Applied Materials Announces Record Results for Third Fiscal Quarter 1999; New Orders of $1.46 Billion, Net Sales of $1.43 Billion
SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 17, 1999--Applied Materials, Inc., the world's largest supplier of wafer fabrication systems and services to the global semiconductor industry, reported results for its third fiscal quarter ended August 1, 1999. Record net sales of $1.43 billion were 28 percent higher than $1.12 billion for the second fiscal quarter of 1999, and 62 percent higher than $884 million for the third fiscal quarter of 1998. Record ongoing net income for the third fiscal quarter of 1999 was $244.4 million, or $0.61 per diluted share, an increase from $141.6 million, or $0.36 per diluted share, for the second fiscal quarter of 1999, and from $70.6 million, or $0.19 per diluted share, for the third fiscal quarter of 1998. Strong asset management performance resulted in a record $2.26 billion of cash and short-term investments at the end of the third fiscal quarter.
New orders for the third fiscal quarter of 1999 reached a record
$1.46 billion, an increase of 5 percent from $1.39 billion for the
second fiscal quarter of 1999 and an increase of 140 percent from $608
million for the third fiscal quarter of 1998. Regional distribution of
new orders for the third fiscal quarter of 1999 was: North America 28
percent, Taiwan 26 percent, Japan 16 percent, Europe 16 percent, Korea
8 percent and Southeast Asia and China 6 percent. Backlog at the end
of the third fiscal quarter of 1999 was $1.34 billion.
Gross margin for the third fiscal quarter of 1999 increased to
48.7 percent, from 46.3 percent for the second fiscal quarter of 1999,
and from 44.6 percent for the third fiscal quarter of 1998. Ongoing
net income as a percentage of net sales was a record 17.1 percent for
the third fiscal quarter of 1999, compared to 12.7 percent for the
second fiscal quarter of 1999 and 8 percent for the third fiscal
quarter of 1998.
"We are extremely pleased with our record performance this
quarter," said James C. Morgan, chairman and chief executive officer.
"Our customers are experiencing the early stages of a broad-based
recovery, fueled by low inventories and strong demand across all
product categories, with particular strength in communications and
consumer electronic products. Our new orders this quarter were driven
by both capacity and technology requirements for 0.18 micron
production and pilot line applications, as well as by research and
development for next-generation products with design features below
0.18 micron."
"Gross margin reached the highest level in this decade,
reflecting the achievement of many operational objectives set within
the last year emphasizing cost control and productivity improvement,"
continued Morgan.
The Company continues to increase its market share in all product
segments, with applications incorporating new materials such as copper
and low-k dielectric films contributing to these gains. During
the quarter, the Company received its first orders for the Electra(TM)
Cu ECP (ElectroChemical Plating) system for copper fill, which
complements the Company's industry-leading Endura(R) Electra Cu
Barrier & Seed system to provide Total Solutions(TM) for high-volume
copper manufacturing. The Company also received multiple repeat orders
for its high-throughput Producer(TM) platform.
Product introductions this quarter included the Mirra(R) Mesa(TM)
CMP (chemical mechanical polishing) system, an integrated polisher and
cleaner that provides the industry's highest wafer throughput per
square foot; the Quantum(TM) ion implanter, a 200mm/300mm compatible
system that extends high current implant technology to 0.13 micron
device geometries; and BLOk(TM), an innovative barrier
dielectric film that is combined with other low-k films to
increase the overall insulating capability between copper circuit
lines. In addition, the Company launched a unique line of service
products called Total Service Solutions(TM), which provides customers
a performance guarantee to lower overall operating costs and improve
system productivity of Applied Materials' equipment.
"We believe the market for semiconductor equipment may double
over the next five years, driven by three waves of industry activity,"
said Morgan. "The first wave, the acceleration of Moore's Law to
smaller linewidths, is driving orders today. The second wave, the
introduction of several new materials, including copper and
low-k dielectric films, is creating the need for a broad range
of innovative process technologies. Just on the horizon is the third
wave, the industry's move to 300mm wafers, which will require
completely new wafer processing equipment. Our broad product
offerings, product development capability and global infrastructure
continue to position the Company to address the opportunities ahead,"
concluded Morgan.
