UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2003
Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 0-6920
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3050 Bowers Avenue
Santa Clara, CA 95054-3299
(Address of principal executive offices including zip code)
(408) 727-5555
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press Release issued by Applied Materials, Inc. dated May 13, 2003.
Item 9. Regulation FD Disclosure. (Information furnished pursuant to Item 12. Results of Operations of Financial Condition)
On May 13, 2003, Applied Materials, Inc. ("Applied Materials") announced its financial results for the second fiscal quarter ended April 27, 2003. A copy of Applied Materials' press release is attached hereto as Exhibit 99.1.
The information contained herein and in the accompanying exhibit is being furnished pursuant to "Item 12. Results of Operations and Financial Condition" in accordance with interim guidance issued by the Securities and Exchange Commission in Release No.33-8216. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Applied Materials, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Use of Non-GAAP Financial Information
To supplement the consolidated financial statements prepared under United
States Generally Accepted Accounting Priniciples ("GAAP"), Applied Materials uses a pro forma
measure of net income that is GAAP net income, adjusted to exclude costs of
the 2003 Realignment Plan (the "Plan").
Due to the amount of costs incurred with the Plan, Applied Materials
believes that the use of pro forma measure facilitates meaningful comparison with prior periods.
Applied Materials believes that pro forma net
income reports baseline performance before costs of the Plan. In addition, pro forma net
income is the primary indicator management uses to plan and forecast future periods.
These measures are not in accordance with, or are an alternative for GAAP, and may be
materially different from pro forma methods of accounting and reporting used by other
companies. Pro forma net income is computed by adjusting GAAP net income with the
impact of restructuring and realignment activities. The presentation of this additional
information should not be considered as a substitute for net income prepared in
accordance with GAAP. Reconciliations of reported results under GAAP to the pro forma
amounts have been included as a supplement to the press release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned therunto duly authorized.
| Applied Materials, Inc. |
| By: | /s/ Joseph J. Sweeney |
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| Joseph J. Sweeney | |
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Group Vice President Legal Affairs and Intellectual Property and Corporate Secretary |
Dated: May 13, 2003
EXHIBIT INDEX
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Exhibit |
Description |
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Exhibit 99.1* |
Press Release issued by Applied Materials, Inc. dated May 13, 2003. |
* Also provided in PDF format as a courtesy.
Exhibit 99.1
Release: Immediate
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Contact: Carolyn Schwartz (investment community) |
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Jeffrey Lettes (editorial/media) |
APPLIED MATERIALS ANNOUNCES RESULTS
FOR SECOND FISCAL QUARTER 2003
New Orders of $971 Million; Net Sales of $1.11 Billion
SANTA CLARA, Calif., May 13, 2003 -- Applied Materials, Inc., the world's largest supplier of wafer fabrication solutions to the semiconductor industry, reported results for its second fiscal quarter ended April 27, 2003. Net sales were $1.11 billion, up five percent from $1.05 billion from the first fiscal quarter of 2003, and down four percent from $1.16 billion for the second fiscal quarter of 2002. The net loss for the second fiscal quarter of 2003 was $62 million, or $0.04 per share, compared to a loss of $66 million, or $0.04 per share, for the first fiscal quarter of 2003, and down from net income of $52 million, or $0.03 per share reported for the second fiscal quarter of 2002. The initiation of the 2003 Realignment Plan (the "Plan") resulted in the reported net loss for the second fiscal quarter of 2003.
Gross margin for the second fiscal quarter of 2003 was 33.7 percent, down from 37.0 percent for the first fiscal quarter of 2003 and 40.0 percent for the second fiscal quarter of 2002.
On March 17, 2003, Applied Materials announced the Plan to realign the company's infrastructure with current business conditions. The Plan consists of two major elements: first, restructuring actions (including consolidation of facilities and a reduction in work force); and second, refocused product development and cost reduction programs. Both parts of the Plan will result in charges to income across multiple categories, as incurred. During the second fiscal quarter of 2003, the company began implementing the Plan, resulting in charges of $151.7 million. If the charges under the Plan had been excluded from the results reported above, the company would have reported gross margin of 38.1 percent and $44.8 million of net income or $0.03 per share on an ongoing basis.
