,967,873
|
|
Schedule of noncash transactions:
|
|
|
|
|
|
||
Accrued payables for stock repurchases
|
8,382
|
|
|
—
|
|
||
Accrued payables for capital expenditures
|
24,216
|
|
|
8,842
|
|
||
Dividends payable
|
73,338
|
|
|
47,539
|
|
||
Transfers of inventory to property and equipment, net
|
23,828
|
|
|
14,732
|
|
•
|
entities will be required to recognize all excess tax benefits or deficiencies as an income tax benefit or expense in the income statement, eliminating APIC pools;
|
•
|
entities will no longer be required to delay recognition of excess tax benefits until they are realized;
|
•
|
entities will be required to classify the excess tax benefits as an operating activity in the statement of cash flows;
|
•
|
entities will be allowed to elect an accounting policy to either estimate the number of forfeitures, or account for forfeitures as they occur; and
|
•
|
entities can withhold up to the maximum individual statutory tax rate without classifying the awards as a liability, the cash paid to satisfy the statutory income tax withholding obligations shall be classified as a financing activity in the statement of cash flows.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
||||||||
|
(in thousands)
|
||||||||||||||
Equity-based compensation expense
|
$
|
32,255
|
|
|
$
|
32,570
|
|
|
$
|
70,850
|
|
|
$
|
68,344
|
|
Income tax benefit recognized related to equity-based compensation expense
|
$
|
8,815
|
|
|
$
|
12,651
|
|
|
$
|
19,721
|
|
|
$
|
18,748
|
|
|
Options Outstanding
|
|
RSUs Outstanding
|
||||||||||
|
Number of
Shares |
|
Weighted-
Average Exercise Price |
|
Number of
Shares |
|
Weighted-
Average Fair Market Value at Grant |
||||||
June 26, 2016
|
907,411
|
|
|
$
|
47.41
|
|
|
4,335,104
|
|
|
$
|
69.30
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
91,818
|
|
|
$
|
94.16
|
|
Exercised
|
(143,829
|
)
|
|
$
|
33.91
|
|
|
N/A
|
|
|
N/A
|
|
|
Canceled
|
(13,770
|
)
|
|
$
|
70.26
|
|
|
(112,396
|
)
|
|
$
|
67.82
|
|
Vested restricted stock
|
N/A
|
|
|
N/A
|
|
|
(470,807
|
)
|
|
$
|
59.29
|
|
|
December 25, 2016
|
749,812
|
|
|
$
|
49.58
|
|
|
3,843,719
|
|
|
$
|
71.15
|
|
|
Six Months Ended
|
||||
December 25,
2016 |
|
December 27,
2015 |
|||
Expected term (years)
|
0.77
|
|
|
0.67
|
|
Expected stock price volatility
|
33.02
|
%
|
|
31.86
|
%
|
Risk-free interest rate
|
0.43
|
%
|
|
0.19
|
%
|
Dividend Yield
|
1.14
|
%
|
|
0.94
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
||||||||
|
(in thousands)
|
||||||||||||||
Interest income
|
$
|
10,945
|
|
|
$
|
6,729
|
|
|
$
|
23,708
|
|
|
$
|
12,489
|
|
Interest expense
|
(26,641
|
)
|
|
(38,577
|
)
|
|
(68,070
|
)
|
|
(63,238
|
)
|
||||
Gains (losses) on deferred compensation plan related assets, net
|
1,666
|
|
|
1,983
|
|
|
7,838
|
|
|
(3,181
|
)
|
||||
Loss on extinguishment of debt
|
(36,325
|
)
|
|
—
|
|
|
(36,325
|
)
|
|
—
|
|
||||
Foreign exchange gains (losses), net
|
1,011
|
|
|
512
|
|
|
2,230
|
|
|
(186
|
)
|
||||
Other, net
|
(5,679
|
)
|
|
(582
|
)
|
|
(7,558
|
)
|
|
(2,940
|
)
|
||||
|
$
|
(55,023
|
)
|
|
$
|
(29,935
|
)
|
|
$
|
(78,177
|
)
|
|
$
|
(57,056
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
332,791
|
|
|
$
|
222,980
|
|
|
$
|
596,626
|
|
|
$
|
511,659
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic average shares outstanding
|
162,659
|
|
|
158,424
|
|
|
161,633
|
|
|
158,388
|
|
||||
Effect of potential dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee stock plans
|
2,243
|
|
|
2,034
|
|
|
2,193
|
|
|
2,289
|
|
||||
Convertible notes
|
16,640
|
|
|
13,363
|
|
|
15,930
|
|
|
13,242
|
|
||||
Warrants
|
2,001
|
|
|
421
|
|
|
2,024
|
|
|
389
|
|
||||
Diluted average shares outstanding
|
183,543
|
|
|
174,242
|
|
|
181,780
|
|
|
174,308
|
|
||||
Net income per share - basic
|
$
|
2.05
|
|
|
$
|
1.41
|
|
|
$
|
3.69
|
|
|
$
|
3.23
|
|
Net income per share - diluted
|
$
|
1.81
|
|
|
$
|
1.28
|
|
|
$
|
3.28
|
|
|
$
|
2.94
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
||||
|
(in thousands)
|
||||||||||
Number of options and RSUs excluded
|
—
|
|
|
79
|
|
|
3
|
|
|
85
|
|
|
December 25, 2016
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
(Reported Within)
|
|||||||||||||||||||||||
Cost
|
|
Unrealized
Gain |
|
Unrealized
(Loss) |
|
Fair Value
|
|
Cash and
Cash Equivalents |
|
Investments
|
|
Restricted
Cash & Investments |
|
Other
Assets |
|||||||||||||||||
(in thousands)
|
|||||||||||||||||||||||||||||||
Cash
|
$
|
615,922
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
615,922
|
|
|
$
|
610,775
|
|
|
$
|
—
|
|
|
$
|
5,147
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Time Deposit
|
728,810
|
|
|
—
|
|
|
—
|
|
|
728,810
|
|
|
478,782
|
|
|
—
|
|
|
250,028
|
|
|
—
|
|
