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): November 14, 2007

Applied Materials, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)		000-06920 (Commission File Number)		94-1655526 (IRS Employer Identification No.)

3050 Bowers Avenue
P.O. Box 58039
Santa Clara, CA		95052-8039
(Address of principal		(Zip Code)
executive offices)

Registrant’s telephone number, including area code: (408) 727-5555

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02  Results of Operations and Financial Condition.

On November 14, 2007, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its fiscal year and fourth quarter ended October 28, 2007. 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 in 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.

Item 9.01  Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press Release issued by Applied Materials, Inc. dated November 14, 2007.

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 hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release issued by Applied Materials, Inc. dated November 14, 2007.

Exhibit 99.1

APPLIED MATERIALS ANNOUNCES
FISCAL 2007 FULL YEAR AND FOURTH QUARTER RESULTS

Reports Record Annual Net Sales

     SANTA CLARA, Calif., November 14, 2007 — Applied Materials, Inc. reported results for its fiscal year and fourth quarter ended October 28, 2007. Fiscal 2007 net sales were a record $9.73 billion, a 6 percent increase from $9.17 billion for fiscal 2006. Net income was $1.71 billion, or $1.20 per diluted share, up from $1.52 billion, or $0.97 per diluted share, for fiscal 2006. New orders were $9.68 billion, a 2 percent decrease from $9.89 billion for fiscal 2006.

     “This was one of the strongest years in the history of Applied Materials as we delivered record net sales and increased profitability,” said Mike Splinter, president and CEO. “During 2007, we enhanced our position in flash memory, entered the thin film solar business with strong demand for the SunFab line, and drove our operating performance to increase earnings per share. These achievements strengthen our foundation for the future.

     “We met our financial targets for the fourth quarter in a softening semiconductor and a challenging display environment. We invested in new opportunities, including the HCT acquisition for precision solar wafering and the launch of our PVD product for flat panel display arrays,” said Splinter.

     Fourth quarter net sales were $2.37 billion, down from $2.52 billion for the fourth quarter of fiscal 2006, and down from $2.56 billion for the third quarter of fiscal 2007. Gross margin was 45.5 percent, down from 47.1 percent for the fourth quarter of fiscal 2006, and down from 47.5 percent for the third quarter of fiscal 2007. Net income was $422 million, or $0.30 per share, compared to net income of $449 million, or $0.30 per share, for the fourth quarter of fiscal 2006, and down from $474 million, or $0.34 per share, for the third quarter of fiscal 2007.

     New orders of $2.21 billion for the fourth quarter of fiscal 2007 decreased 18 percent from $2.69 billion for the fourth quarter of fiscal 2006, and decreased 3 percent from $2.28 billion for the third quarter of fiscal 2007. Regional distribution of new orders for the fourth quarter of fiscal 2007 was: Taiwan 27 percent, Japan 18 percent, Southeast Asia and China 18 percent, Korea 14 percent, North America 13 percent, and Europe 10 percent. Backlog at the end of the fourth quarter of fiscal 2007 was $3.65 billion, up from $3.43 billion at the end of the third quarter of fiscal 2007.

     Non-GAAP net income for fiscal 2007 was $1.90 billion, or $1.33 per share, up from non-GAAP net income of $1.80 billion, or $1.15 per share, for fiscal 2006. Non-GAAP net income for the fourth quarter of fiscal 2007 was $472 million, or $0.34 per share, compared to non-GAAP net income of $482 million, or $0.33 per share, for the fourth quarter of fiscal 2006, and down from $518 million, or $0.37 per share, for the third quarter of fiscal 2007. Non-GAAP adjustments are explained below and further detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results.

