Applied Materials Announces Second Quarter of Fiscal 2009 Results
"In a period of exceptionally weak demand, Applied preserved its strong balance sheet, returned a dividend to our stockholders and made substantial investments in our future," said Mike Splinter, Chairman and CEO.
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GAAP Results |
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| Q2 FY '09 | Q1 FY '09 | Q2 FY '08 | ||||
| Net sales | $1.02 billion | $1.33 billion | $2.15 billion | |||
| Net income (loss) | ($255 million) | ($133 million) | $303 million | |||
| Earnings (loss) per share | ($0.19) | ($0.10) | $0.22 | |||
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Non-GAAP Results |
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| Q2 FY '09 | Q1 FY '09 | Q2 FY '08 | ||||
| Non-GAAP net income (loss) | ($136 million) | ($3 million) | $362 million | |||
| Non-GAAP earnings (loss) per share | ($0.10) | $0.00 | $0.26 |
The non-GAAP results exclude the impact of the following, as applicable for a particular quarter: investment impairments, equity-based compensation, restructuring and asset impairments, acquisition-related costs, ceasing implant development, and amounts associated with the resolution of income tax audits. A reconciliation of the GAAP and non-GAAP results is provided in the financial statements included in this release.
Order and Backlog Summary
New orders totaled $649 million and were generated in the following regions: North America 20 percent, Taiwan 19 percent, Europe 19 percent, Japan 16 percent, Korea 13 percent, and Southeast Asia and China 13 percent. Backlog at the end of the period was $3.16 billion, down from $4.05 billion at the end of the first quarter of fiscal 2009.
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Reportable Segment Results |
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| Q2 FY '09 | Q1 FY '09 | Q2 FY '08 | ||||||||||||||||
| (In millions) |
New |
Net |
Operating |
New |
Net |
Operating |
New |
Net |
Operating |
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| Silicon | $259 | $260 | ($96) | $246 | $546 | $34 | $1,061 | $1,268 | $448 | |||||||||
| Applied Global Services | $236 | $319 | ($1) | $310 | $345 | $26 | $602 | $599 | $159 | |||||||||
| Display | $13 | $84 | $1 | $26 | $149 | $26 | $493 | $198 | $59 | |||||||||
| Energy and Environmental Solutions | $141 | $357 |
($93) |
$321 | $293 | ($65) | $257 | $85 | ($71) | |||||||||
Use of Non-GAAP Financial Measures
Management uses non-GAAP results to evaluate the company's operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Applied believes these measures enhance investors' ability to review the company's business from the same perspective as the company's management and facilitate comparisons of this period's results with prior periods. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast will be available at www.appliedmaterials.com.
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding Applied's performance and investments. Forward-looking statements may contain words such as "expect," "believe," "may," "can," "should," "will," "forecast" 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, including but not limited to: the level of demand for nanomanufacturing technology products, which is subject to many factors, including uncertain global economic and industry conditions, business and consumer spending, demand for electronic products and semiconductors, governmental renewable energy policies and incentives, and customers' utilization rates and capacity requirements, including capacity utilizing the latest technology; the duration and severity of the recession; customers' ability to acquire sufficient capital and/or obtain regulatory approvals; variability of operating results among the company's segments caused by differing conditions in the served markets; Applied's ability to (i) develop, deliver and support a broad range of products, expand its markets and develop new markets, (ii) timely implement and maintain effective cost reduction programs, realize expected benefits, and align its cost structure with business conditions, (iii) plan and manage its resources and production capability, including its supply chain, (iv) implement initiatives that enhance global operations and efficiencies, (v) obtain and protect intellectual property rights in key technologies, and (vi) attract, motivate and retain key employees; and other risks described in Applied Materials' SEC filings. All forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof. The company undertakes no obligation to update any forward-looking statements.
Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in Nanomanufacturing Technology(TM) solutions with a broad portfolio of innovative equipment, services and software products for the fabrication of semiconductor chips, flat panel displays, solar photovoltaic cells, flexible electronics and energy-efficient glass. At Applied Materials, we apply Nanomanufacturing Technology to improve the way people live. Learn more at www.appliedmaterials.com.
| APPLIED MATERIALS, INC. | ||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 26, | April 27, | April 26, | April 27, | |||||||||||||
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(In thousands, except per share amounts) |
2009 | 2008 | 2009 | 2008 | ||||||||||||
| Net sales | $ | 1,020,077 | $ | 2,149,998 | $ | 2,353,473 | $ | 4,237,395 | ||||||||
| Cost of products sold | 864,558 | 1,183,170 | 1,806,378 | 2,335,586 | ||||||||||||
| Gross margin | 155,519 | 966,828 | 547,095 | 1,901,809 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research, development and engineering | 236,335 | 287,122 | 465,875 | 560,341 | ||||||||||||
| General and administrative | 101,080 | 122,035 | 242,321 | 238,011 | ||||||||||||
| Marketing and selling | 84,678 | 119,410 | 168,793 | 243,327 | ||||||||||||
| Restructuring and asset impairments | 26,709 | 510 | 159,481 | 49,496 | ||||||||||||
| Income (loss) from operations | (293,283 | ) | 437,751 | (489,375 | ) | 810,634 | ||||||||||
| Pre-tax loss of equity method investment | 19,175 | 9,766 | 34,983 | 19,352 | ||||||||||||
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Impairment of equity method investment and strategic investments |
77,081 |
|
-- |
77,081 |
|
-- |
||||||||||
| Interest expense | 5,058 | 6,256 | 11,052 | 10,801 | ||||||||||||
| Interest income | 11,789 | 32,414 | 27,024 | 62,984 | ||||||||||||
| Income (loss) before income taxes | (382,808 | ) | 454,143 | (585,467 | ) | 843,465 | ||||||||||
| Provision (benefit) for income taxes | (127,418 | ) | 151,636 | (197,143 | ) | 278,582 | ||||||||||
| Net income (loss) | $ | (255,390 | ) | $ | 302,507 | $ | (388,324 | ) | $ | 564,883 | ||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | (0.19 | ) | $ | 0.22 | $ | (0.29 | ) | $ | 0.41 | ||||||
| Diluted | $ | (0.19 | ) | $ | 0.22 | $ | (0.29 | ) | $ | 0.41 | ||||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 1,331,729 | 1,356,705 | 1,330,476 | 1,363,975 | ||||||||||||
| Diluted | 1,331,729 | 1,373,314 | 1,330,476 | 1,379,071 | ||||||||||||
| APPLIED MATERIALS, INC. | ||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||
| April 26, | October 26, | |||||||
|
(In thousands) |
2009 | 2008 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,466,976 | $ | 1,411,624 | ||||
| Short-term investments | 597,389 | 689,044 | ||||||
| Accounts receivable, net | 914,392 | 1,691,027 | ||||||
| Inventories | 1,901,024 | 1,987,017 | ||||||
| Deferred income taxes, net | 390,025 | 388,807 | ||||||
| Income taxes receivable | 300,401 | 125,605 | ||||||
| Other current assets | 344,599 | 371,033 | ||||||
| Total current assets | 5,914,806 | 6,664,157 | ||||||
| Long-term investments | 1,000,705 | 1,367,056 | ||||||
| Property, plant and equipment | 2,864,396 | 2,831,952 | ||||||
| Less: accumulated depreciation and amortization | (1,774,273 | ) | (1,737,752 | ) | ||||
| Net property, plant and equipment | 1,090,123 | 1,094,200 | ||||||
| Goodwill, net | 1,171,740 | 1,174,673 | ||||||
| Purchased technology and other intangible assets, net | 347,117 | 388,429 | ||||||
| Equity method investment |
|
-- |
79,533 | |||||
| Deferred income taxes and other assets | 224,608 | 238,270 | ||||||
| Total assets | $ | 9,749,099 | $ | 11,006,318 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 1,156 | $ | 1,068 | ||||
| Accounts payable and accrued expenses | 1,047,915 | 1,545,355 | ||||||
| Customer deposits and deferred revenue | 962,975 | 1,225,735 | ||||||
| Income taxes payable | 120,787 | 173,394 | ||||||
| Total current liabilities | 2,132,833 | 2,945,552 | ||||||