||||||||
Money Market Funds
|
1,233,602
|
|
|
—
|
|
|
—
|
|
|
1,233,602
|
|
|
1,233,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
U.S. Treasury and Agencies
|
811,564
|
|
|
39
|
|
|
(4,720
|
)
|
|
806,883
|
|
|
88,982
|
|
|
717,901
|
|
|
—
|
|
|
—
|
|
||||||||
Mutual Funds
|
40,889
|
|
|
1,613
|
|
|
—
|
|
|
42,502
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,502
|
|
||||||||
Level 1 Total
|
2,814,865
|
|
|
1,652
|
|
|
(4,720
|
)
|
|
2,811,797
|
|
|
1,801,366
|
|
|
717,901
|
|
|
250,028
|
|
|
42,502
|
|
||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal Notes and Bonds
|
134,838
|
|
|
48
|
|
|
(115
|
)
|
|
134,771
|
|
|
—
|
|
|
134,771
|
|
|
—
|
|
|
—
|
|
||||||||
Government-Sponsored Enterprises
|
31,357
|
|
|
—
|
|
|
(42
|
)
|
|
31,315
|
|
|
—
|
|
|
31,315
|
|
|
—
|
|
|
—
|
|
||||||||
Foreign Government Bonds
|
30,605
|
|
|
—
|
|
|
(177
|
)
|
|
30,428
|
|
|
1,154
|
|
|
29,274
|
|
|
—
|
|
|
—
|
|
||||||||
Corporate Notes and Bonds
|
2,361,859
|
|
|
542
|
|
|
(7,563
|
)
|
|
2,354,838
|
|
|
80,167
|
|
|
2,274,671
|
|
|
—
|
|
|
—
|
|
||||||||
Mortgage Backed Securities — Residential
|
98,869
|
|
|
42
|
|
|
(975
|
)
|
|
97,936
|
|
|
10,498
|
|
|
87,438
|
|
|
—
|
|
|
—
|
|
||||||||
Mortgage Backed Securities — Commercial
|
54,266
|
|
|
4
|
|
|
(215
|
)
|
|
54,055
|
|
|
—
|
|
|
54,055
|
|
|
—
|
|
|
—
|
|
||||||||
Level 2 Total
|
2,711,794
|
|
|
636
|
|
|
(9,087
|
)
|
|
2,703,343
|
|
|
91,819
|
|
|
2,611,524
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
$
|
6,142,581
|
|
|
$
|
2,288
|
|
|
$
|
(13,807
|
)
|
|
$
|
6,131,062
|
|
|
$
|
2,503,960
|
|
|
$
|
3,329,425
|
|
|
$
|
255,175
|
|
|
$
|
42,502
|
|
|
June 26, 2016
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
(Reported Within)
|
|||||||||||||||||||||||
Cost
|
|
Unrealized
Gain |
|
Unrealized
(Loss) |
|
Fair Value
|
|
Cash and
Cash Equivalents |
|
Investments
|
|
Restricted
Cash & Investments |
|
Other
Assets |
|||||||||||||||||
(in thousands)
|
|||||||||||||||||||||||||||||||
Cash
|
$
|
418,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
418,216
|
|
|
$
|
412,573
|
|
|
$
|
—
|
|
|
$
|
5,643
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Time Deposit
|
904,243
|
|
|
—
|
|
|
—
|
|
|
904,243
|
|
|
659,465
|
|
|
—
|
|
|
244,778
|
|
|
—
|
|
||||||||
Money Market Funds
|
3,904,288
|
|
|
—
|
|
|
—
|
|
|
3,904,288
|
|
|
3,904,288
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
U.S. Treasury and Agencies
|
446,530
|
|
|
2,041
|
|
|
(2
|
)
|
|
448,569
|
|
|
62,996
|
|
|
385,573
|
|
|
—
|
|
|
—
|
|
||||||||
Mutual Funds
|
39,318
|
|
|
1,400
|
|
|
(397
|
)
|
|
40,321
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,321
|
|
||||||||
Level 1 Total
|
5,294,379
|
|
|
3,441
|
|
|
(399
|
)
|
|
5,297,421
|
|
|
4,626,749
|
|
|
385,573
|
|
|
244,778
|
|
|
40,321
|
|
||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal Notes and Bonds
|
265,386
|
|
|
355
|
|
|
(16
|
)
|
|
265,725
|
|
|
—
|
|
|
265,725
|
|
|
—
|
|
|
—
|
|
||||||||
U.S. Treasury and Agencies
|
8,068
|
|
|
151
|
|
|
—
|
|
|
8,219
|
|
|
—
|
|
|
8,219
|
|
|
—
|
|
|
—
|
|
||||||||
Government-Sponsored Enterprises
|
31,885
|
|
|
91
|
|
|
(13
|
)
|
|
31,963
|
|
|
—
|
|
|
31,963
|
|
|
—
|
|
|
—
|
|
||||||||
Foreign Government Bonds
|
41,440
|
|
|
76
|
|
|
(4
|
)
|
|
41,512
|
|
|
—
|
|
|
41,512
|
|
|
—
|
|
|
—
|
|
||||||||
Corporate Notes and Bonds
|
979,566
|
|
|
4,341
|
|
|
(566
|
)
|
|
983,341
|
|
|
—
|
|
|
983,341
|
|
|
—
|
|
|
—
|
|
||||||||
Mortgage Backed Securities — Residential
|
17,395
|
|
|
37
|
|
|
(152
|
)
|
|
17,280
|
|
|
—
|
|
|
17,280
|
|
|
—
|
|
|
—
|
|
||||||||
Mortgage Backed Securities — Commercial
|
55,129
|
|
|
30
|
|
|
(160
|
)
|
|
54,999
|
|
|
—
|
|
|
54,999
|
|
|
—
|
|
|
—
|
|
||||||||
Level 2 Total
|
1,398,869
|
|
|
5,081
|
|
|
(911
|
)
|
|
1,403,039
|
|
|
—
|
|
|
1,403,039
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
$
|
7,111,464
|
|
|
$
|
8,522
|
|
|
$
|
(1,310
|
)
|
|
$
|
7,118,676
|
|
|
$
|
5,039,322
|
|
|
$
|
1,788,612
|
|
|
$
|
250,421
|
|
|
$
|
40,321
|
|
|
December 25, 2016
|
||||||||||||||||||||||
Unrealized Losses
Less Than 12 Months |
|
Unrealized Losses
12 Months or Greater |
|
Total
|
|||||||||||||||||||
Fair Value
|
|
Gross
Unrealized Loss |
|
Fair Value
|
|
Gross
Unrealized Loss |
|
Fair Value
|
|
Gross
Unrealized Loss |
|||||||||||||
(in thousands)
|
|||||||||||||||||||||||
Municipal Notes and Bonds |
$
|
99,754
|
|
|
$
|
(111
|
)
|
|
$
|
1,996
|
|
|
$
|
(4
|
)
|
|
$
|
101,750
|
|
|
$
|
(115
|
)
|
U.S. Treasury & Agencies |
684,419
|
|
|
(4,720
|
)
|
|
—
|
|
|
—
|
|
|
684,419
|
|
|
(4,720
|
)
|
||||||
Government-Sponsored Enterprises |
30,627
|
|
|
(26
|
)
|
|
564
|
|
|
(16
|
)
|
|
31,191
|
|
|
(42
|
)
|
||||||
