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Applied Materials, Inc., Form 8-K dated 8-12-2003
Table of Contents

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): August 12, 2003

Applied Materials, Inc.

(Exact name of registrant as specified in its charter)

Commission file number 0-6920

     
Delaware   94-1655526
 
(State or Other Jurisdiction of Incorporation or Organization)   (IRS Employer Identification Number)

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)

 

TABLE OF CONTENTS

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Item 12. Results of Operations and Financial Condition.
SIGNATURES
Exhibit Index
EXHIBIT 99.1

Table of Contents

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c)  Exhibits.

99.1 Press Release issued by Applied Materials, Inc. dated August 12, 2003.

Item 12. Results of Operations and Financial Condition.

On August 12, 2003, Applied Materials, Inc. (“Applied Materials”) announced its financial results for the third fiscal quarter ended July 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 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 Principles (“GAAP”), Applied Materials uses a pro forma measure, or a non-GAAP financial measure, as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended, of net income that is GAAP net income, adjusted to exclude costs associated with realignment activities. Due to the amount of costs incurred with realignment activities, Applied Materials believes that the use of a pro forma measure facilitates meaningful comparison with prior periods. Applied Materials believes that pro forma net income reports baseline performance before costs associated with realignment activities. 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. 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.

 

Table of Contents

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 thereunto duly authorized.

     
  Applied Materials, Inc.
 
  By:    /s/ Joseph J. Sweeney
   
    Joseph J. Sweeney
Group Vice President
Legal Affairs and Intellectual Property and Corporate Secretary

Dated: August 12, 2003

 

Table of Contents

Exhibit Index

             
Exhibit            
No.   Description        
 
       
99.1*   Press Release issued by Applied Materials, Inc. dated August 12, 2003.

*   Also provided in PDF format as a courtesy.

 

Exhibit 99.1
 

EXHIBIT 99.1

         
Release:   Immediate    
         
Contact:   Paul Bowman (investment community)   Jeffrey Lettes (editorial/media)
    (408) 563-1698   (408) 563-5161

APPLIED MATERIALS ANNOUNCES RESULTS
FOR THIRD FISCAL QUARTER 2003
New Orders Increase to $1.05 Billion; Net Sales of $1.09 Billion

     SANTA CLARA, Calif., August 12, 2003 — Applied Materials, Inc., the world’s largest supplier of wafer fabrication solutions to the semiconductor industry, reported results for its third fiscal quarter ended July 27, 2003. Net sales were $1.09 billion, down one percent from $1.11 billion for the second fiscal quarter of 2003, and down 25 percent from $1.46 billion for the third fiscal quarter of 2002. Gross margin for the third fiscal quarter of 2003 was 31.7 percent, down from 33.7 percent for the second fiscal quarter of 2003 and 41.5 percent for the third fiscal quarter of 2002. The net loss for the third fiscal quarter of 2003 was $37 million, or $0.02 per share, compared to a loss of $62 million, or $0.04 per share, for the second fiscal quarter of 2003, and down from net income of $115 million, or $0.07 per share, for the third fiscal quarter of 2002.

     A pre-tax realignment charge of $164 million, or $0.07 per share, resulted in the net loss for the third fiscal quarter of 2003. Realignment activities consisted of inventory write-offs as a result of the implementation of the global spares distribution system, refocused product efforts (which included the Etec mask pattern products), a reduction in the workforce and the consolidation of facilities. Excluding the charges associated with realignment activities, the company would have reported ongoing gross margin of 40.2 percent for the third fiscal quarter, an increase from 38.1 percent for the second fiscal quarter, and ongoing net income of $78 million, or $0.05 per share, for the third fiscal quarter, an increase from $45 million, or $0.03 per share, for the second fiscal quarter.

     New orders of $1.05 billion for the third fiscal quarter of 2003 increased nine percent from $971 million for the second fiscal quarter of 2003, and decreased 41 percent from $1.78 billion for the third fiscal quarter of 2002. Regional distribution of new orders for the third fiscal quarter of 2003 was: Taiwan 36 percent, North America 20 percent, Japan 18 percent, Korea 10 percent, Europe 10 percent, and Southeast Asia and China six percent. Backlog at the end of the third fiscal quarter of 2003 decreased to $2.53 billion from $2.76 billion at the end of the second fiscal quarter of 2003.