| Long-term debt | 201,165 | 201,576 | ||||||
| Other liabilities | 319,202 | 310,232 | ||||||
| Total liabilities | 2,653,200 | 3,457,360 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 13,330 | 13,308 | ||||||
| Additional paid-in capital | 5,155,301 | 5,095,894 | ||||||
| Retained earnings | 11,031,711 | 11,601,288 | ||||||
| Treasury stock | (9,100,915 | ) | (9,134,962 | ) | ||||
| Accumulated other comprehensive loss | (3,528 | ) | (26,570 | ) | ||||
| Total stockholders' equity | 7,095,899 | 7,548,958 | ||||||
| Total liabilities and stockholders' equity | $ | 9,749,099 | $ | 11,006,318 | ||||
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APPLIED MATERIALS, INC. |
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
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|
Six Months Ended |
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April 26, |
April 27, |
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|
(In thousands) |
2009 |
2008 |
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| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (388,324 | ) | $ | 564,883 | |||
| Adjustments required to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 146,108 | 154,321 | ||||||
| Loss on fixed asset retirements | 7,002 | 21,527 | ||||||
| Provision for bad debts | 62,539 | -- | ||||||
| Restructuring and asset impairments | 159,481 | 49,496 | ||||||
| Deferred income taxes | 35,927 | (38,538 | ) | |||||
| Excess tax benefits from equity-based compensation plans | -- | (5,406 | ) | |||||
| Net recognized loss (gain) on investments | 10,915 | (3,560 | ) | |||||
| Pretax loss of equity-method investment | 34,983 | 19,352 | ||||||
| Impairment of equity-method investment and strategic investments | 77,081 | -- | ||||||
| Equity-based compensation | 72,780 | 89,044 | ||||||
| Changes in operating assets and liabilities, net of amounts acquired: | ||||||||
| Accounts receivable | 714,096 | 385,830 | ||||||
| Inventories | 85,993 | (277,478 | ) | |||||
| Other current assets | 13,411 | 116,352 | ||||||
| Other assets | (1,144 | ) | (4,875 | ) | ||||
| Accounts payable and accrued expenses | (649,976 | ) | (107,155 | ) | ||||
| Customer deposits and deferred revenue | (262,760 | ) | 302,195 | |||||
| Income taxes | (246,739 | ) | (11,803 | ) | ||||
| Other liabilities | 27,710 | 9,548 | ||||||
| Cash provided by (used in) operating activities | (100,917 | ) | 1,263,733 | |||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (128,099 | ) | (137,699 | ) | ||||
| Cash paid for acquisition, net of cash acquired | -- | (235,324 | ) | |||||
| Proceeds from sales and maturities of investments | 925,485 | 3,131,994 | ||||||
| Purchases of investments | (486,527 | ) | (3,376,917 | ) | ||||
| Cash provided by (used in) investing activities | 310,859 | (617,946 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Debt repayments | (323 | ) | (12 | ) | ||||
| Proceeds from common stock issuances | 27,633 | 308,463 | ||||||
| Common stock repurchases | (22,906 | ) | (899,984 | ) | ||||
| Excess tax benefits from equity-based compensation plans | -- | 5,406 | ||||||
| Payment of dividends to stockholders | (159,736 | ) | (164,274 | ) | ||||
| Cash used in financing activities | (155,332 | ) | (750,401 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 742 | 151 | ||||||
| Increase (decrease) in cash and cash equivalents | 55,352 | (104,463 | ) | |||||
| Cash and cash equivalents -- beginning of period | 1,411,624 | 1,202,722 | ||||||
| Cash and cash equivalents -- end of period | $ | 1,466,976 | $ | 1,098,259 | ||||
| Supplemental cash flow information: | ||||||||
| Cash payments for income taxes | $ | 83,128 | $ | 167,185 | ||||
| Cash payments for interest | $ | 7,211 | $ | 7,229 | ||||
| APPLIED MATERIALS, INC. | ||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| April 26, | April 27, | January 25, | April 26, | April 27, | ||||||||||||||||
|
(In thousands, except per share amounts) |
2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||||||
