01—Abstract
Summary
Summary of the 10-K filed August 17, 2016. Cited figures are marked; the original filing is the authoritative source.
Lam Research Corporation's 2016 10-K filing details a strong year of growth, with revenues increasing by 11.9% to $5.89 billiona, driven by increased customer investment in technology and capacity, particularly from memory customers.
The company is strategically positioned to benefit from industry technology inflections like 3D NAND and FinFET, which are expanding its addressable market. Lam Research also announced a significant proposed acquisition of KLA-Tencor, aimed at strengthening its market position, though details on financing and integration risks are highlighted.
The company's robust R&D investment of $913.7 millionb underscores its commitment to innovation and maintaining a competitive edge in the dynamic semiconductor equipment industry. Fiscal year 2016 demonstrated solid financial performance with a significant increase in net income and improved gross margins.
02—Key points
Key Highlights
- Revenue increased by 11.9% to $5.89 billion in fiscal year 2016, driven by increased customer investment in semiconductor manufacturing equipment.
- Net income grew significantly by 39.4% to $914 million, with diluted EPS rising to $5.22.
- Gross margin improved to 44.5% of revenue, up from 43.4% in the prior year, attributed to a more favorable customer and product mix.
- The company significantly increased its R&D spending to $913.7 million, reflecting a commitment to innovation and development of next-generation semiconductor manufacturing solutions.
- Lam Research announced a pending acquisition of KLA-Tencor, a move intended to enhance its market position, though the filing notes associated risks and financing considerations.
- Geographically, Asia continues to be the largest revenue contributor, with Taiwan, Korea, and China representing a substantial portion of sales.
- The company's backlog increased to $1.37 billion from $880 million at the end of the previous fiscal year, indicating strong future order visibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Lam Research Corp kept $0.16.
- Revenue$5.89B100.0%
- Cost of revenue−$3.27B55.5%
- Gross profit$2.62B44.5%
- Operating costs−$1.54B26.2%
- Operating income$1.07B18.3%
- Interest, other & tax−$160.2M2.7%
- Net income$914.0M15.5%
Where FY2016 revenue went
$5.89B- Cost of revenue: $3.27B, 56% of revenue
- Net income: $914.0M, 16% of revenue
- R&D: $913.7M, 16% of revenue
- SG&A: $631.0M, 11% of revenue
- Interest, other & tax: $160.2M, 2.7% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed August 17, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $5.89B$5.26B | +11.9% |
| Cost of Revenue | $3.27B$2.97B | +9.8% |
| Gross Profit | $2.62B$2.28B | +14.6% |
| R&D Expenses | $913.71M$825.24M | +10.7% |
| SG&A Expenses | $630.95M$591.61M | +6.7% |
| Operating Expenses | $1.54B$1.50B | +3.2% |
| Operating Income | $1.07B$788.04M | +36.3% |
| Interest Expense | $134.77M$73.68M | +82.9% |
| Net Income | $914.05M$655.58M | +39.4% |
| EPS (Basic) | $0.57$0.41 | +39.9% |
| EPS (Diluted) | $0.52$0.37 | +41.1% |
| Shares Outstanding (Basic) | 1.59B1.60B | −0.4% |
| Shares Outstanding (Diluted) | 1.75B1.77B | −1.1% |
05—Questions
Frequently Asked Questions
What were the key financial performance indicators for Lam Research in fiscal year 2016?
In fiscal year 2016, Lam Research reported a 11.9% increase in revenue to $5.89 billion and a 39.4% increase in net income to $914 million. Diluted earnings per share rose to $5.22. The gross margin also saw an improvement, reaching 44.5%.
What are the main drivers behind the revenue growth in fiscal year 2016?
Revenue growth was primarily driven by increased technology and capacity investments from customers in the semiconductor industry, particularly memory manufacturers. Technology inflections such as 3D NAND and FinFET also expanded the company's addressable market for its deposition and etch products.
What is the strategic significance of the proposed KLA-Tencor acquisition?
The acquisition of KLA-Tencor is a significant strategic move aimed at strengthening Lam Research's position in the semiconductor equipment market. While the filing notes the potential benefits, it also outlines various risks related to integration, financing, and regulatory approvals.
How is Lam Research investing in future growth?
The company is making substantial investments in Research and Development (R&D), with R&D expenses increasing to $913.7 million in fiscal year 2016. This investment focuses on leading-edge deposition, plasma etch, single-wafer clean technologies, and other semiconductor manufacturing requirements to meet evolving customer needs and maintain a competitive advantage.
06—Continue