     “We are pleased with our financial performance this quarter, particularly the increase in new orders as we focus the company on renewed growth,” said Mike Splinter, president and CEO of Applied Materials. “These results reflect Applied Materials’ technology and market leadership, customer focus and improved cost structure.

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     “Although semiconductor manufacturers continue to be cautious in their capital spending, we see positive indicators emerging. An improved global economy and higher fab utilization are giving customers the confidence to gradually invest in new technology for the transition to advanced chip designs and 300mm wafer production.”

     In the quarter, Applied Materials extended its leadership in 300mm technologies for 90nm and below devices with eight new products for copper interconnect and transistor applications, including advanced systems for etch, decoupled plasma nitridation, electrochemical plating, wafer inspection, epitaxy, and chemical mechanical polishing. In addition, Applied Materials’ Black Diamond CVD film became the first low-k solution to reach volume production in multiple manufacturing sites.

     “My first 90 days at Applied Materials have reinforced my belief in its great people, outstanding product portfolio, strong financial management and commitment to our customers. Our entire organization is focused on delivering the next generation technologies that our customers need. Applied Materials is well positioned to take advantage of the opportunities ahead,” concluded Splinter.

     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 charges incurred with realignment activities, Applied Materials believes that reconciliation to ongoing operations facilitates meaningful comparison with prior periods. To supplement the consolidated condensed financial statements prepared under GAAP, the company uses a pro forma measure of net income that is GAAP net income, adjusted to exclude costs associated with realignment activities. The company believes that pro forma net income reports baseline performance before charges associated with realignment activities. 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. 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 impact of realignment activities, the company’s strategic position, customers’ investments in new technology, the global economy, the rate of fab utilization 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 conduct the realignment activities according to the timetable and to the extent anticipated; the impact of the realignment activities 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; continuing uncertainties in global

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economic conditions; 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; the timing, rate, amount and sustainability of increases in capital spending for new technology, such as 300mm and 90nm and below applications; 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 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 third fiscal quarter results, along with its outlook for the fourth 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.

###

 

 

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

                                   
      Three Months Ended   Nine Months Ended
     
 
      July 28,   July 27,   July 28,   July 27,
(In thousands, except per share amounts)   2002   2003   2002   2003
 
 
 
 
Net sales
   $ 1,459,682     $ 1,094,907     $ 3,616,614     $ 3,256,293  
Cost of products sold
     853,539       747,979       2,162,279       2,146,209  
 
    
     
     
     
 
Gross margin
     606,143       346,928       1,454,335       1,110,084  
Operating expenses:
                                
 
Research, development and engineering
     275,952       217,025       779,630       692,668  
 
Marketing and selling
     104,225       78,121       278,113       253,906  
 
General and administrative
     89,553       72,307       236,011       223,306  
 
Restructuring, asset impairments and other charges*
     –       66,181       85,479       258,250  
 
    
     
     
     
 
Income/(loss) from operations
     136,413       (86,706 )     75,102       (318,046 )
Interest expense
     13,080       11,626       36,168       35,185  
Interest income
     40,110       46,131       133,779       119,759  
 
    
     
     
     
 
Income/(loss) before income taxes
     163,443       (52,201 )     172,713       (233,472 )
Provision/(benefit) for income taxes
     48,216       (15,399 )     50,951       (68,874 )
 
    
     
     
     
 
Net income/(loss)
   $ 115,227     $ (36,802 )   $ 121,762     $ (164,598 )
 
    
     
     
     
 
Earnings/(loss) per share:
                                
 
Basic
   $ 0.07     $ (0.02 )   $ 0.07     $ (0.10 )
 
Diluted
   $ 0.07     $ (0.02 )   $ 0.07     $ (0.10 )
Weighted average number of shares:
                                
 
Basic
     1,647,181       1,659,365       1,642,337       1,655,430  
 
Diluted
     1,703,196       1,659,365       1,706,894       1,655,430  

*    The company’s reported results of operations for the third fiscal quarter of 2003 included a pre-tax restructuring charge for a reduction in the workforce, the consolidation of facilities, and impairment of certain assets associated with realignment activities.

