10-KPeriod: FY2013

LAM RESEARCH CORP Annual Report, Year Ended Jun 30, 2013

Filed August 27, 2013For Securities:LRCX

Summary

Lam Research Corporation's fiscal year 2013 10-K filing reveals a company in a recovery phase, with revenues rebounding after a dip in the previous year, largely driven by the full-year inclusion of the Novellus Systems acquisition. The company's core business remains strong in providing essential wafer fabrication equipment for the semiconductor industry, with a particular emphasis on plasma etch and thin film deposition technologies. Despite a slight decrease in gross margin percentage due to acquisition-related adjustments and amortization, the overall financial picture shows top-line growth and continued investment in research and development to stay ahead in a rapidly evolving technological landscape. Investors should note the significant international revenue concentration, with Asia, particularly Taiwan and Korea, being key markets. The company also highlights its reliance on a few major customers, which presents both an opportunity for strong partnerships and a potential risk factor. Management is focused on navigating the cyclical nature of the semiconductor industry, managing expenses, and continuing to innovate to meet customer demands for smaller, faster, and more efficient integrated circuits.

Financial Highlights

54 data points
Beta

Revenue

$3.60B

39.0% Gross Margin

Net Income

$113.88M

3.2% Net Margin

EPS (Diluted)

$0.07

Total Assets

$7.25B

Cash & Equivalents

$1.16B

Free Cash Flow

$719.93M

Financial Statements
Beta
Revenue$3.60B
Cost of Revenue$2.20B
Gross Profit$1.40B
R&D Expenses$683.69M
SG&A Expenses$601.30M
Operating Expenses$1.28B
Operating Income$118.07M
Interest Expense$60.41M
Net Income$113.88M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)1.69B
Shares Outstanding (Diluted)1.73B

Key Highlights

  • 1Revenue increased by 35% year-over-year to $3.6 billion, largely due to the full-year inclusion of the Novellus acquisition.
  • 2The company reported net income of $113.9 million, a decrease from the previous year, impacted by acquisition-related expenses and amortization.
  • 3Research and Development (R&D) expenses increased significantly by 53.8% to $683.7 million, reflecting continued investment in product innovation.
  • 4Gross margin as a percentage of revenue slightly decreased to 39.0% from 40.7% in the prior year, primarily due to acquisition-related inventory adjustments and intangible asset amortization.
  • 5The company completed a significant portion of its $1.6 billion share repurchase program and authorized a new $250 million program.
  • 6Three major customers (Samsung, SK Hynix, TSMC) accounted for 46% of total revenues, indicating significant customer concentration.
  • 7International sales represented a substantial majority of revenue, with Taiwan and Korea being the largest markets.

Frequently Asked Questions

The acquisition of Novellus Systems, completed in June 2012, significantly impacted Lam Research's fiscal year 2013 results. The company reported a 35% increase in revenue to $3.6 billion, largely due to having a full year of Novellus' operations included. However, this also led to higher operating expenses and a slight decrease in gross margin percentage due to acquisition-related inventory fair value adjustments and amortization of intangible assets.

Lam Research's revenue is highly concentrated geographically, with the majority of sales coming from Asia. Taiwan, Korea, and Asia Pacific regions accounted for a significant portion of the total revenue. Furthermore, the company relies heavily on a few key customers; in fiscal year 2013, three customers (Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company) represented approximately 46% of total revenues. This concentration indicates significant customer dependency.

Lam Research is making substantial investments in R&D to maintain its competitive edge in the fast-evolving semiconductor equipment market. R&D expenses increased by over 53% in fiscal year 2013 to $683.7 million. This investment is focused on developing leading-edge technologies in plasma etch, deposition, and single-wafer clean processes, driven by customer needs for smaller, faster, and more power-efficient devices, and new fabrication strategies like 3D architectures and multiple patterning.

Lam Research continued its commitment to returning capital to shareholders. The company completed its $1.6 billion share repurchase program and authorized a new $250 million program. Despite the significant share repurchases, the company maintained substantial liquidity, with $2.7 billion in cash, cash equivalents, and short-term investments at the end of the fiscal year, sufficient to support its anticipated operations and investments.