Applied Materials (NASDAQ:AMAT), a maker of semiconductor manufacturing equipment, released full-year 2006 earnings on Nov. 15 for the period ended Oct. 29.

  • As long as back-end suppliers like Applied Materials keep growing sales at a better-than-30% clip, you have to assume that the semiconductor industry as a whole is growing at a healthy pace, too. The company's customers wouldn't be buying more fabrication equipment unless they saw a future need for increased production capacity.

  • Free cash flow is another fast-growing item here, though the company still had to dip into its cash accounts to fund acquisitions and share buybacks.

  • Other than net margins, which suffered from a higher-than-expected tax rate for the year, those margins are moving in the right direction on a year-over-year and sequential basis.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

FY 2006

FY 2005

Change

Sales

$9,210

$9,167.0

$6,991.8

31.1%

Net Profit

--

$1,516.7

$1,209.9

25.4%

EPS

$1.06

$0.97

$0.73

32.9%

Diluted Shares

 --

1,565.1

1,657.5

(5.6%)



Get back to basics with a look at the income statement.

Margin Checkup

FY 2006

FY 2005

Change*

Gross Margin

46.82%

44.14%

2.68

Operating Margin

22.04%

20.71%

1.33

Net Margin

16.54%

17.30%

(0.76)

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

FY 2006

FY 2005

Change

Cash + ST Invest.

$1,897.3

$3,333.3

(43.1%)

Accounts Rec.

$2,026.2

$1,615.5

25.4%

Inventory

$1,406.8

$1,034.1

36%


Liabilities

FY 2006

FY 2005

Change

Accounts Payable

$2,023.7

$1,618.0

25.1%

Long-Term Debt

$204.7

$407.4

(49.8%)



Learn the ways of the balance sheet.

Cash Flow Highlights

FY 2006

FY 2005

Change

Cash From Ops.

$1,935.6

$1,247.1

55.2%

Capital Expenditures

$179.1

$199.7

(10.3%)

Free Cash Flow

$1,756.5

$1,047.5

67.7%

2006 Figures extracted from the earnings conference call.

Find out why Fools always follow the money.

Cash Handling Checkup

FY 2006

FY 2005

Change

Days in Inventory

91.4

101.6

(10.2)

Days in Receivables

72.5

85.8

(13.3)

Days Payables Outstanding

136.3

164.1

(27.8)

Cash Conversion Cycle

27.5

23.2

4.4

New Orders

$9,890

$6,390

55%



Read up on cash conversion metrics.

Competitors:

  • Brooks Automation (NASDAQ:BRKS)
  • LAM Research (NASDAQ:LRCX)
  • Linear Technology (NASDAQ:LLTC)

Major Customers:

  • Intel (NASDAQ:INTC)
  • STMicroelectronics (NYSE:STM)
  • Semiconductor Manufacturing International (NYSE:SMI)

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here . Intel is a Motley Fool Inside Value recommendation.