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		(Zip Code)
offices)

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 17, 2010, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its first fiscal quarter ended January 31, 2010. 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 17, 2010.

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 17, 2010.

Exhibit 99.1

				CONTACT Howard Clabo (editorial/media) 408.748.5775 Michael Sullivan (financial community) 408.986.7977
		NEWS RELEASE

APPLIED MATERIALS ANNOUNCES SOLID FIRST QUARTER RESULTS

	•		Raises fiscal year net sales outlook to growth of more than 50%
	•		Orders up 33% quarter over quarter led by Silicon Systems Group order growth of 80%
	•		Completes Semitool acquisition targeting growth in advanced semiconductor packaging

SANTA CLARA, Calif., Feb. 17, 2010 — Applied Materials, Inc. (NASDAQ: AMAT), the global leader in Nanomanufacturing Technology™ solutions for the semiconductor, flat panel display and solar industries, today reported results for its first quarter of fiscal 2010 ended January 31, 2010. Applied generated net sales of $1.85 billion, operating profit of $116 million, and net income of $83 million or $0.06 per share. Non-GAAP net income was $179 million or $0.13 per share.

“Applied posted solid first quarter results led by robust sales in our semiconductor equipment business,” said Mike Splinter, chairman and CEO. “With global demand improving in our customers’ end markets, we are raising our full-year revenue target to reflect higher anticipated demand in our semiconductor, LCD display and crystalline silicon solar businesses.”

“During the quarter, we completed the acquisition of Semitool Inc., opening new growth opportunities in our core semiconductor equipment market, particularly in advanced packaging,” Splinter added. “Applied enters its second quarter with considerable momentum, and we are off to an excellent start for the year.”

Financial Results Summary

		Q1 FY 2010		Q4 FY 2009		Q1 FY 2009
GAAP Results
Net sales		$1.85 billion		$1.53 billion		$1.33 billion
Net income (loss)		$83 million		$138 million		($133 million)
Earnings (loss) per share		$0.06		$0.10		($0.10)
Non-GAAP Results
Non-GAAP net income (loss)		$179 million		$155 million		($28 million)
Non-GAAP earnings (loss) per share		$0.13		$0.11		($0.02)

Fiscal year 2010 is a 53-week year with 14 weeks in the first quarter.

The non-GAAP results exclude the impact of the following, where applicable: restructuring and asset impairments, acquisition-related costs, investment impairments, gains on sales of facilities, and amounts associated with the resolution of income tax audits. Effective the first quarter of fiscal 2010, the non-GAAP results no longer exclude the impact of equity-

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based compensation. A reconciliation of the GAAP and non-GAAP results is provided in the financial statements included in this release.

Reportable Segment Results

The Silicon Systems Group (SSG) had new orders of $1.13 billion, net sales of $970 million and operating income of $306 million. The 48 percent sequential increase in net sales was led by shipments to foundry and DRAM customers. New order composition was: foundry 42 percent, DRAM 36 percent, flash 13 percent, and logic and other 9 percent.

Applied Global Services (AGS) had new orders of $474 million, net sales of $426 million and operating income of $63 million. Sequential growth in net sales of 9 percent was driven primarily by semiconductor customer increases in factory utilization levels and new wafer starts.

The Display group had new orders of $126 million, net sales of $132 million and operating income of $25 million. The sequential decline in net sales was expected following a strong prior quarter.

The Energy and Environmental Solutions (EES) group had new orders of $230 million, net sales of $321 million and an operating loss of $36 million. Net sales included revenue for two additional SunFab™ thin film solar production lines.

Financial Highlights

Applied generated operating cash flow of $367 million during the quarter. The company acquired Semitool Inc. in an all-cash transaction for $323 million, net of cash acquired, and paid cash dividends of $80 million. At the end of the period, the company held $3.2 billion in cash and investments.

Business Outlook

For the second quarter of fiscal 2010, Applied expects quarter over quarter net sales growth of between 15 percent and 25 percent. The company expects non-GAAP EPS to be in the range of $0.17 to $0.22, which excludes anticipated charges related primarily to acquisitions.

For fiscal 2010, Applied expects net sales to grow by more than 50 percent, an increase from the previous outlook of greater than 30 percent.