November 14, 2007
Page 2 of 6

     Results by reportable segment for fiscal 2007 were:

										Operating
(In millions)		New Orders				Net Sales				Income (loss)
Silicon		$	6,651			$	6,512			$	2,379
Fab Solutions		$	2,374			$	2,196			$	572
Display		$	407			$	862			$	217
Adjacent Technologies		$	245			$	165			$	(89	)

     Results by reportable segment for the fourth quarter of fiscal 2007 were:

										Operating
(In millions)		New Orders				Net Sales				Income (loss)
Silicon		$	1,343			$	1,511			$	550
Fab Solutions		$	602			$	572			$	148
Display		$	163			$	222			$	58
Adjacent Technologies		$	98			$	62			$	(30	)

     Non-GAAP net income and non-GAAP EPS, detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results, exclude charges related to (i) equity-based compensation, (ii) asset impairment and restructuring activities, (iii) ceasing development of beamline implant products, (iv) certain items associated with acquisitions, including amortization and impairment of intangibles, inventory fair value adjustments on products sold, and in-process research and development charges, and/or (v) the resolution of income tax audits and changes in tax credits. Management uses non-GAAP net income and non-GAAP EPS 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 Generally Accepted Accounting Principles (GAAP) and may differ from non-GAAP methods of accounting and reporting used by other companies. Applied believes that 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 net income or EPS prepared in accordance with GAAP.

     Applied Materials will discuss its fiscal 2007 full year and fourth quarter results, along with its outlook for the first quarter of fiscal 2008, on a conference call today beginning at 1:30 p.m. Pacific Standard Time. A webcast of the conference call will be available at www.appliedmaterials.com.

     This press release contains forward-looking statements, including statements regarding the company’s performance, strategic position, products, growth opportunities, strategic investments, technology leadership, and industry conditions. Forward-looking statements may contain words such as “expect,” “believe,” “may,” “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 sustainability of demand in the nanomanufacturing technology industry and broadening of demand for emerging applications such as solar, which are subject to many factors, including global economic conditions, business and consumer spending, demand for electronic products and semiconductors, and geopolitical uncertainties; customers’ capacity requirements, including capacity utilizing the latest technology, and fab utilization; the timing, rate, amount and sustainability of capital spending for nanomanufacturing technology products; variability of operating results among the company’s reportable segments caused by differing

November 14, 2007
Page 3 of 6

conditions in the served markets; the company’s ability to (i) successfully develop, deliver and support a broad range of products and expand its markets and develop new markets, (ii) maintain effective cost controls and timely align its cost structure with business conditions, (iii) effectively manage its resources and production capability, including its supply chain, and (iv) attract, motivate and retain key employees; difficulties in production planning and execution in new businesses such as solar; the successful implementation and effectiveness of initiatives to enhance global operations and efficiencies; the successful performance of acquired businesses and joint ventures; and other risks described in Applied Materials’ SEC filings, including its reports on Forms 10-K, 10-Q and 8-K. 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™ 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.

November 14, 2007
Page 4 of 6

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

		Three Months Ended								Twelve Months Ended
		October 29,				October 28,				October 29,				October 28,
(In thousands, except per share amounts)		2006				2007				2006				2007
Net sales		$	2,518,293			$	2,367,044			$	9,167,014			$	9,734,856
Cost of products sold			1,332,169				1,290,139				4,875,212				5,242,413
Gross margin			1,186,124				1,076,905				4,291,802				4,492,443
Operating expenses:
Research, development and engineering			299,240				270,878				1,152,326				1,142,073
Marketing and selling			116,365				116,270				438,654				451,258
General and administrative			134,199				125,624				468,088				501,185
Restructuring and asset impairments			1,490				3,039				212,113				26,421
Income from operations			634,830				561,094				2,020,621				2,371,506
Pre-tax loss of equity method investment			2,849				12,162				2,849				29,371
Interest expense			9,308				9,243				36,096				38,631
Interest income			37,396				39,556				185,295				136,149
Income before income taxes			660,069				579,245				2,166,971				2,439,653
Provision for income taxes			211,040				157,484				650,308				729,457
Net income		$	449,029			$	421,761			$	1,516,663			$	1,710,196
Earnings per share:
Basic		$	0.31			$	0.31			$	0.98			$	1.22
Diluted		$	0.30			$	0.30			$	0.97			$	1.20
Weighted average number of shares:
Basic			1,469,975				1,381,871				1,551,339				1,406,685
Diluted			1,482,132				1,403,687				1,565,072				1,427,002