 

 

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS*

                   
      October 27,   July 27,
(In thousands)   2002   2003
 
 
ASSETS
                
Current assets:
                
 
Cash and cash equivalents
   $ 1,284,791     $ 1,285,045  
 
Short-term investments
     3,644,735       3,947,657  
 
Accounts receivable, net
     1,046,016       741,618  
 
Inventories
     1,273,816       997,277  
 
Refundable income taxes
     –       5,661  
 
Deferred income taxes
     565,936       629,594  
 
Other current assets
     257,499       200,890  
 
    
     
 
Total current assets
     8,072,793       7,807,742  
Property, plant and equipment
     3,223,133       3,087,968  
Less: accumulated depreciation and amortization
     (1,458,196 )     (1,479,519 )
 
    
     
 
 
Net property, plant and equipment
     1,764,937       1,608,449  
 
    
     
 
Goodwill, net
     202,290       223,521  
Purchased technology, net
     112,920       88,021  
Other assets
     71,825       95,646  
 
    
     
 
Total assets
   $ 10,224,765     $ 9,823,379  
 
    
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
 
Notes payable
   $ 40,323     $ –  
 
Current portion of long-term debt
     9,453       4,847  
 
Accounts payable and accrued expenses
     1,348,156       1,254,757  
 
Income taxes payable
     103,524       –  
 
    
     
 
Total current liabilities
     1,501,456       1,259,604  
Long-term debt
     573,853       557,161  
Deferred income taxes and other liabilities
     129,807       141,521  
 
    
     
 
Total liabilities
     2,205,116       1,958,286  
 
    
     
 
Stockholders’ equity:
                
 
Common stock
     16,480       16,631  
 
Additional paid-in capital
     2,022,546       2,036,341  
 
Less: deferred stock compensation
     –       (2,749 )
 
Retained earnings
     5,962,014       5,797,416  
 
Accumulated other comprehensive income
     18,609       17,454  
 
    
     
 
Total stockholders’ equity
     8,019,649       7,865,093  
 
    
     
 
Total liabilities and stockholders’ equity
   $ 10,224,765     $ 9,823,379  

*    Amounts as of July 27, 2003 are unaudited. Amounts as of October 27, 2002 are from the October 27, 2002 audited financial statements with certain reclassifications to conform to the July 27, 2003 presentation.

 

 

APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – ONGOING BASIS
(UNAUDITED)

                                                   
      Three Months Ended
     
      April 27, 2003   July 27, 2003
     
 
              Special   Ongoing           Special   Ongoing
(In thousands, except per share amounts)   Reported(1)   Items(2)   Results   Reported(1)   Items(3)   Results
 
 
 
 
 
 
Net sales
   $ 1,107,177     $ –     $ 1,107,177     $ 1,094,907     $ –     $ 1,094,907  
Cost of products sold
     734,403       (49,000 )(a)     685,403       747,979       (93,404 )(e)     654,575  
 
    
     
     
     
     
     
 
Gross margin
     372,774       49,000       421,774       346,928       93,404       440,332  
Operating expenses:
                                                
 
Research, development and engineering
     232,438       (10,000 )(b)     222,438       217,025       (3,916 )(f)     213,109  
 
Marketing and selling
     83,568       –       83,568       78,121       –       78,121  
 
General and administrative
     78,198       –       78,198       72,307       –       72,307  
 
Restructuring, asset impairments and other charges
     92,731       (92,731 )(c)     –       66,181       (66,181 )(g)     –  
 
    
     
     
     
     
     
 
Income/(loss) from operations
     (114,161 )     151,731       37,570       (86,706 )     163,501       76,795  
Interest expense
     12,217       –       12,217       11,626       –       11,626  
Interest income
     38,256       –       38,256       46,131       –       46,131  
 