New orders of $971 million for the second fiscal quarter of 2003 decreased four percent from $1.02 billion from the first fiscal quarter of 2003, and decreased 42 percent from $1.69 billion for the second fiscal quarter of 2002. Regional distribution of new orders for the second fiscal quarter of 2003 was: Japan 28 percent, Europe 25 percent, North America 23 percent, Korea 12 percent, Taiwan seven percent, and Southeast Asia and China five percent. Backlog at the end of the second fiscal quarter of 2003 decreased to $2.76 billion from $3.05 billion at the end of the first fiscal quarter of 2003.
"We achieved our financial objectives for the second fiscal quarter despite challenging market conditions," said James C. Morgan, chairman of Applied Materials. "We believe that the Plan, which began during the quarter, will improve the company's cost structure and enable greater strategic focus on partnering with our customers to address their technology challenges as they move to 300mm wafers, smaller chip design geometries, and new materials.
"Semiconductor manufacturers remain cautious but continue to invest in advanced technologies, as they balance their need to develop the most advanced process capabilities with the uncertainties in the global economy and the impact of near-term weakness in chip demand. We believe that Applied Materials' strategic investment in product and service solutions, as well as our process integration expertise, strongly position the company for growth as the economy and capital spending levels improve.
"With the addition of Mike Splinter, as president and CEO, I am confident that our seasoned management team, together with our technological capabilities, global infrastructure and financial strength, uniquely position Applied Materials to rapidly respond to the opportunities ahead."
Reconciliations of reported results of operations under U.S. Generally Accepted Accounting Principles (GAAP) to the pro forma amounts have been included as a supplement to this press release. Due to the amount of costs incurred with realignment activities, Applied Materials believes that reconciliation to ongoing operations facilitates meaningful comparison with prior periods. To supplement the consolidated financial statements prepared under GAAP, the company uses a pro forma measure of net income that is GAAP net income, adjusted to exclude costs of the Plan. The company believes that pro forma net income reports baseline performance before costs of the Plan. In addition, pro forma net income is the primary indicator management uses to plan and forecast future periods. These measures are not in accordance with, or are an alternative for GAAP, and may be materially different from pro forma methods of accounting and reporting used by other companies. Pro forma net income is computed by adjusting GAAP net income with the impact of restructuring and realignment activities. 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 certain forward-looking statements, including, but not limited to, those relating to the impact of the Plan, the company's strategic position and the semiconductor equipment and semiconductor industries' outlook. These forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof. Forward-looking statements may contain words such as "expects," "anticipates," "believes," "may," "should," "will," "estimates," "forecasts," or similar expressions, and include the assumptions that underlie such statements. 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 implement the Plan according to the timetable and to the extent anticipated; the impact of the Plan on the company's net sales and profitability; the company's ability to maintain effective cost controls and to timely align its cost structure with market conditions; the length and severity of the economic and industry downturn; changes in management; geopolitical uncertainties; changes in opportunities for growth; changes in demand for electronic products and semiconductors; customer capacity requirements, including capacity utilizing the latest technology; changes in the timing and amount of customers' capital spending for new technology; the company's ability to develop, deliver and support a broad range of products and services on a timely basis; the company's successful and timely development of new markets, products, processes and services and other risks described in Applied Materials' Forms 10-K, 10-Q, 8-K and other 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 second fiscal quarter results, along with its outlook for the third fiscal quarter of 2003, 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 (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™ by helping semiconductor manufacturers produce more powerful, portable and affordable chips.
Applied Materials' web site is http://www.appliedmaterials.com.