November 14, 2007
Page 5 of 6

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

		October 29,				October 28,
(In thousands)		2006				2007
ASSETS
Current assets:
Cash and cash equivalents		$	861,463			$	1,202,722
Short-term investments			1,035,875				1,166,857
Accounts receivable, net			2,026,199				2,049,427
Inventories			1,406,777				1,313,237
Deferred income taxes			455,473				424,502
Assets held for sale			37,211				—
Other current assets			258,021				448,879
Total current assets			6,081,019				6,605,624
Long-term investments			1,314,861				1,362,425
Property, plant and equipment			2,753,883				2,782,204
Less: accumulated depreciation and amortization			(1,729,589	)			(1,730,962	)
Net property, plant and equipment			1,024,294				1,051,242
Goodwill, net			572,558				1,000,176
Purchased technology and other intangible assets, net			201,066				373,178
Equity method investment			144,431				115,060
Deferred income taxes and other assets			142,608				146,370
Total assets		$	9,480,837			$	10,654,075
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	202,535			$	2,561
Accounts payable and accrued expenses			2,023,651				2,213,313
Income taxes payable			209,859				157,549
Total current liabilities			2,436,045				2,373,423
Long-term debt			204,708				202,281
Other liabilities			188,684				256,962
Total liabilities			2,829,437				2,832,666
Stockholders’ equity:
Common stock			13,917				13,857
Additional paid-in capital			3,678,202				4,658,832
Retained earnings			9,472,303				10,863,291
Treasury stock			(6,494,012	)			(7,725,924	)
Accumulated other comprehensive income (loss)			(19,010	)			11,353
Total stockholders’ equity			6,651,400				7,821,409
Total liabilities and stockholders’ equity		$	9,480,837			$	10,654,075

November 14, 2007
Page 6 of 6

APPLIED MATERIALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS

		Three Months Ended												Twelve Months Ended
		October 29,				July 29,				October 28,				October 29,				October 28,
(In thousands, except per share amounts)		2006				2007				2007				2006				2007
Non-GAAP Net Income
Reported net income (GAAP basis)		$	449,029			$	473,515			$	421,761			$	1,516,663			$	1,710,196
Equity-based compensation expense			55,553				47,485				30,889				216,269				161,196
Restructuring and asset impairments 1, 2			1,490				1,616				3,039				212,113				26,421
Costs associated with ceasing development of beamline implant products 3			—				6,373				9,391				—				66,063
Certain items associated with acquisitions 4			18,456				18,911				29,497				49,157				85,513
Resolution of audits of prior years’ income tax filings and changes in tax credits5			(20,000	)			(6,379	)			—				(53,915	)			(36,242	)
Income tax effect of non-GAAP adjustments			(22,268	)			(23,137	)			(22,691	)			(142,712	)			(108,501	)
Non-GAAP net income		$	482,260			$	518,384			$	471,886			$	1,797,575			$	1,904,646
Non-GAAP Net Income Per Diluted Share
Reported net income per diluted share (GAAP basis)		$	0.30			$	0.34			$	0.30			$	0.97			$	1.20
Equity-based compensation expense			0.03				0.02				0.02				0.11				0.08
Restructuring and asset impairments			—				—				—				0.08				0.01
Costs associated with ceasing development of beamline implant products			—				—				—				—				0.03
Certain items associated with acquisitions			0.01				0.01				0.01				0.02				0.04
Resolution of audits of prior years’ income tax filings and changes in tax credits			(0.01	)			—				—				(0.03	)			(0.03	)
Non-GAAP net income — per diluted share		$	0.33			$	0.37			$	0.34			$	1.15			$	1.33
Shares used in diluted shares calculation			1,482,132				1,407,264				1,403,687				1,565,072				1,427,002