Foreign Government Bonds |
26,189
|
|
|
(177
|
)
|
|
—
|
|
|
—
|
|
|
26,189
|
|
|
(177
|
)
|
||||||
Corporate Notes and Bonds |
1,617,323
|
|
|
(7,476
|
)
|
|
34,456
|
|
|
(87
|
)
|
|
1,651,779
|
|
|
(7,563
|
)
|
||||||
Mortgage Backed Securities — Residential
|
75,601
|
|
|
(818
|
)
|
|
10,038
|
|
|
(157
|
)
|
|
85,639
|
|
|
(975
|
)
|
||||||
Mortgage Backed Securities — Commercial
|
44,494
|
|
|
(181
|
)
|
|
7,138
|
|
|
(34
|
)
|
|
51,632
|
|
|
(215
|
)
|
||||||
|
$
|
2,578,407
|
|
|
$
|
(13,509
|
)
|
|
$
|
54,192
|
|
|
$
|
(298
|
)
|
|
$
|
2,632,599
|
|
|
$
|
(13,807
|
)
|
|
Cost
|
|
Estimated
Fair Value |
||||
(in thousands)
|
|||||||
Due in one year or less
|
$
|
3,036,400
|
|
|
$
|
3,035,906
|
|
Due after one year through five years
|
2,333,026
|
|
|
2,320,918
|
|
||
Due in more than five years
|
116,344
|
|
|
115,814
|
|
||
|
$
|
5,485,770
|
|
|
$
|
5,472,638
|
|
|
Notional Value
|
||||||||||||||
Derivatives Designated as
Hedging Instruments: |
|
Derivatives Not Designated
as Hedging Instruments: |
|||||||||||||
(in thousands)
|
|||||||||||||||
Foreign Currency Forward Contracts
|
|
|
|
|
|
|
|
||||||||
|
Buy Contracts
|
|
Sell Contracts
|
|
Buy Contracts
|
|
Sell Contracts
|
||||||||
Japanese yen
|
$
|
—
|
|
|
$
|
235,891
|
|
|
$
|
—
|
|
|
$
|
45,498
|
|
Swiss franc
|
—
|
|
|
—
|
|
|
8,740
|
|
|
—
|
|
||||
Euro
|
39,463
|
|
|
—
|
|
|
20,608
|
|
|
—
|
|
||||
Korean won
|
48,517
|
|
|
—
|
|
|
8,310
|
|
|
—
|
|
||||
Chinese renminbi
|
—
|
|
|
—
|
|
|
8,203
|
|
|
|
|||||
Singapore dollar
|
—
|
|
|
—
|
|
|
20,732
|
|
|
—
|
|
||||
Taiwan dollar
|
—
|
|
|
—
|
|
|
15,639
|
|
|
—
|
|
||||
|
$
|
87,980
|
|
|
$
|
235,891
|
|
|
$
|
82,232
|
|
|
$
|
45,498
|
|
|
December 25, 2016
|
|
June 26, 2016
|
||||||||||||||||||||
Fair Value of Derivative Instruments (Level 2)
|
|
Fair Value of Derivative Instruments (Level 2)
|
|||||||||||||||||||||
Asset Derivatives
|
|
Liability Derivatives
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|||||||||||||||||
Balance Sheet
Location |
|
Fair Value
|
|
Balance Sheet
Location |
|
Fair Value
|
|
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 |
|
$
|
13,432
|
|
|
Accrued liabilities
|
|
$
|
847
|
|
|
Prepaid expense
and other assets |
|
$
|
249
|
|
|
Accrued liabilities
|
|
$
|
16,585
|
|
Interest rate contracts, short-term
|
Accrued expenses and other current liabilities
|
|
—
|
|
|
Prepaid expense
and other assets |
|
2,024
|
|
|
Accrued expenses and other current liabilities
|
|
50
|
|
|
Prepaid expense
and other assets |
|
159
|
|
||||
Interest rate contracts, long-term
|
Other assets
|
|
—
|
|
|
Other long-term liabilities
|
|
17,152
|
|
|
Other assets
|
|
8,661
|
|
|
Other long-term liabilities
|
|
—
|
|
||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|||||||||||||||
Foreign exchange forward contracts
|
Prepaid expense
and other assets |
|
34
|
|
|
Accrued
liabilities |
|
117
|
|
|
Prepaid expense
and other assets |
|
107
|
|
|
Accrued
liabilities |
|
1,529
|
|
||||
Total Derivatives
|
|
|
$
|
13,466
|
|
|
|
|
$
|
20,140
|
|
|
|
|
$
|
9,067
|
|
|
|
|
$
|
18,273
|
|
|
|
Three Months Ended December 25, 2016
|
|
Six Months Ended December 25, 2016
|
||||||||||||||||||||
|
|
Effective Portion
|
Ineffective
Portion and Amount Excluded from Effectiveness |
|
Effective Portion
|
Ineffective
Portion and Amount Excluded from Effectiveness |
||||||||||||||||||
|
Location of
Gain (Loss) Recognized in or Reclassified into Income |
Gain (Loss)
Recognized in AOCI |
|
Gain (Loss)
Reclassified from AOCI into Income |
|
Gain (Loss)
Recognized in Income |
|
Gain (Loss)
Recognized in AOCI |
Gain (Loss)
Reclassified from AOCI into Income |
Gain (Loss)
Recognized in Income |
||||||||||||||
Derivatives Designated
as Hedging Instruments |
|
(in thousands)
|
||||||||||||||||||||||
Foreign Exchange Contracts
|
Revenue
|
$
|
18,138
|
|
|
$
|
(420
|
)
|
|
$
|
708
|
|
|
$
|
15,225
|
|
|
$
|
(14,025
|
)
|
|
$
|
1,413
|
|
Foreign Exchange Contracts
|
Cost of goods sold
|
(786
|
)
|
|
(180
|
)
|
|
(28
|
)
|
|
(551
|
)
|
|
(7
|
)
|
|
(95
|
)
|
||||||
Foreign Exchange Contracts
|
Selling, general, and
administrative |
(348
|
)
|
|
(146
|
)
|
|
(15
|
)
|
|
(372
|
)
|
|
(155
|
)
|
|
(36
|
)
|
||||||
Foreign Exchange Contracts
|
Other expense, net
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Interest Rate Contracts
|
Other expense, net
|
—
|
|
|
1,778
|
|
|
—
|
|
|
—
|
|
|
1,787
|
|
|
—
|
|
||||||
|
|
$
|
17,004
|
|
|
$
|
1,032
|
|
|
$
|
668
|
|
|
$
|
14,302
|
|
|
$
|
(12,400
|
)
|
|
$
|
1,285
|
|
|
|
Three Months Ended December 27, 2015
|
|
Six Months Ended December 27, 2015
|
|||||||||||||||||||
|
|
Effective Portion
|
Ineffective
Portion and Amount Excluded from Effectiveness |
|
