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LAM RESEARCH CORP Annual Report, Year Ended Jun 27, 2004

Filing Date
Filed September 10, 2004
Period End
June 27, 2004
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 10, 2004. Cited figures are marked; the original filing is the authoritative source.

Lam Research's fiscal 2004 (ended June 27, 2004) was a sharp recovery year.

Revenue rose 23.9% to $935.9 milliona from $755.2 million, and gross margin expanded to 46.1% of revenue from 40.2%, driven by higher volumes, better factory and field utilization, and expense management. Operating income swung to $106.2 million from a $5.4 million loss, and net income reached $83.0 million, or $0.59 per diluted share, versus a $7.7 million loss the prior year. Management attributed the improvement to a recovering semiconductor capital equipment market, with Asia Pacific rising to 52% of revenue, and to gains in market share it believes it is capturing.

The balance sheet was strengthened by repaying the $300 millionb 4% convertible notes two years early in June 2004, at a cash outlay of $303.0 million including a $3.0 million premium. Stockholders' equity rose to $812.5 million from $649.1 million, and long-term debt fell to $9.6 million from $332.2 million. Cash, short-term investments and restricted cash totaled $541.9 million at year-end.

Operating cash flow was a solid $157.1 millionc, though accounts receivable grew $138.4 million, reflecting higher sales volumes. Investors should weigh several risks. The company remains highly cyclical and dependent on a few large customers; ST Microelectronics accounted for about 15% of revenue in fiscal 2004.

Management guided September 2004 quarter revenue to $400d-415 million and gross margin near 50%. The company also ceased CMP (chemical mechanical polishing) development, taking a $2.4 million asset impairment charge, and still carries $13.9 million in restructuring reserves plus a $98.7 million residual value guarantee on Fremont facility leases. Sarbanes-Oxley Section 404 compliance begins with fiscal 2005.

02—Key points

Key Highlights

  1. Revenue grew 23.9% to $935.9 million in fiscal 2004, up from $755.2 million, with quarterly revenue rising through the year to $329.6 million in the June quarter.
  2. Gross margin improved to 46.1% of revenue from 40.2%, reflecting higher volumes, factory utilization gains and expense management.
  3. Net income of $83.0 million ($0.59 diluted EPS) reversed a $7.7 million net loss in fiscal 2003, and operating income reached $106.2 million.
  4. Early repayment of the $300 million 4% convertible notes in June 2004 eliminated nearly all long-term debt, cutting long-term obligations to $9.6 million from $332.2 million.
  5. Year-end cash, short-term investments and restricted cash of $541.9 million, with operating cash flow of $157.1 million.
  6. Backlog rose to about $403 million at June 27, 2004, from $239 million a year earlier, and management guided September 2004 quarter revenue to $400-415 million.
  7. Asia Pacific rose to 52% of revenue, and non-U.S. sales were about 82% of the total; the company ceased CMP systems development, recording a $2.4 million fixed-asset impairment.

03—Questions

Frequently Asked Questions

  1. What drove Lam Research's return to profitability in fiscal 2004?

    Stronger semiconductor capital spending lifted revenue 23.9% to $935.9 million. Higher volumes, better utilization of factory and field resources, and expense management lifted gross margin to 46.1% of revenue, which flowed through to operating income of $106.2 million compared with a $5.4 million loss in fiscal 2003.

  2. Why did Lam repay its 4% convertible notes early, and what did it cost?

    The company repaid the $300 million 4% notes in June 2004, two years before their June 2006 maturity, using accumulated cash. The cash outlay was $303.0 million including a $3.0 million redemption premium. The transaction, together with the settlement of the related interest rate swap, produced a net gain of $4.5 million in other income.

  3. How concentrated is Lam's customer base and geographic revenue?

    Customer concentration is significant: ST Microelectronics represented roughly 15% of fiscal 2004 revenue and Samsung about 15% of fiscal 2003 revenue. Asia Pacific accounted for 52% of fiscal 2004 revenue, up from 35% in fiscal 2002, and non-U.S. sales were about 82% of the total.

  4. What are the main risks and outstanding obligations investors should monitor?

    Revenue is volatile and cyclical, with individual system prices of $0.4 to $4.8 million meaning a few missed acceptances can materially affect a quarter. Obligations include $98.7 million in residual value guarantees on Fremont campus leases through fiscal 2008, $206.2 million of purchase commitments, and $13.9 million in restructuring reserves. Sarbanes-Oxley Section 404 internal control attestation begins with fiscal 2005.

04—Continue

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