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

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Materials 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, second quarter and fiscal year 2010 business outlooks, and growth opportunities. Forward-looking statements may contain words such as “expect,” “believe,” “may,” “can,” “should,” “will,” “forecast,” “anticipate” 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, customers’ ability to acquire affordable capital, business and consumer spending, demand for electronic products and semiconductors, government renewable energy policies and incentives, and customers’ utilization rates and capacity requirements, including capacity utilizing the latest technology; variability of operating expenses and 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 information technology, business process, outsourcing, business relocation and other initiatives that enhance global operations and efficiencies, (v) realize synergies from, and successfully commercialize technologies acquired in, business acquisitions, (vi) maintain effective internal controls and procedures, (vii) obtain and protect intellectual property rights in key technologies, (viii) attract, motivate and retain key employees, and (ix) accurately forecast future operating and financial results, which depends on multiple assumptions related to, without limitation, market conditions and business needs; 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.

About Applied Materials

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.

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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

		Three Months Ended
		January 31,				January 25,
(In thousands, except per share amounts)		2010				2009
Net sales		$	1,848,902			$	1,333,396
Cost of products sold			1,137,718				941,820
Gross margin			711,184				391,576
Operating expenses:
Research, development and engineering			269,003				229,540
General and administrative			124,799				141,241
Marketing and selling			97,195				84,115
Restructuring and asset impairments			103,844				132,772
Income (loss) from operations			116,343				(196,092	)
Pre-tax loss of equity method investment			—				15,808
Impairment of strategic investments			1,190				—
Interest expense			5,060				5,994
Interest income			8,641				15,235
Income (loss) before income taxes			118,734				(202,659	)
Provision (benefit) for income taxes			35,983				(69,725	)
Net income (loss)		$	82,751			$	(132,934	)
Earnings (loss) per share:
Basic		$	0.06			$	(0.10	)
Diluted		$	0.06			$	(0.10	)
Weighted average number of shares:
Basic			1,341,941				1,329,223
Diluted			1,349,567				1,329,223

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APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

		January 31,				October 25,
(In thousands)		2010				2009
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,399,054			$	1,576,381
Short-term investments			755,122				638,349
Accounts receivable, less allowance for doubtful accounts of $73,310 and $67,313 at 2010 and 2009, respectively			1,267,409				1,041,495
Inventories			1,664,269				1,627,457
Deferred income taxes, net			417,986				356,336
Income taxes receivable			102,711				184,760
Other current assets			242,712				264,169
Total current assets			5,849,263				5,688,947
Long-term investments			1,046,116				1,052,165
Property, plant and equipment			2,964,028				2,906,957
Less: accumulated depreciation and amortization			(1,835,359	)			(1,816,524	)
Net property, plant and equipment			1,128,669				1,090,433
Goodwill, net			1,336,426				1,170,932
Purchased technology and other intangible assets, net			374,000				306,416
Deferred income taxes and other assets			269,364				265,350
Total assets		$	10,003,838			$	9,574,243
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	2,400			$	1,240
Accounts payable and accrued expenses			1,252,031				1,061,502
Customer deposits and deferred revenue			993,357				864,280
Income taxes payable			30,160				12,435
Total current liabilities			2,277,948				1,939,457
Long-term debt			210,547				200,654
Other liabilities			367,200				339,524
Total liabilities			2,855,695				2,479,635
Stockholders’ equity:
Common stock			13,433				13,409
Additional paid-in capital			5,245,634				5,195,437
Retained earnings			10,936,149				10,934,004
Treasury stock			(9,046,562	)			(9,046,562	)
Accumulated other comprehensive loss			(511	)			(1,680	)
Total stockholders’ equity			7,148,143				7,094,608
Total liabilities and stockholders’ equity		$	10,003,838			$	9,574,243

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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

		Three Months Ended
		January 31,				January 25,
(In thousands)		2010				2009
Cash flows from operating activities:
Net income (loss)		$	82,751			$	(132,934	)
Adjustments required to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization			76,412				71,228
Loss on fixed asset retirements			3,435				3,447
Provision for bad debts			6,000				47,526
Restructuring and asset impairments			103,844				132,772
Deferred income taxes			(43,636	)			(13,054	)
Net recognized loss on investments			209				5,398
Pretax loss of equity-method investment			—				15,808
Impairment of investments			1,190				—
Equity-based compensation			33,689				33,608
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable			(193,953	)			368,648
Inventories			25,026				(144,075	)
Other current assets			23,260				10,890
Other assets			(9,525	)			1,311
Accounts payable and accrued expenses			42,290				(353,672	)
Customer deposit and deferred revenue			123,218				(164,701	)
Income taxes			99,864				(94,337	)
Other liabilities			(7,177	)			26,920
Cash provided by (used in) operating activities			366,897				(185,217	)
Cash flows from investing activities:
Capital expenditures			(53,167	)			(73,318	)
Cash paid for acquisition, net of cash acquired			(322,599	)			—
Proceeds from sales and maturities of investments			189,225				541,689
Purchases of investments			(298,051	)			(227,348	)
Cash provided by (used in) investing activities			(484,592	)			241,023
Cash flows from financing activities:
Debt borrowings			977				510
Proceeds from common stock issuances			19,855				182
Common stock repurchases			—				(22,906	)
Payment of dividends to stockholders			(80,464	)			(79,762	)
Cash used in financing activities			(59,632	)			(101,976	)
Effect of exchange rate changes on cash and cash equivalents			—				742
Decrease in cash and cash equivalents			(177,327	)			(45,428	)
Cash and cash equivalents — beginning of period			1,576,381				1,411,624
Cash and cash equivalents — end of period		$	1,399,054			$	1,366,196
Supplemental cash flow information:
Cash payments (refunds) for income taxes		$	(32,791	)		$	12,064
Cash payments for interest		$	42			$	42