Effective Portion
|
Ineffective
Portion and Amount Excluded from Effectiveness |
|||||||||||||||||
|
Location of
Gain (Loss) Recognized in or Reclassified into Income |
Gain (Loss)
Recognized in AOCI |
Gain (Loss)
Reclassified from AOCI into Income |
Gain (Loss)
Recognized in Income |
|
Gain (Loss)
Recognized in AOCI |
Gain (Loss)
Reclassified from AOCI into Income |
Gain (Loss)
Recognized in Income |
|||||||||||||||
Derivatives Designated
as Hedging Instruments |
|
|
|||||||||||||||||||||
Foreign Exchange Contracts
|
Revenue
|
$
|
4,256
|
|
|
$
|
(4,808
|
)
|
|
$
|
215
|
|
|
$
|
4,187
|
|
|
$
|
(6,186
|
)
|
|
247
|
|
Foreign Exchange Contracts
|
Cost of goods sold
|
(223
|
)
|
|
1,052
|
|
|
(14
|
)
|
|
(638
|
)
|
|
2,557
|
|
|
(36
|
)
|
|||||
Foreign Exchange Contracts
|
Selling, general, and
administrative |
147
|
|
|
111
|
|
|
(12
|
)
|
|
(26
|
)
|
|
369
|
|
|
(19
|
)
|
|||||
Interest Rate Contracts
|
Other expense, net
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
|
(189
|
)
|
|
—
|
|
|||||
|
|
$
|
4,180
|
|
|
$
|
(3,740
|
)
|
|
$
|
189
|
|
|
$
|
3,523
|
|
|
$
|
(3,449
|
)
|
|
192
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||
|
December 25,
2016 |
|
December 27,
2015 |
|
December 25, 2016
|
|
December 27, 2015
|
||||||||||
Derivatives Not Designated as Hedging Instruments:
|
Location
of Gain Recognized in Income |
|
Gain
Recognized in Income |
|
Gain
Recognized in Income |
|
Gain
Recognized in Income |
|
Gain
Recognized in Income |
||||||||
|
|
|
(in thousands)
|
||||||||||||||
Foreign Exchange Contracts
|
Other
income |
|
$
|
4,343
|
|
|
$
|
1,561
|
|
|
$
|
3,960
|
|
|
$
|
7,568
|
|
|
December 25,
2016 |
|
June 26,
2016 |
||||
(in thousands)
|
|||||||
Raw materials
|
$
|
565,485
|
|
|
$
|
536,844
|
|
Work-in-process
|
198,497
|
|
|
151,406
|
|
||
Finished goods
|
254,909
|
|
|
283,661
|
|
||
|
$
|
1,018,891
|
|
|
$
|
971,911
|
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
(in thousands)
|
|||||||||||
Customer relationships
|
$
|
615,167
|
|
|
$
|
(333,561
|
)
|
|
$
|
281,606
|
|
Existing technology
|
643,200
|
|
|
(444,018
|
)
|
|
199,182
|
|
|||
Patents
|
36,553
|
|
|
(29,970
|
)
|
|
6,583
|
|
|||
Other intangible assets
|
36,114
|
|
|
(35,588
|
)
|
|
526
|
|
|||
Total intangible assets
|
$
|
1,331,034
|
|
|
$
|
(843,137
|
)
|
|
$
|
487,897
|
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
(in thousands)
|
|||||||||||
Customer relationships
|
$
|
615,272
|
|
|
$
|
(300,711
|
)
|
|
$
|
314,561
|
|
Existing technology
|
643,433
|
|
|
(401,036
|
)
|
|
242,397
|
|
|||
Patents
|
36,053
|
|
|
(28,701
|
)
|
|
7,352
|
|
|||
Other intangible assets
|
36,114
|
|
|
(35,503
|
)
|
|
611
|
|
|||
Total intangible assets
|
$
|
1,330,872
|
|
|
$
|
(765,951
|
)
|
|
$
|
564,921
|
|
Fiscal Year
|
Amount
|
||
|
(in thousands)
|
||
2017 (remaining 6 months)
|
$
|
77,275
|
|
2018
|
153,446
|
|
|
2019
|
115,152
|
|
|
2020
|
50,332
|
|
|
2021
|
47,687
|
|
|
Thereafter
|
44,005
|
|
|
|
$
|
487,897
|
|
|
December 25,
2016 |
|
June 26,
2016 |
||||
(in thousands)
|
|||||||
Accrued compensation
|
$
|
417,952
|
|
|
$
|
331,528
|
|
Warranty reserves
|
119,334
|
|
|
100,321
|
|
||
Income and other taxes payable
|
56,021
|
|
|
86,723
|
|
||
Dividend payable
|
73,338
|
|
|
48,052
|
|
||
Other
|
180,522
|
|
|
206,286
|
|
||
|
$
|
847,167
|
|
|
$
|
772,910
|
|
|
|
|
|
|
December 25, 2016
|
|
June 26, 2016
|
||||||||||
|
Amount
(in thousands)
|
|
Effective Interest Rate
|
|
Amount
(in thousands)
|
|
Effective Interest Rate
|
||||||
Fixed-rate 1.25% Convertible Notes Due May 15, 2018 ("2018 Notes")
|
$
|
449,849
|
|
(1)
|
5.27
|
%
|
|
$
|
449,954
|
|
(3)
|
5.27
|
%
|
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes")
|
500,000
|
|
|
2.88
|
%
|
|
500,000
|
|
|
2.88
|
%
|
||
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes")
|
800,000
|
|
|
2.95
|
%
|
|
800,000
|
|
|
2.95
|
%
|
||
Fixed-rate 3.45% Senior Notes Due June 15, 2023 ("2023 Notes")
|
—
|
|
|
—
|
|
|
600,000
|
|
|
3.60
|
%
|
||
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes")
|
500,000
|
|
|
3.87
|
%
|
|
500,000
|
|
|
3.87
|
%
|
||
Fixed-rate 3.90% Senior Notes Due June 15, 2026 ("2026 Notes")
|
—
|
|
|
—
|
|
|
1,000,000
|
|
|
4.01
|
%
|
||
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes")
|
699,808
|
|
(1)
|
4.28
|
%
|
|
699,895
|
|
(3)
|
4.28
|
%
|
||
Total debt outstanding, at par
|
2,949,657
|
|
|
|
|
4,549,849
|
|
|
|
||||
Unamortized discount
|
(206,996
|
)
|
|
|
|
(232,727
|
)
|
|
|
||||
Fair value adjustment - interest rate contracts
|
(19,177
|
)
|
|
|
|
8,552
|
|
|
|
||||
Unamortized bond issuance costs
|
(3,885
|
)
|
|
|
|
(7,213
|
)
|
(4)
|
|
||||
Total debt outstanding, at carrying value
|
$
|
2,719,599
|
|
|