    
     
     
     
     
     
 
Income/(loss) before income taxes
     (88,122 )     151,731       63,609       (52,201 )     163,501       111,300  
Provision/(benefit) for income taxes
     (25,996 )     44,761 (d)     18,765       (15,399 )     48,233 (h)     32,834  
 
    
     
     
     
     
     
 
Net income/(loss)
   $ (62,126 )   $ 106,970     $ 44,844     $ (36,802 )   $ 115,268     $ 78,466  
 
    
     
     
     
     
     
 
Earnings/(loss) per share:
                                                
 
Basic
   $ (0.04 )   $ 0.06     $ 0.03     $ (0.02 )   $ 0.07     $ 0.05  
 
Diluted
   $ (0.04 )   $ 0.06     $ 0.03     $ (0.02 )   $ 0.07     $ 0.05  
Weighted average number of shares:
                                                
 
Basic
     1,655,927       1,655,927       1,655,927       1,659,365       1,659,365       1,659,365  
 
Diluted
     1,655,927       1,681,571       1,681,571       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 second fiscal quarter of 2003 consisted of the following:

  (a)   Charges to cost of products sold for inventory deemed to be excess as a result of refocused product efforts associated with realignment activities.
 
  (b)   Charges to research, development and engineering expense for laboratory tool write-offs resulting from refocused product efforts associated with realignment activities.
 
  (c)   Restructuring, asset impairments and other charges consist of employee-related costs, impairment of certain assets and facilities consolidation costs associated with realignment activities.
 
  (d)   Pro forma tax provision for the tax effect of special items.

(3)   Special items for the third fiscal quarter of 2003 consisted of the following:

  (e)   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.
 
  (f)   Charges to research, development and engineering expense for laboratory tool write-offs resulting from refocused product efforts associated with realignment activities.
 
  (g)   Restructuring, asset impairments and other charges consist of a reduction in the workforce, the consolidation of facilities and impairment of certain assets associated with realignment activities.
 
  (h)   Pro forma tax provision for the tax effect of special items.

 

 

APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – ONGOING BASIS
(UNAUDITED)

                                                   
      Three Months Ended
     
      July 28, 2002   July 27, 2003
     
 
              Special   Ongoing           Special   Ongoing
(In thousands, except per share amounts)   Reported(1)   Items(2)   Results   Reported(1)   Items(3)   Results
 
 
 
 
 
 
Net sales
   $ 1,459,682     $ –     $ 1,459,682     $ 1,094,907     $ –     $ 1,094,907  
Cost of products sold
     853,539       –       853,539       747,979       (93,404 )(a)     654,575  
 
    
     
     
     
     
     
 
Gross margin
     606,143       –       606,143       346,928       93,404       440,332  
Operating expenses:
                                                
 
Research, development and engineering
     275,952       –       275,952       217,025       (3,916 )(b)     213,109  
 
Marketing and selling
     104,225       –       104,225       78,121       –       78,121  
 
General and administrative
     89,553       –       89,553       72,307       –       72,307  
 
Restructuring, asset impairments and other charges
     –       –       –       66,181       (66,181 )(c)     –  
 
    
     
     
     
     
     
 
Income/(loss) from operations
     136,413       –       136,413       (86,706 )     163,501       76,795  
Interest expense
     13,080       –       13,080       11,626       –       11,626  
Interest income
     40,110       –       40,110       46,131       –       46,131  
 
    
     
     
     
     
     
 
Income/(loss) before income taxes
     163,443       –       163,443       (52,201 )     163,501       111,300  
Provision/(benefit) for income taxes
     48,216       –       48,216       (15,399 )     48,233 (d)     32,834  
 
    
     
     
     
     
     
 
Net income/(loss)
   $ 115,227     $ –     $ 115,227     $ (36,802 )   $ 115,268     $ 78,466  
 
    
     
     
     
     
     
 
Earnings/(loss) per share:
                                                
 
Basic
   $ 0.07     $ –     $ 0.07     $ (0.02 )   $ 0.07     $ 0.05  
 
Diluted
   $ 0.07     $ –     $ 0.07     $ (0.02 )   $ 0.07     $ 0.05  
Weighted average number of shares:
                                                
 
Basic
     1,647,181       1,647,181       1,647,181       1,659,365       1,659,365       1,659,365  
 
Diluted
     1,703,196       1,703,196       1,703,196       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)   There were no special item adjustments to reported results of operations for the third fiscal quarter of 2002. Therefore, ongoing results are the same as reported results of operations.
 
