Applied Materials Announces Results for Third Fiscal Quarter 2001; New Orders of $1.21 Billion; Net Sales of $1.33 Billion
New orders were $1.21 billion for the third fiscal quarter of 2001, decreasing 11 percent from $1.35 billion for the second fiscal quarter of 2001, and decreasing 63 percent from $3.28 billion for the third fiscal quarter of 2000. Regional distribution of new orders for the third fiscal quarter of 2001 was: North America 44 percent, Japan 19 percent, Taiwan 15 percent, Europe 14 percent, Southeast Asia and China 5 percent and Korea 3 percent. Backlog at the end of the third fiscal quarter of 2001 decreased to $2.65 billion, from $3.05 billion at the end of the second fiscal quarter of 2001.
"The industry-wide decline in demand for most semiconductor chips continued to place downward pressure on new equipment orders during our quarter," said James C. Morgan, chairman and chief executive officer. "The semiconductor industry is experiencing near-historic lows in factory utilization, resulting in further cutbacks in capital spending. Despite reduced spending levels, customers continue to invest in our advanced solutions for copper, nanometer-sized geometries and 300mm wafer processing. Our leadership in these advanced technologies places Applied Materials in a strategic position when our customers move into volume production."
Orders for ion implant, process diagnostics and control and chemical vapor deposition products were sequentially higher than the prior quarter. "Success in these and other products are a strong indicator that our continued investment in product development will provide significant future benefit," continued Morgan.
Gross margin for the third fiscal quarter of 2001 was 40.0 percent, down from 44.8 percent for the second fiscal quarter of 2001, and down from 50.9 percent for the third fiscal quarter of 2000. Operating income as a percentage of net sales, excluding one-time items, was 1.2 percent for the third fiscal quarter of 2001, compared to 17.4 percent for the second fiscal quarter of 2001 and 30.2 percent for the third fiscal quarter of 2000. Ongoing net income as a percentage of net sales was 3.1 percent for the third fiscal quarter of 2001, compared to 14.1 percent for the second fiscal quarter of 2001 and 22.1 percent for the third fiscal quarter of 2000.
"Despite the current weakness in the market, we believe the long-term outlook for the semiconductor industry remains strong. We will continue to reduce costs in this difficult environment as well as prepare the Company for the eventual upturn in business and implement critical new technologies for our customers," concluded Morgan.
This press release contains certain forward-looking statements, including, but not limited to, those relating to the semiconductor industry's long-term outlook and the Company's strategic position in an upturn. These forward-looking statements 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 Company's ability to timely align its cost structure with market conditions; the length and severity of the current economic downturn; changes in customer capacity requirements and demand for semiconductors; changes in the timing and amount of capital equipment purchases by customers; the successful and timely development of new markets, products, processes and services; and other risks described in Applied Materials' filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this press release.
Applied Materials will be discussing its third fiscal quarter results, along with its outlook for the fourth fiscal quarter of 2001, on a conference call today beginning at 1:30 p.m. PST. A webcast of the conference call will be available on Applied Materials' Web site under the "Investors" section.
Applied Materials (Nasdaq: AMAT), the largest supplier of products and services to the global semiconductor industry, is one of the world's leading information infrastructure providers. Applied Materials enables Information for Everyone(TM) by helping semiconductor manufacturers produce more powerful, portable and affordable chips. Applied Materials' Web site is http://www.appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
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(In thousands, except July 30, July 29, July 30, July 29,
per share amounts) 2000 2001 2000 2001
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Net sales $2,732,028 $1,333,871 $6,644,249 $5,974,438
Cost of products sold 1,340,126 800,839 3,297,428 3,253,783
---------- ---------- ---------- ----------
Gross margin 1,391,902 533,032 3,346,821 2,720,655
Operating expenses:
Research, development
and engineering 303,946 277,333 780,509 926,251
Marketing and selling 128,426 125,979 340,718 389,188
General and
administrative 133,291 114,369 343,998 306,481
Non-recurring items(1) -- 14,150 40,000 72,564
---------- ---------- ---------- ----------
Income from operations 826,239 1,201 1,841,596 1,026,171
Non-recurring income -- -- 68,158 --
Interest expense 12,665 10,709 38,154 34,981
Interest income 48,970 54,153 127,962 166,699
---------- ---------- ---------- ----------
Income before
income taxes 862,544 44,645 1,999,562 1,157,889
Provision for
income taxes 258,763 16,120 599,807 344,527
---------- ---------- ---------- ----------
Net income $ 603,781 $ 28,525 $1,399,755 $ 813,362
---------- ---------- ---------- ----------
Earnings per share:
Basic $ 0.75 $ 0.04 $ 1.74 $ 1.00
Diluted $ 0.70 $ 0.03 $ 1.63 $ 0.96
Weighted average
number of shares:
Basic 809,345 814,920 804,532 812,219
Diluted 862,071 853,905 858,585 848,793
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(1) The Company's reported results of operations for the third fiscal
quarter of 2001 included a non-tax deductible charge of $10
million for acquired in-process research and development
associated with the acquisition of Oramir Semiconductor Equipment
Ltd., and a pre-tax restructuring charge of $4 million associated
with severance and benefits costs. These non-recurring charges
amounted to $0.02 per diluted share after tax for the third fiscal
quarter of 2001.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS(2)
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October 29, July 29,
(In thousands) 2000 2001
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ASSETS
Current assets:
Cash and cash equivalents $ 1,647,604 $ 1,365,036
Short-term investments 2,580,435 3,315,886
Accounts receivable, net 2,351,379 1,315,800
Inventories 1,503,751 1,453,996
Deferred income taxes 549,108 545,598
Other current assets 206,870 244,711
----------- -----------
Total current assets 8,839,147 8,241,027
Property, plant and equipment, net 1,366,782 1,653,001
Other assets 339,801 339,258
----------- -----------
Total assets $10,545,730 $10,233,286
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 94,676 $ 99,993
Current portion of long-term debt 11,621 4,652
Accounts payable and
accrued expenses 2,268,608 1,502,940
Income taxes payable 384,806 138,689
----------- -----------
Total current liabilities 2,759,711 1,746,274
Long-term debt 573,126 565,893
Deferred income taxes and
other liabilities 108,545 126,505
----------- -----------
Total liabilities 3,441,382 2,438,672
----------- -----------
Stockholders' equity:
Common stock 8,125 8,163
Additional paid-in capital 1,930,212 1,827,316
Retained earnings 5,185,181 5,998,543
Accumulated other comprehensive
income/(loss) (19,170) (39,408)
----------- -----------
Total stockholders' equity 7,104,348 7,794,614
----------- -----------
Total liabilities and
stockholders' equity $10,545,730 $10,233,286
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(2) Amounts as of July 29, 2001 are unaudited. Amounts as of October
29, 2000 are from the October 29, 2000 audited financial
statements.
CONTACT: Applied Materials, Inc.
Carolyn Schwartz, 408/748-5227 (investment community)
Jeffrey Lettes, 408/563-5161 (editorial/media)