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

Applied Materials, Inc.

(Exact name of registrant as specified in its charter)

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

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

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 February 12, 2008, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its first fiscal quarter ended January 27, 2008. 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 February 12, 2008.

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 February 12, 2008.

Exhibit 99.1

Release:		Immediate
Contact:		Randy Bane (investment community)		David Miller (editorial/media)
		(408) 986-7977		(408) 563-9582

APPLIED MATERIALS ANNOUNCES RESULTS
FOR FIRST QUARTER OF FISCAL 2008

•

Net Sales: $2.09 billion (8% decrease year over year; 12% decrease quarter over quarter)

•

Net Income: $262 million (35% decrease year over year; 38% decrease quarter over quarter)

•

EPS: $0.19 ($0.10 decrease year over year; $0.11 decrease quarter over quarter)

•

New Orders: $2.50 billion (2% decrease year over year; 13% increase quarter over quarter)

     SANTA CLARA, Calif., February 12, 2008 — Applied Materials, Inc. reported results for its first fiscal quarter ended January 27, 2008. Net sales were $2.09 billion, down 8 percent from $2.28 billion for the first quarter of fiscal 2007, and down 12 percent from $2.37 billion for the fourth quarter of fiscal 2007. Gross margin for the first quarter of fiscal 2008 was 44.8 percent, down from 46.7 percent for the first quarter of fiscal 2007, and down from 45.5 percent for the fourth quarter of fiscal 2007. Net income for the first quarter of fiscal 2008 was $262 million, or $0.19 per share, down from net income of $403 million, or $0.29 per share, for the first quarter of fiscal 2007, and down from net income of $422 million, or $0.30 per share, for the fourth quarter of fiscal 2007.

     New orders of $2.50 billion for the first quarter of fiscal 2008 decreased 2 percent from $2.54 billion for the first quarter of fiscal 2007, and increased 13 percent from $2.21 billion for the fourth quarter of fiscal 2007. Regional distribution of new orders for the first quarter of fiscal 2008 was: Taiwan 32 percent, North America 20 percent, Korea 14 percent, Japan 12 percent, Southeast Asia and China 11 percent, and Europe 11 percent. Backlog at the end of the first quarter of fiscal 2008 was $4.10 billion, compared to $3.65 billion at the end of the fourth quarter of fiscal 2007.

     “We executed well in a challenging global chip equipment market,” said Mike Splinter, president and CEO. “The strength in our new orders reflects robust demand for our display products and recognition of our first Applied SunFab™ Thin Film Line orders.

     “This is a pivotal year for Applied and we are focused on execution and growth throughout the company. Our long-term prospects are excellent as we build on our foundation of semiconductor equipment and services to add new businesses and move into new markets,” concluded Splinter.

     Non-GAAP net income for the first quarter of fiscal 2008 was $345 million, or $0.25 per share, compared to non-GAAP net income of $405 million, or $0.29 per share, for the first quarter of fiscal 2007, and $472 million or $0.34 per share for the fourth quarter of fiscal 2007. Non-GAAP adjustments are explained below and detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results.

     Effective in the first quarter of fiscal 2008, Applied renamed two of its reportable segments. The Fab Solutions segment is now called Applied Global Services, and the Adjacent Technologies segment is now called Energy and Environmental Solutions. In addition, Applied changed its management reporting system for services, with all service results reported in the Applied Global Services segment. Fiscal 2007 segment information has been reclassified to conform to fiscal 2008.

     Results by reportable segment for the first quarter of fiscal 2008 and the first and fourth quarters of fiscal 2007 were:

		Three Months Ended												Three Months Ended												Three Months Ended
		January 27, 2008												October 28, 2007												January 28, 2007
										Operating												Operating												Operating
		New				Net				Income				New				Net				Income				New				Net				Income
(In millions)		Orders				Sales				(Loss)				Orders				Sales				(Loss)				Orders				Sales				(Loss)
Silicon		$	1,075			$	1,237			$	445			$	1,343			$	1,511			$	550			$	1,755			$	1,490			$	520
Applied Global Services			610				595				149				645				605				159				718				560				159
Display			555				133				34				120				189				47				34				196				50
Energy and Environmental Solutions			260				122				(48	)			98				62				(30	)			31				32				(15	)

     Non-GAAP net income and non-GAAP EPS, detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results, exclude charges related to (i) restructuring and asset impairments, (ii) equity-based compensation, (iii) certain items associated with acquisitions, including amortization of intangibles and inventory fair value adjustments on products sold, (iv) certain costs associated with ceasing development of beamline implant products, 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 2008 first quarter results, along with its outlook for the second quarter of fiscal 2008, on the earnings call today beginning at 1:30 p.m. Pacific Standard Time. A webcast of the earnings call will be available at www.appliedmaterials.com.

     This press release contains forward-looking statements, including statements regarding Applied’s performance, growth opportunities and prospects. 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 conditions in the served markets; 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; Applied’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, (iv) obtain and protect intellectual property rights in key technologies, and (v) attract, motivate and retain key employees; 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.