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Reportable Segment Results

		Q1 FY 2010												Q4 FY 2009												Q1 FY 2009
										Operating Income												Operating Income												Operating Income
(In millions)		New Orders				Net Sales				(Loss)				New Orders				Net Sales				(Loss)				New Orders				Net Sales				(Loss)
SSG		$	1,135			$	970			$	306			$	629			$	656			$	170			$	246			$	546			$	46
AGS		$	474			$	426			$	63			$	335			$	390			$	66			$	310			$	345			$	26
Display		$	126			$	132			$	25			$	151			$	200			$	41			$	26			$	149			$	21
EES		$	230			$	321				($36	)		$	357			$	280				($28	)		$	321			$	293				($64	)
Corporate-unallocated expenses		$	—			$	—				($242	)		$	—			$	—				($76	)		$	—			$	—				($225	)
Consolidated		$	1,965			$	1,849			$	116			$	1,472			$	1,526			$	173			$	903			$	1,333				($196	)

Effective in the first quarter of fiscal 2010, Applied changed its methodology for allocating certain expenses to its reportable segments. Applied has reclassified segment operating results for the three months ended October 25, 2009 and January 25, 2009 to conform to the fiscal 2010 presentation.

Additional Information

New Orders and Net Sales by Geography		Q1 FY 2010								Q4 FY 2009								Q1 FY 2009
(In $ millions)		New Orders				Net Sales				New Orders				Net Sales				New Orders				Net Sales
North America			256				241				199				232				237				383
% of Total			13				13				14				15				26				29
Europe			146				310				74				150				346				198
% of Total			7				17				5				10				38				15
Japan			178				174				124				218				154				216
% of Total			9				9				8				14				17				16
Korea			387				331				296				251				66				187
% of Total			20				18				20				17				7				14
Taiwan			658				514				218				327				19				144
% of Total			34				28				15				21				2				11
Southeast Asia			125				136				88				69				12				88
% of Total			6				7				6				5				2				6
China			215				143				473				279				69				117
% of Total			11				8				32				18				8				9
Employees
Regular Full Time			13,000*								12,600								14,400

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

		Three Months Ended
		January 31,				October 25,				January 25,
(In thousands, except per share amounts)		2010				2009				2009
Non-GAAP Net Income (Loss)
Reported net income (loss) (GAAP basis)		$	82,751			$	137,862			$	(132,934	)
Certain items associated with acquisitions 1			25,962				22,425				26,025
Semitool deal cost			9,860				—				—
Restructuring and asset impairments 2, 3, 4			103,844				(3,693	)			132,772
Impairment of strategic investments			1,190				5,058				—
Income tax effect of non-GAAP adjustments and resolution of audits of prior years’ income tax filings			(44,607	)			(6,797	)			(53,529	)
Non-GAAP net income (loss)		$	179,000			$	154,855			$	(27,666	)
Non-GAAP Net Income (Loss) Per Diluted Share
Reported net income (loss) per diluted share (GAAP basis)		$	0.06			$	0.10			$	(0.10	)
Certain items associated with acquisitions			0.01				0.01				0.01
Semitool deal cost			0.01				—				—
Restructuring and asset impairments			0.05				—				0.06
Impairment of strategic investments			—				—				—
Non-GAAP net income (loss) — per diluted share		$	0.13			$	0.11			$	(0.02	)
Shares used in diluted shares calculation			1,349,567				1,347,691				1,329,223

Effective the first quarter of fiscal 2010, the non-GAAP results no longer exclude the impact of equity-based compensation. Previously reported non-GAAP results have been restated to conform to the fiscal 2010 presentation.