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APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
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April 28, April 27, April 28, April 27,
2002 2003 2002 2003
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(In thousands, except per share amounts)
Net sales $1,156,472 $1,107,177 $2,156,932 $2,161,386
Cost of products sold 693,732 734,403 1,308,740 1,398,230
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Gross margin 462,740 372,774 848,192 763,156
Operating expenses:
Research, development and engineering 256,879 232,438 503,678 475,643
Marketing and selling 90,084 83,568 173,888 175,785
General and administrative 76,415 78,198 146,458 150,999
Restructuring, asset impairments and
other charges* -- 92,731 85,479 192,069
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Income/(loss) from operations 39,362 (114,161) (61,311) (231,340)
Interest expense 11,097 12,217 23,088 23,559
Interest income 45,537 38,256 93,669 73,628
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Income/(loss) before income taxes 73,802 (88,122) 9,270 (181,271)
Provision/(benefit) for income taxes 21,772 (25,996) 2,735 (53,475)
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Net income/(loss) $ 52,030 $ (62,126) $ 6,535 $ (127,796)
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Earnings/(loss) per share:
Basic $ 0.03 $ (0.04) $ -- $ (0.08)
Diluted $ 0.03 $ (0.04) $ -- $ (0.08)
Weighted average number of shares:
Basic 1,643,317 1,655,927 1,639,871 1,652,981
Diluted 1,719,777 1,655,927 1,708,669 1,652,981
* The Company's reported results of operations for the second fiscal quarter of 2003 included a pre-tax restructuring charge for employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan previously announced on March 17, 2003.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS*
October 27, April 27,
2002 2003
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(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 1,284,791 $ 1,427,621
Short-term investments 3,644,735 3,792,123
Accounts receivable, net 1,046,016 742,063
Inventories 1,273,816 1,114,726
Deferred income taxes 565,936 578,153
Other current assets 257,499 204,402
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Total current assets 8,072,793 7,859,088
Property, plant and equipment, net 1,764,937 1,661,988
Other assets 387,035 402,819
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Total assets $ 10,224,765 $ 9,923,895
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 40,323 $ --
Current portion of long-term debt 9,453 9,821
Accounts payable and accrued expenses 1,348,156 1,256,126
Income taxes payable 103,524 10,967
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Total current liabilities 1,501,456 1,276,914
Long-term debt 573,853 570,153
Deferred income taxes and other liabilities 129,807 138,906
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Total liabilities 2,205,116 1,985,973
Stockholders' equity:
Common stock 16,480 16,574
Additional paid-in capital 2,022,546 2,041,467
Retained earnings 5,962,014 5,834,218
Accumulated other comprehensive income 18,609 45,663
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Total stockholders' equity 8,019,649 7,937,922
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Total liabilities and stockholders' equity $ 10,224,765 $ 9,923,895
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* Amounts as of April 27, 2003 are unaudited. Amounts as of October 27, 2002 are from the October 27, 2002 audited financial statements.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
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April 28, 2002 April 27, 2003
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Special Ongoing Special Ongoing
Reported(1) Items(2) Results Reported(1) Items(3) Results
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(In thousands, except per share amounts)
Net sales $1,156,472 $ -- $1,156,472 $1,107,177 $ -- $1,107,177
Cost of products sold 693,732 -- 693,732 734,403 (49,000)(a) 685,403
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Gross margin 462,740 -- 462,740 372,774 49,000 421,774
Operating expenses:
Research, development and engineering 256,879 -- 256,879 232,438 (10,000)(b) 222,438
Marketing and selling 90,084 -- 90,084 83,568 -- 83,568
General and administrative 76,415 -- 76,415 78,198 -- 78,198
Restructuring, asset impairments and
other charges -- -- -- 92,731 (92,731)(c) --
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Income/(loss) from operations 39,362 -- 39,362 (114,161) 151,731 37,570
Interest expense 11,097 -- 11,097 12,217 -- 12,217
Interest income 45,537 -- 45,537 38,256 -- 38,256
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Income/(loss) before income taxes 73,802 -- 73,802 (88,122) 151,731 63,609
Provision/(benefit) for income taxes 21,772 -- 21,772 (25,996) 44,761 (d) 18,765
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Net income/(loss) $ 52,030 $ -- $ 52,030 $ (62,126) $ 106,970 $ 44,844
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Earnings/(loss) per share:
Basic $ 0.03 $ -- $ 0.03 $ (0.04) $ 0.06 $ 0.03
Diluted $ 0.03 $ -- $ 0.03 $ (0.04) $ 0.06 $ 0.03
Weighted average number of shares:
Basic 1,643,317 1,643,317 1,643,317 1,655,927 1,655,927 1,655,927
Diluted 1,719,777 1,719,777 1,719,777 1,655,927 1,681,571 1,681,571
(1) Reported results of operations are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
(2) There were no special item adjustments to reported results of operations for the second fiscal quarter of 2002. Therefore, ongoing results are equal to reported results of operations.