(3)   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 resulting from refocused product efforts associated with realignment activities.
 
  (c)   Restructuring, asset impairments and other charges consist of a reduction in the workforce, the consolidation of facilities and impairment of certain assets associated with realignment activities.
 
  (d)   Pro forma tax provision for the tax effect of special items.

 

 

APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – ONGOING BASIS
(UNAUDITED)

                                                   
      Nine Months Ended
     
      July 28, 2002   July 27, 2003
     
 
              Special   Ongoing           Special   Ongoing
(In thousands, except per share amounts)   Reported(1)   Items(2)   Results   Reported(1)   Items(3)   Results
 
 
 
 
 
 
Net sales
   $ 3,616,614     $ –     $ 3,616,614     $ 3,256,293     $ –     $ 3,256,293  
Cost of products sold
     2,162,279       –       2,162,279       2,146,209       (142,404 )(c)     2,003,805  
 
    
     
     
     
     
     
 
Gross margin
     1,454,335       –       1,454,335       1,110,084       142,404       1,252,488  
Operating expenses:
                                                
 
Research, development and engineering
     779,630       –       779,630       692,668       (13,916 )(d)     678,752  
 
Marketing and selling
     278,113       –       278,113       253,906       –       253,906  
 
General and administrative
     236,011       –       236,011       223,306       –       223,306  
 
Restructuring, asset impairments and other charges
     85,479       (85,479 )(a)     –       258,250       (258,250 )(e)     –  
 
    
     
     
     
     
     
 
Income/(loss) from operations
     75,102       85,479       160,581       (318,046 )     414,570       96,524  
Interest expense
     36,168       –       36,168       35,185       –       35,185  
Interest income
     133,779       –       133,779       119,759       –       119,759  
 
    
     
     
     
     
     
 
Income/(loss) before income taxes
     172,713       85,479       258,192       (233,472 )     414,570       181,098  
Provision/(benefit) for income taxes
     50,951       25,216 (b)     76,167       (68,874 )     122,298 (f)     53,424  
 
    
     
     
     
     
     
 
Net income/(loss)
   $ 121,762     $ 60,263     $ 182,025     $ (164,598 )   $ 292,272     $ 127,674  
 
    
     
     
     
     
     
 
Earnings/(loss) per share:
                                                
 
Basic
   $ 0.07     $ 0.04     $ 0.11     $ (0.10 )   $ 0.18     $ 0.08  
 
Diluted
   $ 0.07     $ 0.04     $ 0.11     $ (0.10 )   $ 0.17     $ 0.08  
Weighted average number of shares:
                                                
 
Basic
     1,642,337       1,642,337       1,642,337       1,655,430       1,655,430       1,655,430  
 
Diluted
     1,706,894       1,706,894       1,706,894       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 28, 2002 consisted of the following:

  (a)   Restructuring charges consisting of employee-related costs, consolidation of facilities and other costs totaling approximately $77 million, and in-process research and development expenses in connection with the acquisitions of Schlumberger’s electron-beam wafer inspection business and Global Knowledge Services, Inc., totaling approximately $8 million.
 
  (b)   Pro forma tax provision for the tax effect of special items.

(3)   Special items for the nine months ended July 27, 2003 consisted of the following:

  (c)   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.
 
  (d)   Charges to research, development and engineering expense for laboratory tool write-offs resulting from refocused product efforts associated with realignment activities.
 
  (e)   Restructuring, asset impairments and other charges consist of a reduction in the workforce, the consolidation of facilities and impairment of certain assets associated with realignment activities.
 
  (f)   Pro forma tax provision for the tax effect of special items.