10-KPeriod: FY2003

ENTEGRIS INC Annual Report, Year Ended Aug 30, 2003

Filed November 26, 2003For Securities:ENTG

Summary

Entegris, Inc. (ENTG) filed its 10-K for the fiscal year ended August 30, 2003, reporting net sales of $248.8 million, a 13% increase from the prior year. This growth was driven by a modest recovery in the semiconductor industry and contributions from recent acquisitions, particularly in the life sciences and data storage markets. Despite increased sales, gross margins slightly decreased to 39.7% from 40.4% due to factors like under-absorption of fixed manufacturing costs related to a transition to a build-to-order model and integration costs from acquisitions. The company continues to focus on expanding its materials integrity management solutions into new markets beyond its core semiconductor and data storage businesses, including life sciences and fuel cells. Entegris is also strategically pursuing acquisitions to complement its growth and enhance its technology base and product offerings, as evidenced by the acquisitions of Electrol Specialties Company and Asyst Technologies' wafer and reticle carrier product lines in fiscal year 2003. However, the semiconductor industry remains highly cyclical, posing a risk to future revenue and profitability.

Key Highlights

  • 1Net sales increased 13% to $248.8 million in fiscal 2003, driven by recovery in the semiconductor market and growth in newer markets.
  • 2Gross profit increased 11% to $98.7 million, but gross margin slightly declined to 39.7% from 40.4% due to operational adjustments and acquisition integration costs.
  • 3The company made two significant acquisitions in fiscal 2003: Electrol Specialties Company (life sciences) and Asyst Technologies' wafer and reticle carrier product lines (semiconductor).
  • 4International sales represented 59% of total sales in fiscal 2003, indicating a strong global presence and reliance on overseas markets.
  • 5Entegris reported a net income of $1.3 million ($0.02 diluted EPS) in fiscal 2003, a decrease from $2.8 million ($0.04 diluted EPS) in fiscal 2002, reflecting increased operating expenses and other charges.
  • 6The company's strategy includes broadening product/service offerings, expanding into new markets (life sciences, fuel cells), increasing operational efficiencies, and pursuing selective acquisitions.
  • 7Significant risks remain due to the cyclical nature of the semiconductor industry, rapid technological change, and potential disruptions in international operations.

Frequently Asked Questions

Entegris is a leading provider of materials integrity management solutions, with over 95% of its sales in fiscal 2003 derived from the microelectronics industry, specifically semiconductor and data storage markets. These solutions protect and manage critical materials throughout the manufacturing process.

In fiscal year 2003, Entegris reported a 13% increase in net sales to $248.8 million, largely due to a modest improvement in the semiconductor industry and contributions from acquisitions. However, net income decreased to $1.3 million from $2.8 million in fiscal year 2002, impacted by operational costs associated with manufacturing transitions, acquisition integration, and an impairment loss on an equity investment.

Entegris' strategy focuses on broadening its product and service offerings, expanding into new markets such as life sciences and fuel cells by leveraging its core materials integrity management expertise, increasing operational efficiencies through cost reduction and process improvements, enhancing its technological leadership, and pursuing selective acquisitions to complement its existing business and market reach.

Key risks include the highly cyclical nature of the semiconductor industry, which can lead to significant revenue and profit fluctuations. Additionally, rapid technological changes require continuous product development, dependence on international sales exposes the company to global economic and political risks, and supply chain vulnerabilities exist with single or limited-source suppliers for critical materials.