Applied Materials Announces Results for Third Fiscal Quarter 2004; New Orders Increase to $2.46 Billion; Net Sales Increase to $2.24 Billion
SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 17, 2004--Applied Materials, Inc. (Nasdaq:AMAT), the world's largest supplier of equipment and services to the global semiconductor industry, reported results for its third fiscal quarter ended August 1, 2004. Net sales were $2.24 billion, up 11 percent from $2.02 billion for the second fiscal quarter of 2004, and up 104 percent from $1.09 billion for the third fiscal quarter of 2003. Gross margin for the third fiscal quarter of 2004 was 47.4 percent, up from 46.5 percent for the second fiscal quarter of 2004, and up from 31.7 percent for the third fiscal quarter of 2003. Net income for the third fiscal quarter of 2004 was $441 million, or $0.26 per share, up from net income of $373 million, or $0.22 per share, for the second fiscal quarter of 2004, and up from a net loss of $37 million, or $0.02 per share, for the third fiscal quarter of 2003.
The company's ongoing net income was $441 million, or $0.26 per share, for the third fiscal quarter of 2004, up from $373 million, or $0.22 per share, for the second fiscal quarter of 2004, and up from $78 million, or $0.05 per share, for the third fiscal quarter of 2003. Ongoing results for the second and third fiscal quarters of 2004 were the same as reported net income since there were no special items.
New orders of $2.46 billion for the third fiscal quarter of 2004 increased 11 percent from $2.21 billion for the second fiscal quarter of 2004, and increased 134 percent from $1.05 billion for the third fiscal quarter of 2003. Regional distribution of new orders for the third fiscal quarter of 2004 was: Taiwan 28 percent, North America 19 percent, Japan 17 percent, Southeast Asia and China 15 percent, Korea 12 percent, and Europe 9 percent. Backlog at the end of the third fiscal quarter of 2004 was $2.99 billion, compared to $2.80 billion at the end of the second fiscal quarter of 2004.
"Our financial results demonstrate that Applied Materials is continuing to grow while delivering excellent profitability and productivity," said Mike Splinter, president and chief executive officer. "We are building on our technology leadership, introducing leading-edge products and entering new businesses to provide more capability to our customers."
Applied Materials continues to deliver breakthrough technologies with a broad portfolio of transistor, interconnect, and inspection solutions for manufacturing chips at 65 nanometers and beyond. During the quarter, the company launched the Applied Quantum(TM) X, Applied Reflexion LK Ecmp(TM) and Applied Producer(R) HARP(TM) products, and added the FlexStar(TM) system through the acquisition of Torrex. Applied Materials also entered into agreements with Brooks Automation, Praxair Electronics, and Phoenix Silicon to broaden its service product offerings. In addition, Applied Materials announced yesterday a definitive agreement to acquire the operating subsidiaries and businesses of Metron Technology, which provides a wide range of outsource solutions to the semiconductor industry.
"With our growth strategy in place, our focus is clearly on building a stronger Applied Materials as we further expand our product offerings and capabilities," concluded Splinter.
Reconciliations of reported results of operations under U.S. Generally Accepted Accounting Principles (GAAP) to ongoing results are included as a supplement to this press release. Due to the amount of realignment charges incurred in certain prior periods, Applied Materials believes that ongoing results are useful to investors because they reflect baseline performance exclusive of charges associated with realignment activities. Ongoing results are the primary indicator used by Applied Materials' management to plan and forecast future periods. These non-GAAP measures are neither in accordance with, nor an alternative for, GAAP, and may be materially different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered as a substitute for net income prepared in accordance with GAAP.
This press release contains forward-looking statements, including, but not limited to, those relating to the company's strategic position and business outlook, as well as the semiconductor and semiconductor equipment industries' trends. Forward-looking statements may contain words such as "expect," "anticipate," "believe," "may," "should," "will," "estimate," "forecast," "see," or similar expressions, and include the assumptions that underlie such statements. These 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. Risks and uncertainties include, but are not limited to: the sustainability, timing, rate and amount of increased demand in the semiconductor and semiconductor equipment industries, which is subject to many factors, including global economic conditions, business spending, consumer confidence, demand for electronic products and semiconductors, and geopolitical uncertainties; customers' capacity requirements, including capacity utilizing the latest technology (such as 300mm and nanometer applications); the company's ability to timely develop, deliver and support a broad range of products and services and successfully develop new markets; the company's ability to timely satisfy manufacturing requirements; the company's ability to timely align its cost structure with business conditions; changes in management; the possible inability to complete acquisition(s) as anticipated or at all and the possible inability to realize the potential benefits of the integration and performance of acquired business(es); effectiveness of strategic transactions and other risks described in Applied Materials' Securities and Exchange Commission filings. All forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof. 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 2004, on a conference call today beginning at 1:30 p.m. Pacific Time. A webcast of the conference call will be available on Applied Materials' web site under the "Investors" section.
