10-KPeriod: FY2002

ENTEGRIS INC Annual Report, Year Ended Aug 31, 2002

Filed November 27, 2002For Securities:ENTG

Summary

Entegris, Inc. (ENTG) reported a significant decrease in net sales for fiscal year 2002, down 36% to $219.8 million, compared to $342.4 million in fiscal 2001. This decline is attributed to the continued weakness in the semiconductor industry, which began in the latter half of fiscal 2001 and led to reduced demand for both microelectronics and fluid handling products. Despite the revenue drop, the company's gross margin remained relatively solid at 40.4% for fiscal 2002, though down from 47.5% in fiscal 2001, impacted by lower factory utilization. Financially, Entegris experienced a net loss before income taxes of $1.4 million and a net income of $2.8 million ($0.04 per diluted share) for fiscal 2002, a stark contrast to the $60.1 million pre-tax income and $38.6 million net income ($0.53 per diluted share) in fiscal 2001. This performance reflects the challenging market conditions. The company is strategically focused on expanding its technological leadership, broadening product and service offerings, and pursuing selective acquisitions to navigate the cyclical nature of its core markets and drive future growth.

Key Highlights

  • 1Net sales decreased significantly by 36% to $219.8 million in fiscal 2002, primarily due to a downturn in the semiconductor industry.
  • 2Gross profit margin decreased to 40.4% in fiscal 2002 from 47.5% in fiscal 2001, largely due to lower factory utilization.
  • 3The company reported a net income of $2.8 million ($0.04 per diluted share) for fiscal 2002, a substantial decrease from $38.6 million ($0.53 per diluted share) in fiscal 2001.
  • 4International sales represented 53% of total revenue in fiscal 2002, indicating a continued reliance on global markets.
  • 5Entegris continues to invest in Research & Development, with expenses increasing to 7.9% of net sales in fiscal 2002, focusing on new technologies and next-generation products.
  • 6The company completed several acquisitions in fiscal 2001 and two in fiscal 2002 to expand its product portfolio and market reach.

Frequently Asked Questions

The primary driver for the decline in Entegris' revenue in fiscal year 2002 was the continuation of weakened business conditions in the semiconductor industry. This industry downturn, which began in the second half of fiscal 2001, led to a significant decrease in demand for both fluid handling and microelectronics products due to reduced factory utilization and capital spending by semiconductor manufacturers.

Entegris experienced a substantial decrease in profitability. Net income fell from $38.6 million in fiscal 2001 to $2.8 million in fiscal 2002. Earnings per diluted share also decreased from $0.53 to $0.04 over the same period. This decline was primarily driven by lower sales volumes, which impacted factory utilization and consequently, gross profit margins.

Entegris' strategy involves several key elements to address the cyclical nature of the semiconductor market. These include expanding technological leadership by investing in R&D and developing innovative products, broadening product and service offerings through internal development and acquisitions, expanding into international markets, and pursuing selective acquisitions to strengthen its market position and technology base.

Based on current order rates and industry expectations at the time of the filing, Entegris anticipated that sales for the first quarter of fiscal 2003 would be approximately 20% lower than the fourth quarter of fiscal 2002. However, the company cautioned that industry volatility and uncertain global market conditions made forecasting for future quarters difficult.