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LAM RESEARCH CORP Annual Report, Year Ended Jun 30, 1996

Filing Date
Filed September 23, 1996
Period End
June 30, 1996
Security
LRCX
In the record · 2016–202610-K1110-Q328-K128

LRCX filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 128 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Oct ’16Oct ’16
  2. FY2019 annual report10-K · Aug ’19Aug ’19
  3. Leadership change8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed September 23, 1996. Cited figures are marked; the original filing is the authoritative source.

Lam Research's fiscal 1996 (year ended June 30, 1996) was a record year on the top line but a sign of a turning market.

Total revenue rose 58% to $1,276.9 milliona from $810.6 million, net income climbed 58% to $141.1 million, and fully diluted EPS was $4.67. Growth was driven by strong demand for its TCP etch systems, Rainbow etch systems and the Alliance cluster platform, along with a rapidly growing installed base that boosted spares and service revenue. Foreign sales rose to 64% of revenue, with Asia Pacific and Japan contributing heavily.

Operating margin improved to 16.7%b from 14.6%, though gross margin edged down to 48.1% due to a mix shift toward lower-margin TCP and Alliance products. The outlook is considerably more cautious. Management said the semiconductor market had entered a period of volatility in demand and pricing, with some customers rescheduling or canceling equipment purchases.

The company stated that fiscal 1997 revenue could be lower than fiscal 1996, and it announced an August 1996 restructuring that cut about 11% of the workforce and carries a $11.0 to $12.0 millionc charge in the first quarter of fiscal 1997. Backlog stood at $328.0 million at June 30, 1996, up from $252.6 million a year earlier, which provides some near-term visibility. Management expects lower dollar operating expenses in fiscal 1997, though gross margins may come under pressure from overcapacity and slower industry conditions.

The balance sheet strengthened over the year. Stockholders' equity reached $609.8 milliond, up from $395.3 million, largely because the $64.3 million convertible subordinated debentures were converted into common stock in May 1996. Long-term debt fell to $52.9 million.

Operating cash flow was modest at $26.6 million because of heavy growth in receivables and inventories, which rose to $322.4 million. Management believes existing cash, short-term investments and its $210 million credit line will support operations through at least June 30, 1997. Key risks include the cyclical semiconductor market, competition from Applied Materials and Tokyo Electron, the pending Varian patent lawsuit, and reliance on Japanese licensing arrangements, with the TEL royalty rate set to drop substantially in January 1997.

02—Key points

Key Highlights

  1. Record fiscal 1996 revenue of $1,276.9 million, up 58% year over year, with net income of $141.1 million, up 58%
  2. Operating margin expanded to 16.7% from 14.6%, while gross margin slipped to 48.1% from 48.3% due to product mix
  3. Backlog reached $328.0 million at June 30, 1996, up 30% from $252.6 million a year earlier
  4. Management warned fiscal 1997 revenue could fall below fiscal 1996 levels amid semiconductor demand volatility and customer order rescheduling
  5. August 1996 restructuring cut about 11% of the workforce, with an $11.0 to $12.0 million charge expected in Q1 fiscal 1997
  6. Stockholders' equity rose to $609.8 million, aided by conversion of $64.3 million in convertible debentures into common stock
  7. Operating cash flow was only $26.6 million as inventories ballooned to $322.4 million, up from $171.4 million, signaling working capital strain

03—Questions

Frequently Asked Questions

  1. How strong was Lam Research's fiscal 1996 performance?

    Very strong on a headline basis. Revenue grew 58% to $1,276.9 million, net income rose 58% to $141.1 million, and fully diluted EPS was $4.67. Growth came from TCP and Alliance systems, Rainbow etch products and rising spares and service revenue tied to the installed base.

  2. Is the company expecting growth in fiscal 1997?

    No. Management said fiscal 1997 revenue could be less than fiscal 1996 because of market volatility and customer delays or cancellations. The company is cutting costs, including an 11% workforce reduction, and expects lower dollar operating expenses in fiscal 1997.

  3. What does the backlog tell investors?

    Backlog was $328.0 million at June 30, 1996, up from $252.6 million a year earlier. It offers near-term visibility, but the company notes that orders can be cancelled with limited penalty and backlog is not a reliable predictor of future sales.

  4. What are the main risks to the investment case?

    Key risks include cyclical semiconductor capital spending, intense competition from Applied Materials, Tokyo Electron and others, the Varian patent infringement suit, declining royalty income from Japanese licensees after the TEL rate cut in January 1997, reliance on single suppliers for some components, and the cash drain from rising inventories and receivables.

  5. Is the balance sheet healthy?

    It improved meaningfully. Equity rose to $609.8 million, long-term debt fell to $52.9 million after the debenture conversion, and the company had $130.5 million in cash and short-term investments plus $210 million in available credit, of which $25 million was drawn. Working capital grew to $470.2 million. Operating cash flow was thin, however, so funding growth relied on working capital management.

04—Continue

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