Applied Materials, Inc. (Nasdaq:AMAT) is the largest supplier of equipment and services to the global semiconductor industry. Applied Materials' web site is http://www.appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
----------------------------------------------------------------------
(In thousands, except July 27, August 1, July 27, August 1,
per share amounts) 2003 2004 2003 2004
----------------------------------------------------------------------
Net sales $1,094,907 $2,236,152 $3,256,293 $5,809,705
Cost of products sold 747,979 1,176,920 2,146,209 3,135,663
----------- ----------- ----------- -----------
Gross margin 346,928 1,059,232 1,110,084 2,674,042
Operating expenses:
Research, development
and engineering 217,025 256,781 692,668 743,601
Marketing and selling 78,121 101,513 253,906 285,886
General and
administrative 72,307 87,394 223,306 251,145
Restructuring, asset
impairments and
other charges 66,181 - 258,250 167,459
----------- ----------- ----------- -----------
Income/(loss) from
operations (86,706) 613,544 (318,046) 1,225,951
Interest expense 11,626 13,489 35,185 36,971
Interest income 46,131 24,869 119,759 82,362
----------- ----------- ----------- -----------
Income/(loss) before
income taxes (52,201) 624,924 (233,472) 1,271,342
Provision for/(benefit
from) income taxes (15,399) 184,353 (68,874) 375,047
----------- ----------- ----------- -----------
Net income/(loss) $ (36,802) $ 440,571 $ (164,598) $ 896,295
----------- ----------- ----------- -----------
Earnings/(loss) per
share:
Basic $ (0.02) $ 0.26 $ (0.10) $ 0.53
Diluted $ (0.02) $ 0.26 $ (0.10) $ 0.52
Weighted average
number of shares:
Basic 1,659,365 1,696,544 1,655,430 1,689,573
Diluted 1,659,365 1,721,690 1,655,430 1,727,626
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
----------------------------------------------------------------------
October 26, August 1,
(In thousands) 2003 2004
----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,857 $ 2,047,442
Short-term investments 4,128,349 4,548,645
Accounts receivable, net 912,875 1,527,603
Inventories 950,692 1,152,774
Deferred income taxes 782,823 572,245
Other current assets 231,177 292,734
------------ ------------
Total current assets 8,370,773 10,141,443
Property, plant and equipment 3,094,427 2,922,091
Less: accumulated depreciation and
amortization (1,534,597) (1,539,487)
------------ ------------
Net property, plant and equipment 1,559,830 1,382,604
Goodwill, net 223,521 249,157
Purchased technology and other intangible
assets, net 92,512 62,416
Other assets 64,986 82,849
------------ ------------
Total assets $10,311,622 $11,918,469
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 105,292 $ 103,829
Accounts payable and accrued expenses 1,319,471 1,779,143
Income taxes payable 216,114 323,880
------------ ------------
Total current liabilities 1,640,877 2,206,852
Long-term debt 456,422 454,491
Deferred income taxes and other liabilities 146,289 153,713
------------ ------------
Total liabilities 2,243,588 2,815,056
------------ ------------
Stockholders' equity:
Common stock 16,774 16,982
Additional paid-in capital 2,223,553 2,364,609
Deferred stock compensation, net (1,543) (371)
Retained earnings 5,812,867 6,709,162
Accumulated other comprehensive income 16,383 13,031
------------ ------------
Total stockholders' equity 8,068,034 9,103,413
------------ ------------
Total liabilities and stockholders' equity $10,311,622 $11,918,469
----------------------------------------------------------------------
Amounts as of August 1, 2004 are unaudited. Amounts as of October 26,
2003 are derived from the October 26, 2003 audited financial
statements.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
- ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
July 27, 2003
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $1,094,907 $ - $1,094,907
Cost of products sold 747,979 (93,404) (a) 654,575
----------- ----------- -----------
Gross margin 346,928 93,404 440,332
Operating expenses:
Research, development and
engineering 217,025 (3,916) (b) 213,109
Marketing and selling 78,121 - 78,121
General and administrative 72,307 - 72,307
Restructuring, asset
impairments and other
charges 66,181 (66,181) (c) -
----------- ----------- -----------
Income/(loss) from operations (86,706) 163,501 76,795
Interest expense 11,626 - 11,626
Interest income 46,131 - 46,131
----------- ----------- -----------
Income/(loss) before income
taxes (52,201) 163,501 111,300
Provision for/(benefit from)
income taxes (15,399) 48,233 (d) 32,834
----------- ----------- -----------
Net income/(loss) $ (36,802) $ 115,268 $ 78,466
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.02) $ 0.07 $ 0.05
Diluted $ (0.02) $ 0.07 $ 0.05
Weighted average number of
shares:
Basic 1,659,365 1,659,365 1,659,365
Diluted 1,659,365 1,692,207 1,692,207
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the third fiscal quarter of 2003 consisted
of the following:
(a) Charges to cost of products sold for inventory write-offs
as a result of the implementation of the global spares
distribution system and refocused product efforts, which
included the Etec mask pattern products.
(b) Charges to research, development and engineering expense
for laboratory tool write-offs as a result of refocused
product efforts associated with realignment activities.
