01—Abstract
Summary
Summary of the 10-K filed August 27, 2013. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Revenue increased by 35% year-over-year to $3.6 billion, largely due to the full-year inclusion of the Novellus acquisition.
- The company reported net income of $113.9 million, a decrease from the previous year, impacted by acquisition-related expenses and amortization.
- Research and Development (R&D) expenses increased significantly by 53.8% to $683.7 million, reflecting continued investment in product innovation.
- Gross 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.
- The company completed a significant portion of its $1.6 billion share repurchase program and authorized a new $250 million program.
- Three major customers (Samsung, SK Hynix, TSMC) accounted for 46% of total revenues, indicating significant customer concentration.
- International sales represented a substantial majority of revenue, with Taiwan and Korea being the largest markets.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Lam Research Corp kept $0.03.
- Revenue$3.60B100.0%
- Cost of revenue−$2.20B61.0%
- Gross profit$1.40B39.0%
- Operating costs−$1.28B35.7%
- Operating income$118.1M3.3%
- Interest, other & tax−$4.2M0.1%
- Net income$113.9M3.2%
Where FY2013 revenue went
$3.60B- Cost of revenue: $2.20B, 61% of revenue
- R&D: $683.7M, 19% of revenue
- SG&A: $601.3M, 17% of revenue
- Net income: $113.9M, 3.2% of revenue
Kept 3.2% as net incomeNet income $113.9M · 3.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed August 27, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $3.60B$2.67B | +35.0% |
| Cost of Revenue | $2.20B$1.58B | +38.9% |
| Gross Profit | $1.40B$1.08B | +29.4% |
| R&D Expenses | $683.69M$444.56M | +53.8% |
| SG&A Expenses | $601.30M$401.78M | +49.7% |
| Operating Expenses | $1.28B$846.34M | +51.8% |
| Operating Income | $118.07M$237.73M | −50.3% |
| Interest Expense | $60.41M$38.96M | +55.0% |
| Net Income | $113.88M$168.72M | −32.5% |
| EPS (Basic) | $0.07$0.14 | −50.7% |
| EPS (Diluted) | $0.07$0.14 | −51.1% |
| Shares Outstanding (Basic) | 1.69B1.24B | +36.0% |
| Shares Outstanding (Diluted) | 1.73B1.25B | +38.5% |
05—Questions
Frequently Asked Questions
What was the impact of the Novellus acquisition on Lam Research's fiscal year 2013 performance?
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.
How diversified is Lam Research's revenue base geographically and by customer?
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.
What is Lam Research's strategy regarding research and development (R&D)?
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.
How did the company manage its capital and shareholder returns in fiscal year 2013?
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.
06—Continue