|
|
$
|
4,318,461
|
|
|
|
||
Reported as:
|
|
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
951,052
|
|
(2)
|
|
|
$
|
940,537
|
|
(2)
|
|
||
Long-term debt
|
1,768,547
|
|
|
|
|
3,377,924
|
|
|
|
||||
Total debt outstanding, at carrying value
|
$
|
2,719,599
|
|
|
|
|
$
|
4,318,461
|
|
|
|
|
December 25, 2016
|
|
June 26, 2016
|
||||||||||||
2018 Notes
|
|
2041 Notes
|
|
2018 Notes
|
|
2041 Notes
|
|||||||||
(in thousands, except years, percentages, conversion rate, and conversion price)
|
|||||||||||||||
Carrying amount of permanent equity component, net of tax
|
$
|
81,135
|
|
|
$
|
154,241
|
|
|
$
|
72,992
|
|
|
$
|
152,397
|
|
Carrying amount of temporary equity component, net of tax
|
$
|
23,685
|
|
|
$
|
173,628
|
|
|
$
|
31,894
|
|
|
$
|
175,658
|
|
Remaining amortization period (years)
|
1.4
|
|
|
24.4
|
|
|
1.9
|
|
|
24.9
|
|
||||
Fair Value of Notes (Level 2)
|
$
|
801,919
|
|
|
$
|
2,219,497
|
|
|
|
|
|
||||
Conversion rate (shares of common stock per $1,000 principal amount of notes)
|
16.4605
|
|
|
29.5403
|
|
|
|
|
|
||||||
Conversion price (per share of common stock)
|
$
|
60.75
|
|
|
$
|
33.85
|
|
|
|
|
|
||||
If-converted value in excess of par value
|
$
|
350,306
|
|
|
$
|
1,534,067
|
|
|
|
|
|
||||
Estimated share dilution using average quarterly stock price $100.52 per share
|
2,930
|
|
|
13,711
|
|
|
|
|
|
|
|
2018 Notes
|
||
|
(shares in thousands)
|
|||
Warrants:
|
|
|
||
Underlying shares
|
|
7,407
|
|
|
Estimated share dilution using average quarterly stock price $100.52 per share
|
|
2,000
|
|
|
Exercise price
|
|
$
|
73.36
|
|
Expiration date range
|
|
August 15 - October 23, 2018
|
|
|
Convertible Note Hedge: |
|
|
||
Number of shares available from counterparties |
|
7,405
|
|
|
Exercise price
|
|
$
|
60.75
|
|
|
Remaining Amortization period
|
|
Fair Value of Notes (Level 2)
|
||
|
(years)
|
|
(in thousands)
|
||
2020 Notes
|
3.2
|
|
$
|
499,690
|
|
2021 Notes
|
4.5
|
|
$
|
790,192
|
|
2025 Notes
|
8.2
|
|
$
|
497,955
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||
|
|
|
|
(in thousands)
|
|||||||||||
Contractual interest coupon
|
$
|
22,622
|
|
|
$
|
14,750
|
|
|
$
|
57,334
|
|
|
$
|
29,577
|
|
Amortization of interest discount
|
5,673
|
|
|
9,258
|
|
|
11,587
|
|
|
18,380
|
|
||||
Amortization of issuance costs
|
531
|
|
|
14,391
|
|
|
1,449
|
|
|
15,043
|
|
||||
Effect of interest rate contracts, net
|
(2,566
|
)
|
|
95
|
|
|
(3,624
|
)
|
|
189
|
|
||||
Total interest cost recognized
|
$
|
26,260
|
|
|
$
|
38,494
|
|
|
$
|
66,746
|
|
|
$
|
63,189
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
December 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||
(in thousands)
|
|||||||||||||||
Balance at beginning of period
|
$
|
103,226
|
|
|
$
|
98,968
|
|
|
$
|
100,321
|
|
|
$
|
93,209
|
|
Warranties issued during the period
|
41,544
|
|
|
26,173
|
|
|
76,399
|
|
|
59,486
|
|
||||
Settlements made during the period
|
(32,747
|
)
|
|
(27,691
|
)
|
|
(64,975
|
)
|
|
(55,154
|
)
|
||||
Changes in liability for pre-existing warranties
|
7,311
|
|
|
(115
|
)
|
|
7,589
|
|
|
(206
|
)
|
||||
Balance at end of period
|
$
|
119,334
|
|
|
$
|
97,335
|
|
|
$
|
119,334
|
|
|
$
|
97,335
|
|
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 26, 2016
|
|
|
|
|
|
|
$
|
229,094
|
|
|||||
Quarter ended September 25, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
229,094
|
|
|||
Board authorization, November 2016
|
|
|
|
|
|
|
1,000,000
|
|
||||||
Quarter ended December 25, 2016
|
619
|
|
|
$
|
65,014
|
|
|
$
|
105.01
|
|
|
$
|
934,986
|
|
|
Accumulated foreign
currency translation adjustment |
|
Accumulated
unrealized holding gain (loss) on cash flow hedges |
|
Accumulated
unrealized holding gain (loss) on available- for-sale investments |
|
Accumulated
unrealized components of defined benefit plans |
|
Total
|
||||||||||
(in thousands)
|
|||||||||||||||||||
Balance as of June 26, 2016
|
$
|
(39,528
|
)
|
|
$
|
(15,623
|
)
|
|
$
|
4,896
|
|
|
$
|
(19,078
|
)
|
|
$
|
(69,333
|
)
|
Other comprehensive income (loss) before reclassifications
|
(10,126
|
)
|
|
12,804
|
|
|
(16,308
|
)
|
|
245
|
|
|
(13,385
|
)
|
|||||
Losses reclassified from accumulated other comprehensive income (loss) to net income
|
199
|
|
(1)
|
11,448
|
|
(2)
|
994
|
|
(1)
|
—
|
|
|
12,641
|
|
|||||
Net current-period other comprehensive income (loss)
|
$
|
(9,927
|
)
|
|
$
|
24,252
|
|
|
$
|
(15,314
|
)
|
|
$
|
245
|
|
|
$
|
(744
|
)
|
Balance as of December 25, 2016
|
$
|
(49,455
|
)
|
|
$
|
8,629
|
|
|
$
|
(10,418
|
)
|
|
$
|
(18,833
|
)
|
|
$
|
(70,077
|
)
|
(1)
|
Amount of after tax gain reclassified from accumulated other comprehensive income into net income located in other expense, net.