(c) Restructuring, asset impairments and other charges
consisted of a reduction in the workforce, the
consolidation of facilities and impairment of certain
assets associated with realignment activities.
(d) Provision for the tax effect of special items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
- ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
August 1, 2004
-----------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $2,236,152 $ - $2,236,152
Cost of products sold 1,176,920 - 1,176,920
----------- ----------- -----------
Gross margin 1,059,232 - 1,059,232
Operating expenses:
Research, development and
engineering 256,781 - 256,781
Marketing and selling 101,513 - 101,513
General and administrative 87,394 - 87,394
Restructuring, asset impairments
and other charges - - -
----------- ----------- -----------
Income/(loss) from operations 613,544 - 613,544
Interest expense 13,489 - 13,489
Interest income 24,869 - 24,869
----------- ----------- -----------
Income/(loss) before income taxes 624,924 - 624,924
Provision for/(benefit from)
income taxes 184,353 - 184,353
----------- ----------- -----------
Net income/(loss) $ 440,571 $ - $ 440,571
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ 0.26 $ - $ 0.26
Diluted $ 0.26 $ - $ 0.26
Weighted average number of shares:
Basic 1,696,544 1,696,544 1,696,544
Diluted 1,721,690 1,721,690 1,721,690
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(3) There were no special items for the third fiscal quarter of
2004. Therefore, ongoing results are the same as reported
results of operations.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
- ONGOING BASIS
(UNAUDITED)
Nine Months Ended
----------------------------------------------------------------------
July 27, 2003
----------------------------------------
(In thousands, except per Special Ongoing
share amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $3,256,293 $ - $3,256,293
Cost of products sold 2,146,209 (142,404) (a) 2,003,805
------------ ----------- -----------
Gross margin 1,110,084 142,404 1,252,488
Operating expenses:
Research, development and
engineering 692,668 (13,916) (b) 678,752
Marketing and selling 253,906 - 253,906
General and administrative 223,306 - 223,306
Restructuring, asset
impairments and other
charges 258,250 (258,250) (c) -
------------ ----------- -----------
Income/(loss) from operations (318,046) 414,570 96,524
Interest expense 35,185 - 35,185
Interest income 119,759 - 119,759
------------ ----------- -----------
Income/(loss) before income
taxes (233,472) 414,570 181,098
Provision for/(benefit from)
income taxes (68,874) 122,298 (d) 53,424
------------ ----------- -----------
Net income/(loss) $ (164,598) $ 292,272 $ 127,674
------------ ----------- -----------
Earnings/(loss) per share:
Basic $ (0.10) $ 0.18 $ 0.08
Diluted $ (0.10) $ 0.17 $ 0.08
Weighted average number of
shares:
Basic 1,655,430 1,655,430 1,655,430
Diluted 1,655,430 1,685,001 1,685,001
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the nine months ended July 27, 2003
consisted of the following:
(a) Charges to cost of products sold for inventory write-offs
as a result of the implementation of the global spares
distribution system and refocused product efforts, which
included the Etec mask pattern products.
(b) Charges to research, development and engineering expense
for laboratory tool write-offs as a result of refocused
product efforts associated with realignment activities.
(c) Restructuring, asset impairments and other charges
consisted of reduction in the workforce, the consolidation
of facilities and impairment of certain assets associated
with realignment activities.
(d) Provision for the tax effect of special items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
- ONGOING BASIS
(UNAUDITED)
Nine Months Ended
----------------------------------------------------------------------
August 1, 2004
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $5,809,705 $ - $5,809,705
Cost of products sold 3,135,663 - 3,135,663
----------- ----------- -----------
Gross margin 2,674,042 - 2,674,042
Operating expenses:
Research, development and
engineering 743,601 - 743,601
Marketing and selling 285,886 - 285,886
General and administrative 251,145 - 251,145
Restructuring, asset
impairments and other
charges 167,459 (167,459) (e) -
----------- ----------- -----------
Income/(loss) from operations 1,225,951 167,459 1,393,410
Interest expense 36,971 - 36,971
Interest income 82,362 - 82,362
----------- ----------- -----------
Income/(loss) before income
taxes 1,271,342 167,459 1,438,801
Provision for/(benefit from)
income taxes 375,047 49,400 (f) 424,447
----------- ----------- -----------
Net income/(loss) $ 896,295 $ 118,059 $1,014,354
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ 0.53 $ 0.07 $ 0.60
Diluted $ 0.52 $ 0.07 $ 0.59
Weighted average number of
shares:
Basic 1,689,573 1,689,573 1,689,573
Diluted 1,727,626 1,727,626 1,727,626
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(3) Special items for the nine months ended August 1, 2004, all of
which occurred in the first fiscal quarter of 2004, consisted
of the following:
(e) Restructuring, asset impairments and other charges
resulting primarily from the consolidation of facilities
associated with realignment activities.
(f) Provision for the tax effect of special items.
CONTACT: Applied Materials, Inc. Paul Bowman, 408-563-1698 (investment community) Jeff Lettes, 408-563-5161 (editorial/media) SOURCE: Applied Materials, Inc.