(3) Special items for the second fiscal quarter of 2003 consisted of the following:
- Charges to cost of products sold for inventory deemed to be excess as a result of refocused product efforts initiated under the 2003 Realignment Plan.
- Charges to research, development and engineering expense for laboratory tool write-offs associated with refocused product efforts initiated under the 2003 Realignment Plan.
- Restructuring, asset impairments and other charges consist of employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan.
- Pro forma tax provision for the tax effect of special items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Six Months Ended
--------------------------------------------------------------------------
April 28, 2002 April 27, 2003
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Special Ongoing Special Ongoing
Reported(1) Items(2) Results Reported(1) Items(3) Results
---------- ---------- ---------- ---------- ---------- ----------
(In thousands, except per share amounts)
Net sales $2,156,932 $ -- $2,156,932 $2,161,386 $ -- $2,161,386
Cost of products sold 1,308,740 -- 1,308,740 1,398,230 (49,000)(c) 1,349,230
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Gross margin 848,192 -- 848,192 763,156 49,000 812,156
Operating expenses:
Research, development and engineering 503,678 -- 503,678 475,643 (10,000)(d) 465,643
Marketing and selling 173,888 -- 173,888 175,785 -- 175,785
General and administrative 146,458 -- 146,458 150,999 -- 150,999
Restructuring, asset impairments and
other charges 85,479 (85,479)(a) -- 192,069 (192,069)(e) --
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Income/(loss) from operations (61,311) 85,479 24,168 (231,340) 251,069 19,729
Interest expense 23,088 -- 23,088 23,559 -- 23,559
Interest income 93,669 -- 93,669 73,628 -- 73,628
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Income/(loss) before income taxes 9,270 85,479 94,749 (181,271) 251,069 69,798
Provision/(benefit) for income taxes 2,735 25,216 (b) 27,951 (53,475) 74,065 (f) 20,590
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Net income/(loss) $ 6,535 $ 60,263 $ 66,798 $ (127,796) $ 177,004 $ 49,208
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Earnings/(loss) per share:
Basic $ -- $ 0.04 $ 0.04 $ (0.08) $ 0.11 $ 0.03
Diluted $ -- $ 0.04 $ 0.04 $ (0.08) $ 0.11 $ 0.03
Weighted average number of shares:
Basic 1,639,871 1,639,871 1,639,871 1,652,981 1,652,981 1,652,981
Diluted 1,708,669 1,708,669 1,708,669 1,652,981 1,681,846 1,681,846
(1) Reported results of operations are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the six months ended April 28, 2002 consisted of the following:
- Restructuring consisting of employee-related costs, consolidation of facilities and other costs totaling approximately $77 million, and in-process research and development expense in connection with its acquisitions of Schlumberger's electron-beam wafer inspection business and Global Knowledge Services, Inc. totaling approximately $8 million.
- Pro forma tax provision for the tax effect of special items.
(3) Special items for the six months ended April 27, 2003 consisted of the following:
- Charges to cost of products sold for inventory deemed to be excess as a result of refocused product efforts initiated under the 2003 Realignment Plan.
- Charges to research, development and engineering expense for laboratory tool write-offs associated with refocused product efforts initiated under the 2003 Realignment Plan.
- Restructuring, asset impairments and other charges consist of employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan and restructuring activities for the first fiscal quarter of 2003.
- Pro forma tax provision for the tax effect of special items.