|
Non-GAAP Net Income (Loss) |
||||||||||||||||||||
| Reported net income (loss) (GAAP basis) | $ | (255,390 | ) | $ | 302,507 | $ | (132,934 | ) | $ | (388,324 | ) | $ | 564,883 | |||||||
| Equity-based compensation expense | 39,172 | 50,322 | 33,608 | 72,780 | 89,044 | |||||||||||||||
|
Certain items associated with acquisitions 1 |
24,824 | 31,144 | 26,025 | 50,849 | 62,182 | |||||||||||||||
|
Restructuring and asset impairments 2,3,4 |
26,709 | 510 | 132,772 | 159,481 | 49,496 | |||||||||||||||
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Costs associated with ceasing development of beamline implant products 5 |
|
- |
259 |
|
- |
|
- |
1,280 | ||||||||||||
|
Impairment of equity method investment and strategic investments |
77,081 |
|
- |
|
- |
77,081 |
|
- |
||||||||||||
|
Income tax effect of non-GAAP adjustments and resolution of audits of prior years' income tax filings |
(48,040 | ) | (23,142 | ) | (62,939 | ) | (110,979 | ) | (60,468 | ) | ||||||||||
| Non-GAAP net income (loss) | $ | (135,644 | ) | $ | 361,600 | $ | (3,468 | ) | $ | (139,112 | ) | $ | 706,417 | |||||||
|
Non-GAAP Net Income (Loss) Per Diluted Share |
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|
Reported net income (loss) per diluted share (GAAP basis) |
$ | (0.19 | ) | $ | 0.22 | $ | (0.10 | ) | $ | (0.29 | ) | $ | 0.41 | |||||||
| Equity-based compensation expense | 0.02 | 0.03 | 0.02 | 0.04 | 0.05 | |||||||||||||||
| Certain items associated with acquisitions | 0.01 | 0.02 | 0.01 | 0.03 | 0.03 | |||||||||||||||
| Restructuring and asset impairments | 0.01 |
|
- |
0.06 | 0.08 | 0.02 | ||||||||||||||
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Costs associated with ceasing development of beamline implant products |
|
- |
|
- |
|
- |
|
- |
|
- |
||||||||||
|
Impairment of equity method investment and strategic investments |
0.05 |
|
- |
|
- |
0.05 |
|
- |
||||||||||||
|
Resolution of audits of prior years' income tax filings |
(0.01 | ) |
|
- |
|
- |
(0.01 | ) |
|
- |
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| Non-GAAP net income (loss) - per diluted share | $ | (0.10 | ) | $ | 0.26 | $ | 0.00 | $ | (0.10 | ) | $ | 0.51 | ||||||||
| Shares used in diluted shares calculation | 1,331,729 | 1,373,314 | 1,329,223 | 1,330,476 | 1,379,071 | |||||||||||||||
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1 Incremental charges attributable to acquisitions consisting of inventory fair value adjustments on products sold and amortization of purchased intangible assets. |
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2 Results for the three months ended April 26, 2009 included asset impairment charges of $15 million related to wafer cleaning equipment and restructuring charges of $12 million primarily associated with a restructuring program announced on November 12, 2008. Results for the six months ended April 26, 2009 included asset impairment charges of $15 million related to wafer cleaning equipment and restructuring charges of $145 million associated with a restructuring program announced on November 12, 2008. |
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3 Results for the six months ended April 27, 2008 included restructuring charges of $38 million associated with a global cost reduction plan. |
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4 Results for the three and six months ended April 27, 2008 included restructuring and asset impairment charges of $510,000 and $12 million, respectively, associated with ceasing development of beamline implant products. |
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5 Results for the three and six months ended April 27, 2008 included other operating charges of $259,000 and $1 million associated with ceasing development of beamline implant products. |
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SOURCE: Applied Materials, Inc.
Applied Materials, Inc.
David Miller, 408-563-9582 (editorial/media)
Michael Sullivan, 408-986-7977 (financial community)