10-QPeriod: Q1 FY2002

LAM RESEARCH CORP Quarterly Report for Q1 Ended Sep 23, 2001

Filed November 5, 2001For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported its third-quarter results for the period ending September 23, 2001. The company experienced a year-over-year revenue increase of 11.3% to $339.6 million. However, gross margin declined significantly from 43.5% to 34.8% due to lower manufacturing volumes, excess capacity, and restructuring charges. Consequently, the company reported a net loss of $8.9 million for the quarter, a substantial deterioration from the net income of $19.8 million (before a large accounting adjustment) in the prior year's comparable quarter. Significant restructuring charges of $21.0 million were recorded in relation to workforce reductions and facility consolidations, reflecting the challenging market conditions in the semiconductor equipment industry. The company ended the quarter with $94.0 million in cash and cash equivalents, a decrease from $221.7 million at the end of the prior quarter, impacted by operating cash burn and investing activities.

Key Highlights

  • 1Revenue increased by 11.3% to $339.6 million, compared to $305.0 million in the prior year's quarter.
  • 2Gross margin decreased to 34.8% from 43.5% in the prior year, impacted by lower volumes and restructuring charges.
  • 3The company reported a net loss of $8.9 million, a significant decline from the net income of $19.8 million in the prior year (before accounting adjustments).
  • 4Substantial restructuring charges of $21.0 million were incurred due to workforce reductions and facility consolidation, reflecting a challenging industry environment.
  • 5Cash and cash equivalents decreased to $94.0 million from $221.7 million in the previous quarter.
  • 6The company is adjusting its revenue recognition policy to align with SEC Staff Accounting Bulletin No. 101 (SAB 101), which may delay revenue recognition.
  • 7Investments in derivative financial instruments related to the company's stock resulted in an $18.0 million charge to 'Other Income (Expense), net' due to a decline in stock price.

Frequently Asked Questions

The company reported an increase in revenue but a significant decline in profitability, resulting in a net loss for the quarter. This is attributed to lower gross margins, increased restructuring charges, and challenging market conditions in the semiconductor equipment industry.

The gross margin decreased due to lower manufacturing volumes leading to excess capacity and unabsorbed costs, along with restructuring charges of $7.6 million related to goods sold.

The company announced two restructuring plans, one in April 2001 and another in August 2001, to reduce headcount and rationalize facilities in response to the anticipated decline in the semiconductor equipment market and subsequent reduction in customer capital expenditures. These plans resulted in charges for severance, lease payments on vacated facilities, and inventory write-offs.

Cash and cash equivalents decreased from $221.7 million at the end of the previous quarter to $94.0 million. This decrease was driven by net cash used in operating activities and investing activities, including net purchases of available-for-sale securities.