|
(2)
|
Amount of after tax gain reclassified from AOCI into net income located in revenue:
$12,469
loss; cost of goods sold:
$24
gain; selling, general and administrative expenses:
$119
loss; and other income and expense:
$1,116
gain.
|
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
||||||||||
December 25, 2016
|
|
September 25,
2016 |
|
December 27, 2015
|
|||||||
(in thousands, except per share data and
percentages) |
|||||||||||
Revenue
|
$
|
1,882,299
|
|
|
$
|
1,632,419
|
|
|
$
|
1,425,534
|
|
Gross margin
|
$
|
846,797
|
|
|
$
|
716,197
|
|
|
$
|
626,510
|
|
Gross margin as a percent of total revenue
|
45.0
|
%
|
|
43.9
|
%
|
|
43.9
|
%
|
|||
Total operating expenses
|
$
|
406,969
|
|
|
$
|
400,250
|
|
|
$
|
387,676
|
|
Net income
|
$
|
332,791
|
|
|
$
|
263,835
|
|
|
$
|
222,980
|
|
Diluted net income per share
|
$
|
1.81
|
|
|
$
|
1.47
|
|
|
$
|
1.28
|
|
|
Three Months Ended
|
||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|||||||
Shipments (in millions)
|
$
|
1,923
|
|
|
$
|
1,708
|
|
|
$
|
1,288
|
|
Taiwan
|
37
|
%
|
|
26
|
%
|
|
38
|
%
|
|||
Korea
|
25
|
%
|
|
28
|
%
|
|
15
|
%
|
|||
China
|
8
|
%
|
|
11
|
%
|
|
9
|
%
|
|||
Japan
|
12
|
%
|
|
11
|
%
|
|
21
|
%
|
|||
United States
|
8
|
%
|
|
8
|
%
|
|
8
|
%
|
|||
Europe
|
6
|
%
|
|
5
|
%
|
|
4
|
%
|
|||
Southeast Asia
|
4
|
%
|
|
11
|
%
|
|
5
|
%
|
|
Three Months Ended
|
|||||||
|
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|||
Memory
|
61
|
%
|
|
56
|
%
|
|
65
|
%
|
Foundry
|
31
|
%
|
|
36
|
%
|
|
25
|
%
|
Logic/integrated device manufacturing
|
8
|
%
|
|
8
|
%
|
|
10
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
Revenue (in millions)
|
$
|
1,882
|
|
|
$
|
1,632
|
|
|
$
|
1,426
|
|
|
$
|
3,515
|
|
|
$
|
3,026
|
|
Taiwan
|
37
|
%
|
|
26
|
%
|
|
31
|
%
|
|
32
|
%
|
|
29
|
%
|
|||||
Korea
|
26
|
%
|
|
23
|
%
|
|
15
|
%
|
|
25
|
%
|
|
16
|
%
|
|||||
China
|
10
|
%
|
|
14
|
%
|
|
17
|
%
|
|
12
|
%
|
|
17
|
%
|
|||||
Japan
|
8
|
%
|
|
15
|
%
|
|
22
|
%
|
|
11
|
%
|
|
20
|
%
|
|||||
Southeast Asia
|
5
|
%
|
|
12
|
%
|
|
5
|
%
|
|
8
|
%
|
|
6
|
%
|
|||||
United States
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
|
8
|
%
|
|||||
Europe
|
7
|
%
|
|
3
|
%
|
|
3
|
%
|
|
5
|
%
|
|
4
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
(in thousands, except percentages)
|
|||||||||||||||||||
Gross margin
|
$
|
846,797
|
|
|
$
|
716,197
|
|
|
$
|
626,510
|
|
|
$
|
1,562,994
|
|
|
$
|
1,348,873
|
|
Percent of total revenue
|
45.0
|
%
|
|
43.9
|
%
|
|
43.9
|
%
|
|
44.5
|
%
|
|
44.6
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
(in thousands, except percentages)
|
|||||||||||||||||||
Research & development (“R&D”)
|
$
|
246,804
|
|
|
$
|
235,240
|
|
|
$
|
220,754
|
|
|
$
|
482,044
|
|
|
$
|
454,963
|
|
Percent of total revenue
|
13.1
|
%
|
|
14.4
|
%
|
|
15.5
|
%
|
|
13.7
|
%
|
|
15.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
(in thousands, except percentages)
|
|||||||||||||||||||
Selling, general & administrative (“SG&A”)
|
$
|
160,165
|
|
|
$
|
165,010
|
|
|
$
|
166,922
|
|
|
$
|
325,175
|
|
|
$
|
319,648
|
|
Percent of total revenue
|
8.5
|
%
|
|
10.1
|
%
|
|
11.7
|
%
|
|
9.3
|
%
|
|
10.6
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
|
|
(in thousands)
|
|
|
|
|
|
|
|||||||||||
Interest income
|
$
|
10,945
|
|
|
$
|
12,763
|
|
|
$
|
6,729
|
|
|
$
|
23,708
|
|
|
$
|
12,489
|
|
Interest expense
|
(26,641
|
)
|
|
(41,429
|
)
|
|
(38,577
|
)
|
|
(68,070
|
)
|
|
(63,238
|
)
|
|||||
Gains (losses) on deferred compensation plan related assets, net
|
1,666
|
|
|
6,172
|
|
|
1,983
|
|
|
7,838
|
|
|
(3,181
|
)
|
|||||
Loss on extinguishment of debt
|
(36,325
|
)
|
|
—
|
|
|
—
|
|
|
(36,325
|
)
|
|
—
|
|
|||||
Foreign exchange gains (losses), net
|
1,011
|
|
|
1,219
|
|
|
512
|
|
|
2,230
|
|
|
(186
|
)
|
|||||
Other, net
|
(5,679
|
)
|
|
(1,879
|
)
|
|
(582
|
)
|
|
(7,558
|
)
|
|
(2,940
|
)
|
|||||
|
$
|
(55,023
|
)
|
|
$
|
(23,154
|
)
|
|
$
|
(29,935
|
)
|
|
$
|
(78,177
|
)
|
|
$
|
(57,056
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
December 25,
2016 |
|
September 25,
2016 |
|
December 27,
2015 |
|
December 25,
2016 |
|
December 27,
2015 |
|||||||||||
(in thousands, except percentages)
|
|||||||||||||||||||
Income tax expense (benefit)
|
$
|
52,014
|
|
|
$
|
28,958
|
|
|
$
|
(14,081
|
)
|
|
$
|
80,972
|
|
|
$
|
5,547
|
|
Effective tax rate
|
13.5
|
%
|
|
9.9
|
%
|
|
(6.7
|
)%
|
|
11.9
|
%
|
|
1.1
|
%
|
•
|
the recognition and valuation of revenue from multiple-element arrangements, which impacts revenue;
|
•
|
the valuation of inventory, which impacts gross margin;
|
•
|
the valuation of warranty reserves, which impacts gross margin;
|
•
|
the valuation of equity based compensation expense, including forfeiture estimates, which impacts both gross margin and operating expenses;
|
•
|
the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, which impact our provision for income tax expenses; and
|
•
|
the valuation and recoverability of long-lived assets, which impacts gross margin and operating expenses when we record asset impairments or accelerate their depreciation or amortization.