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

		Three Months Ended
		January 27,				January 28,
(In thousands, except per share amounts)		2008				2007
Net sales		$	2,087,397			$	2,277,267
Cost of products sold			1,152,416				1,214,729
Gross margin			934,981				1,062,538
Operating expenses:
Research, development and engineering			273,219				287,567
Marketing and selling			123,917				106,912
General and administrative			115,976				121,811
Restructuring and asset impairments			48,986				(3,278	)
Income from operations			372,883				549,526
Pre-tax loss of equity method investment			9,586				3,937
Interest expense			4,545				10,468
Interest income			30,570				30,103
Income before income taxes			389,322				565,224
Provision for income taxes			126,946				161,748
Net income		$	262,376			$	403,476
Earnings per share:
Basic		$	0.19			$	0.29
Diluted		$	0.19			$	0.29
Weighted average number of shares:
Basic			1,371,245				1,394,710
Diluted			1,383,886				1,409,014

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

		January 27,				October 28,
(In thousands)		2008				2007
ASSETS
Current assets:
Cash and cash equivalents		$	1,215,649			$	1,202,722
Short-term investments			689,907				1,166,857
Accounts receivable, net			2,014,501				2,049,427
Inventories			1,387,512				1,313,237
Deferred income taxes			409,773				424,502
Other current assets			474,464				448,879
Total current assets			6,191,806				6,605,624
Long-term investments			1,457,825				1,362,425
Property, plant and equipment			2,815,860				2,782,204
Less: accumulated depreciation and amortization			(1,750,773	)			(1,730,962	)
Net property, plant and equipment			1,065,087				1,051,242
Goodwill, net			1,017,705				1,000,176
Purchased technology and other intangible assets, net			354,450				373,178
Equity method investment			105,474				115,060
Deferred income taxes and other assets			160,141				146,370
Total assets		$	10,352,488			$	10,654,075
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	2,674			$	2,561
Accounts payable and accrued expenses			2,174,683				2,213,313
Income taxes payable			176,113				157,549
Total current liabilities			2,353,470				2,373,423
Long-term debt			202,476				202,281
Other liabilities			337,811				256,962
Total liabilities			2,893,757				2,832,666
Stockholders’ equity:
Common stock			13,536				13,857
Additional paid-in capital			4,707,141				4,658,832
Retained earnings			11,044,518				10,863,291
Treasury stock			(8,323,728	)			(7,725,924	)
Accumulated other comprehensive income			17,264				11,353
Total stockholders’ equity			7,458,731				7,821,409
Total liabilities and stockholders’ equity		$	10,352,488			$	10,654,075

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

		Three Months Ended
		January 27,				January 28,
(In thousands)		2008				2007
Cash flows from operating activities:
Net income		$	262,376			$	403,476
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization			78,474				60,904
Loss on fixed asset retirements			11,211				3,122
Restructuring and asset impairments			48,986				(3,278	)
Deferred income taxes			3,417				(2,457	)
Net recognized loss on investments			639				1,767
Pretax loss of equity-method investment			9,586				3,937
Equity-based compensation			38,722				34,901
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable, net			34,926				(24,350	)
Inventories			(73,937	)			(110,695	)
Other current assets			(22,579	)			(31	)
Other assets			(4,984	)			(3,078	)
Accounts payable and accrued expenses			(95,459	)			(107,823	)
Income taxes payable			94,248				121,082
Other liabilities			4,105				3,720
Cash provided by operating activities			389,731				381,197
Cash flows from investing activities:
Capital expenditures			(74,144	)			(58,901	)
Cash paid for acquisition, net of cash acquired			(19,084	)			—
Proceeds from disposition of assets held for sale			—				9,484
Proceeds from sales and maturities of investments			806,776				730,009
Purchases of investments			(423,529	)			(728,520	)
Cash provided (used) for investing activities			290,019				(47,928	)
Cash flows from financing activities:
Long-term debt borrowings			343				—
Proceeds from common stock issuances			15,681				75,094
Common stock repurchases			(600,000	)			(132,017	)
Payment of dividends to stockholders			(83,068	)			(69,614	)
Cash provided (used) for financing activities			(667,044	)			(126,537	)
Effect of exchange rate changes on cash and cash equivalents			221				420
Increase in cash and cash equivalents			12,927				207,152
Cash and cash equivalents — beginning of period			1,202,722				861,463
Cash and cash equivalents — end of period		$	1,215,649			$	1,068,615
Supplemental cash flow information:
Cash payments for income taxes		$	41,878			$	40,428
Cash payments for interest		$	45			$	57

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

		Three Months Ended
		January 27,				October 28,				January 28,
(In thousands, except per share amounts)		2008				2007				2007
Non-GAAP Net Income
Reported net income (GAAP basis)		$	262,376			$	421,761			$	403,476
Restructuring and asset impairments 1, 2, 3			48,986				3,039				(3,278	)
Equity-based compensation expense			38,722				30,889				34,900
Certain items associated with acquisitions 4			31,038				29,497				13,380
Costs associated with ceasing development of beamline implant products 5			1,021				9,391				—
Resolution of audits of prior years’ income tax filings 6			—				—				(29,863	)
Income tax effect of non-GAAP adjustments			(37,326	)			(22,691	)			(13,434	)
Non-GAAP net income		$	344,817			$	471,886			$	405,181
Non-GAAP Net Income Per Diluted Share
Reported net income per diluted share (GAAP basis)		$	0.19			$	0.30			$	0.29
Restructuring and asset impairments			0.02				—				—
Equity-based compensation expense			0.02				0.02				0.02
Certain items associated with acquisitions			0.02				0.01				0.01
Costs associated with ceasing development of beamline implant products			—				—				—
Resolution of audits of prior years’ income tax filings			—				—				(0.02	)
Non-GAAP net income — per diluted share		$	0.25			$	0.34			$	0.29
Shares used in diluted shares calculation			1,383,886				1,403,687				1,409,014