This press release contains certain forward-looking statements
that are subject to known and unknown risks and uncertainties that
could cause actual results to differ materially from those expressed
or implied by such statements. Such risks and uncertainties include,
but are not limited to: the continuing broad-based recovery of the
semiconductor industry, which is dependent on many factors, including
the health of global economies, DRAM prices and overall demand for
logic, communications, memory and other chips; continued customer
transition to advanced technology, new materials and 300mm wafers; the
ability of the Company to continue to achieve improvements in
productivity and operating performance; the ability of the Company to
maintain its technology leadership and improve its market share; the
ability of the Company to satisfy manufacturing demands, based in part
on the availability of critical components; and the continued growth
of the market for computing, consumer, communications and
Internet-related products. The Company assumes no obligation to update
the information in this press release.
Applied Materials, Inc. is a Fortune 500 global growth company
and the world's largest supplier of wafer fabrication systems and
services to the global semiconductor industry. Applied Materials is
traded on the Nasdaq National Market under the symbol, "AMAT". Applied
Materials' website is http://www.appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
July 26, Aug. 1, July 26, Aug. 1,
1998 1999 1998 1999
(In thousands,
except per share amounts)
Net sales $ 884,491 $1,433,510 $3,368,492 $3,293,613
Cost of products sold 490,102 734,895 1,790,373 1,756,654
---------- ---------- ---------- ----------
Gross margin 394,389 698,615 1,578,119 1,536,959
Operating expenses:
Research, development
and engineering 154,044 171,195 518,310 478,546
Marketing and selling 79,896 87,627 250,974 235,560
General and administrative 69,667 99,634 212,180 242,113
Non-recurring items 35,000 -- 67,227 5,000
---------- ---------- ---------- ----------
Income from operations 55,782 340,159 529,428 575,740
Non-recurring income -- -- 80,000 20,000
Interest expense 11,282 11,883 35,031 34,947
Interest income 18,868 25,950 58,377 75,352
---------- ---------- ---------- ----------
Income before taxes 63,368 354,226 632,774 636,145
Provision for
income taxes (a) 15,851 109,810 215,143 197,205
---------- ---------- ---------- ----------
Net income $ 47,517 $ 244,416 $ 417,631 $ 438,940
---------- ---------- ---------- ----------
Earnings per share:
Basic $ 0.13 $ 0.65 $ 1.14 $ 1.17
Diluted $ 0.13 $ 0.61 $ 1.10 $ 1.11
Weighted average
number of shares:
Basic 366,942 376,901 366,584 373,815
Diluted 378,072 397,877 378,808 394,196
(a) The Company's effective income tax rate for the third fiscal
quarter of 1999 was 31 percent, compared to 25 percent for the
third fiscal quarter of 1998. In the third fiscal quarter of
1998, the Company changed its effective income tax rate for
fiscal 1998 from 35 percent to 34 percent, and recorded the
cumulative effect of this change in the third fiscal quarter of
1998.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS(b)
Oct. 25, Aug. 1,
(In thousands) 1998 1999
ASSETS
Current assets:
Cash and cash equivalents $ 575,205 $ 577,999
Short-term investments 1,188,351 1,680,616
Accounts receivable, net 764,472 1,107,712
Inventories 555,881 575,333
Deferred income taxes 337,906 335,213
Other current assets 97,140 127,003
----------- -----------
Total current assets 3,518,955 4,403,876
Property, plant and equipment, net 1,261,520 1,195,337
Other assets 149,217 167,658
----------- -----------
Total assets $ 4,929,692 $ 5,766,871
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 644 $ 876
Current portion of long-term debt 7,367 6,361
Accounts payable and accrued expenses 1,041,341 1,118,863
Income taxes payable 68,974 275,927
----------- -----------
Total current liabilities 1,118,326 1,402,027
Long-term debt 616,572 611,920
Deferred income taxes
and other liabilities 74,173 85,041
----------- -----------
Total liabilities 1,809,071 2,098,988
----------- -----------
Stockholders' equity:
Common stock 3,679 3,784
Additional paid-in capital 792,145 918,883
Retained earnings 2,328,940 2,767,880
Accumulated other
comprehensive income/(loss) (4,143) (22,664)
----------- -----------
Total stockholders' equity 3,120,621 3,667,883
----------- -----------
Total liabilities and
stockholders' equity $ 4,929,692 $ 5,766,871
----------- -----------
(b) Amounts as of August 1, 1999 are unaudited. Amounts as of October
25, 1998 are from the October 25, 1998 audited financial
statements.
--30--lmm/sf*
CONTACT: Applied Materials, Inc.
Carolyn Schwartz, 408/748-5227 (investment community)
or
Jeffrey Lettes, 408/563-5161 (editorial/media)
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED EARNINGS
KEY: APMFXB