|
Net income
|
$
|
596.6
|
|
Non-cash charges:
|
|
||
Depreciation and amortization
|
151.6
|
|
|
Equity-based compensation
|
70.9
|
|
|
Deferred income taxes
|
42.2
|
|
|
Amortization of note discounts and issuance costs
|
13.0
|
|
|
Loss on extinguishment of debt
|
36.3
|
|
|
Changes in operating asset and liability accounts
|
(48.9
|
)
|
|
Other
|
15.6
|
|
|
|
$
|
877.3
|
|
ITEM 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
Valuation of Securities
Given an Interest Rate
Decrease of X Basis Points
|
|
Fair Value as of
December 25, 2016
|
|
Valuation of Securities
Given an Interest Rate
Increase of X Basis Points
|
||||||||||||||||||||||
|
(150 BPS)
|
|
(100 BPS)
|
|
(50 BPS)
|
|
0.00%
|
|
50 BPS
|
|
100 BPS
|
|
150 BPS
|
||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||
Time Deposit
|
$
|
728,810
|
|
|
$
|
728,810
|
|
|
$
|
728,810
|
|
|
$
|
728,810
|
|
|
$
|
728,810
|
|
|
$
|
728,810
|
|
|
$
|
728,810
|
|
Municipal Notes and Bonds
|
135,542
|
|
|
135,412
|
|
|
135,103
|
|
|
134,771
|
|
|
134,438
|
|
|
134,106
|
|
|
133,774
|
|
|||||||
U.S. Treasury & Agencies
|
826,577
|
|
|
821,398
|
|
|
814,228
|
|
|
806,883
|
|
|
799,531
|
|
|
792,180
|
|
|
784,831
|
|
|||||||
Government-Sponsored Enterprises
|
31,647
|
|
|
31,635
|
|
|
31,476
|
|
|
31,315
|
|
|
31,154
|
|
|
30,992
|
|
|
30,831
|
|
|||||||
Foreign Government Bonds
|
31,036
|
|
|
30,847
|
|
|
30,638
|
|
|
30,428
|
|
|
30,218
|
|
|
30,009
|
|
|
29,799
|
|
|||||||
Bank and Corporate Notes
|
2,403,889
|
|
|
2,388,641
|
|
|
2,371,753
|
|
|
2,354,838
|
|
|
2,337,926
|
|
|
2,321,016
|
|
|
2,304,108
|
|
|||||||
Mortgage Backed Securities - Residential
|
101,389
|
|
|
100,292
|
|
|
99,116
|
|
|
97,936
|
|
|
96,754
|
|
|
95,572
|
|
|
94,390
|
|
|||||||
Mortgage Backed Securities - Commercial
|
55,058
|
|
|
54,725
|
|
|
54,390
|
|
|
54,055
|
|
|
53,720
|
|
|
53,385
|
|
|
53,050
|
|
|||||||
Total
|
$
|
4,313,948
|
|
|
$
|
4,291,760
|
|
|
$
|
4,265,514
|
|
|
$
|
4,239,036
|
|
|
$
|
4,212,551
|
|
|
$
|
4,186,070
|
|
|
$
|
4,159,593
|
|
ITEM 4.
|
Controls and Procedures
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
Legal Proceedings
|
ITEM 1A.
|
Risk Factors
|
•
|
a decline in demand for our products or services;
|
•
|
an increase in reserves on accounts receivable due to our customers’ inability to pay us;
|
•
|
an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory;
|
•
|
valuation allowances on deferred tax assets;
|
•
|
restructuring charges;
|
•
|
asset impairments including the potential impairment of goodwill and other intangible assets;
|
•
|
a decline in the value of our investments;
|
•
|
exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition;
|
•
|
a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and
|
•
|
challenges maintaining reliable and uninterrupted sources of supply.
|
•
|
economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry;
|
•
|
the size and timing of orders from customers;
|
•
|
consolidation of the customer base, which may result in the investment decisions of one customer or market having a significant effect on demand for our products or services;
|
•
|
procurement shortages;
|
•
|
the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations;
|
•
|
manufacturing difficulties;
|
•
|
customer cancellations or delays in shipments, installations, and/or customer acceptances;
|
•
|
the extent that customers continue to purchase and use our products and services in their business;
|
•
|
our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services;
|
•
|
changes in average selling prices, customer mix, and product mix;
|
•
|
our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products;
|
•
|
our competitors’ introduction of new products;
|
•
|
legal or technical challenges to our products and technology;
|
•
|
transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural or man-made disasters;
|
•
|
legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements;
|
•
|
changes in our estimated effective tax rate;
|
•
|
foreign currency exchange rate fluctuations; and
|
•
|
the dilutive impact of our Convertible Notes (as defined below) and related warrants on our earnings per share.
|
•
|
risk associated with any inability to satisfy our obligations;
|
•
|
a portion of our cash flows that may have to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes; and
|
•
|
impairing our ability to obtain additional financing in the future.
|
•
|
incur additional debt, assume obligations in connection with letters of credit, or issue guarantees;
|
•
|
create liens;
|
•
|
enter into transactions with our affiliates;
|
•
|
sell certain assets; and
|
•
|
merge or consolidate with any person.
|
•
|
a decline in demand for even a limited number of our products;
|
•
|
a failure to achieve continued market acceptance of our key products;
|
•
|
export restrictions or other regulatory or legislative actions that could limit our ability to sell those products to key customers or customers within certain markets;
|
•
|
an improved version of products being offered by a competitor in the markets in which we participate;
|
•
|
increased pressure from competitors that offer broader product lines;
|
•
|
technological changes that we are unable to address with our products; or
|
•
|
a failure to release new or enhanced versions of our products on a timely basis.
|
•
|
trade balance issues;
|
•
|
tariffs and other barriers;
|
•
|
global or national economic and political conditions;
|
•
|
changes in currency controls;
|
•
|
differences in the enforcement of intellectual property and contract rights in varying jurisdictions;
|
•
|
our ability to respond to customer and foreign government demands for locally sourced systems, spare parts and services and develop the necessary relationships with local suppliers;
|
•
|
compliance with U.S. and international laws and regulations affecting foreign operations; including U.S. and international trade restrictions and sanctions, anti-bribery, anti-corruption, environmental, tax, and labor laws;
|
•
|
fluctuations in interest and foreign currency exchange rates;
|
•
|
our ability to repatriate cash in a tax-efficient manner;
|
•
|
the need for technical support resources in different locations; and
|
•
|
our ability to secure and retain qualified people, and effectively manage people, in all necessary locations for the successful operation of our business.
|
•
|
general market, semiconductor, or semiconductor equipment industry conditions;
|
•
|
economic or political events, trends and unexpected developments occurring nationally, globally, or in any of our key sales regions;
|
•
|
variations in our quarterly operating results and financial condition, including our liquidity;
|
•
|
variations in our revenues, earnings or other business and financial metrics from forecasts by us or securities analysts, or from those experienced by other companies in our industry;
|
•
|
announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of operations;
|
•
|
government regulations;
|
•
|
developments in, or claims relating to, patent or other proprietary rights;
|
•
|
technological innovations and the introduction of new products by us or our competitors;
|
•
|
commercial success or failure of our new and existing products;
|
•
|
disruptions of relationships with key customers or suppliers; or
|
•
|
dilutive impacts of our Convertible Notes and related warrants.
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Total Number
of Shares
Repurchased
(1)
|
|
Average Price
Paid Per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
|
|
Amount
Available
Under
Repurchase
Program
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||||
Amount available at June 26, 2016
|
|
|
|
|
|
|
$
|
316,587
|
|
||||
Quarter ended September 25, 2016
|
20
|
|
|
$
|
90.53
|
|
|
—
|
|
|
229,094
|
|
|
September 26, 2015 - October 23, 2016
|
111
|
|
|
$
|
94.82
|
|
|
—
|
|
|
229,094
|
|
|
Board-approved increase (November 2016)
|
|
|
|
|
|
|
1,000,000
|
|
|||||
October 24, 2016 - November 20, 2016
|
3
|
|
|
$
|
98.12
|
|
|
—
|
|
|
1,000,000
|
|
|
November 21, 2016 - December 25, 2016
|
621
|
|
|
$
|
105.00
|
|
|
619
|
|
|
934,986
|
|
|
Total Quarter Ended December 25, 2016
|
735
|
|
|
$
|
103.43
|
|
|
619
|
|
|
$
|
934,986
|
|
(1)
|
During the three and six months ended
December 25, 2016
, the Company acquired
116 thousand
shares at a total cost of
$11.0 million
and
137 thousand
shares at a total cost of
$12.9 million
, respectively, 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 plan.
|
ITEM 3.
|
Defaults Upon Senior Securities
|
ITEM 4.
|
Mine Safety Disclosures
|
ITEM 5.
|
Other Information
|
ITEM 6.
|
Exhibits
|
Date:
|
January 30, 2017
|
LAM RESEARCH CORPORATION
(Registrant)
|
|
|
|||
|
/s/ Douglas R. Bettinger
|
||
Douglas R. Bettinger
|
|||
Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting
Officer)
|
Exhibit
Number
|
Description
|
|
|
3.1
|
Restated Certificate of Incorporation of Lam Research Corporation, dated November 22, 2016
|
|
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)
|
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)
|
|
|
32.1
|
Section 1350 Certification (Principal Executive Officer)
|
|
|
32.2
|
Section 1350 Certification (Principal Financial Officer)
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
FIRST:
|
The name of the Corporation is Lam Research Corporation (the "Corporation").
|
SECOND:
|
The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, zip code 19801. The name of its registered agent at such address is The Corporation Trust company.
|
THIRD:
|
The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
|
FOURTH:
|
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 405,000,000 shares, consisting of 400,000,000 shares of Common Stock, par value $.001 per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock, par value $.001 per share (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences or any wholly unissued class or series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them.
The Board of Directors is further authorized to increase or decrease the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the limitations and restrictions stated in the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Lam Research Corporation is attached hereto as
Exhibit A
.
|
FIFTH:
|
[RESERVED]
|
SIXTH:
|
The Corporation is to have perpetual existence.
|
SEVENTH:
|
Elections of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins or unless the Bylaws of the Corporation shall so provide.
|
EIGHTH:
|
The number of directors which constitute the whole Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation.
|
NINTH:
|
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.
|
TENTH:
|
To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.
|
ELEVENTH:
|
Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places an may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
|
TWELFTH:
|
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and the rights conferred upon stockholders herein are granted subject to this reservation.
|
|
/s/ Martin B. Anstice
|
|
Martin B. Anstice
|
|
President and Chief Executive Officer
|
|
/s/ Douglas R. Bettinger
|
|
Douglas R. Bettinger
|
|
Executive Vice President, Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
/s/ Martin B. Anstice
|
|
Martin B. Anstice
|
|
President and Chief Executive Officer
|
|
/s/ Douglas R. Bettinger
|
|
Douglas R. Bettinger
|
|
Executive Vice President, Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|