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 16, 2013
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Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
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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) | ||
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 May 16, 2013, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its second quarter of fiscal 2013 ended April 28, 2013. 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 May 16, 2013. | |
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.
Applied Materials, Inc. (Registrant) | |||
Date: May 16, 2013 | By: | /s/ Thomas F. Larkins | |
Thomas F. Larkins | |||
Senior Vice President, General Counsel and Corporate Secretary | |||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release issued by Applied Materials, Inc. dated May 16, 2013. | |
Exhibit 99.1
APPLIED MATERIALS ANNOUNCES SECOND QUARTER RESULTS
• | Second consecutive quarter with more than $2 billion in new orders |
• | Net sales of $1.97 billion up 25 percent sequentially |
• | Non-GAAP adjusted EPS of 16 cents exceeded high end of outlook; GAAP loss of 11 cents per share reflected impairment charges in Energy and Environmental Solutions |
SANTA CLARA, Calif., May 16, 2013 — Applied Materials, Inc. (NASDAQ:AMAT), the global leader in manufacturing solutions for the semiconductor, display and solar industries, today reported results for its second quarter of fiscal 2013 ended April 28, 2013.
Applied generated orders of $2.27 billion, up 7 percent from the prior quarter, with Silicon Systems Group orders up 14 percent from the first quarter and Display orders up 41 percent sequentially. Net sales were $1.97 billion, up 25 percent sequentially.
Applied reported non-GAAP adjusted operating income of $285 million and non-GAAP adjusted net income of $199 million or 16 cents per diluted share. The company recorded a GAAP operating loss of $68 million and a GAAP net loss of $129 million or 11 cents per diluted share. The GAAP net loss included $278 million in goodwill and intangible asset impairment charges associated with the Energy and Environmental Solutions (EES) segment, which were primarily the result of the further deterioration in solar equipment market conditions, along with $10 million in charges related to previously announced restructuring plans. The company continues to aggressively reduce spending in the EES segment.
“For the second quarter in a row, Applied had strong order performance of over $2 billion,” said Mike Splinter, chairman and chief executive officer. “We are seeing increasing pull from some of our largest strategic customers for our key enabling technologies. We remain committed to driving profitable growth.”
Quarterly Results Summary
GAAP Results | Q2 FY2013 | Q1 FY2013 | Q2 FY2012 | |||
Net sales | $1.97 billion | $1.57 billion | $2.54 billion | |||
Operating income (loss) | $(68) million | $39 million | $409 million | |||
Net income (loss) | $(129) million | $34 million | $289 million | |||
Diluted earnings (loss) per share (EPS) | $(0.11) | $0.03 | $0.22 | |||
Non-GAAP Adjusted Results | ||||||
Non-GAAP adjusted operating income | $285 million | $112 million | $490 million | |||
Non-GAAP adjusted net income | $199 million | $69 million | $349 million | |||
Non-GAAP adjusted diluted EPS | $0.16 | $0.06 | $0.27 | |||
Applied's non-GAAP adjusted results exclude the impact of the following, where applicable: certain discrete tax items; restructuring charges and any associated adjustments; certain acquisition-related costs; and impairments of assets, goodwill, or investments. A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Adjusted Financial Measures” below.
Applied Materials, Inc.
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Second Quarter Reportable Segment Results and Comparisons to the Prior Quarter
Silicon Systems Group (SSG) orders were $1.55 billion, up 14 percent, with growth primarily driven by memory. Net sales were $1.29 billion, up 33 percent, led by foundry. Non-GAAP adjusted operating income increased to $329 million or 25.5 percent of net sales. GAAP operating income increased to $283 million or 21.9 percent of net sales. New order composition was: foundry 66 percent; logic/other 13 percent; flash 11 percent; and DRAM 10 percent.
Applied Global Services (AGS) orders were $481 million, down 12 percent primarily due to the timing of service contract renewals which are typically concentrated in the first fiscal quarter. Net sales were $517 million, up 10 percent. Non-GAAP adjusted operating income increased to $120 million and rose by 3.9 points to 23.2 percent of net sales. GAAP operating income increased to $118 million or 22.8 percent of net sales.
Display orders were $195 million, up 41 percent driven by the initial recovery in TV equipment investment. Net sales were $127 million, up 46 percent. Non-GAAP adjusted operating income increased to $21 million or 16.5 percent of net sales. GAAP operating income increased to $19 million or 15.0 percent of net sales.
Energy and Environmental Solutions (EES) orders were $39 million, down 43 percent. Net sales were $38 million, down 17 percent. EES had a non-GAAP adjusted operating loss of $34 million; EES recorded a GAAP operating loss of $322 million, which included impairment charges of $278 million.
Additional Quarterly Financial Information
• | Backlog increased by 9 percent sequentially to $2.30 billion including negative adjustments of $102 million. |
• | Gross margin was 43.2 percent on a non-GAAP adjusted basis, up from 39.8 percent in the prior quarter reflecting higher net sales and lower inventory charges. GAAP gross margin was 41.0 percent. |
• | RD&E increased by $40 million or 13 percent sequentially. On a year-over-year basis, RD&E as a proportion of RD&E plus SG&A increased by 5 points to 59 percent, reflecting the impact of structural changes aimed at funding growth initiatives. |
• | The effective tax rate was 24.9 percent on a non-GAAP adjusted basis. The GAAP effective tax rate was (43.3) percent, reflecting the effects of the goodwill impairment charge, which were not deductible. |
• | The company paid $108 million in cash dividends and used $100 million to repurchase 8 million shares of its common stock. |
• | Cash, cash equivalents and investments ended the quarter at $2.85 billion, up slightly from the prior quarter. |
Business Outlook
For the third quarter of fiscal 2013, Applied expects net sales to be up slightly from the previous quarter. The company expects non-GAAP adjusted EPS to be in the range of $0.16 to $0.20. The non-GAAP adjusted EPS outlook excludes known charges related to completed acquisitions of approximately $0.04 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release.
Use of Non-GAAP Adjusted Financial Measures
Management uses non-GAAP adjusted 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 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. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.
Applied Materials, Inc.
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Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding Applied’s performance, customer demand, industry conditions, market outlooks, and business outlooks for the third quarter of fiscal 2013, as well as 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 Applied’s products, which is subject to many factors, including uncertain global economic and industry conditions, end-demand for electronic products and semiconductors, and customers’ new technology and capacity requirements; variability of operating expenses and results among the company’s segments caused by differing conditions in the served markets; the concentrated nature of Applied’s customer base; Applied’s ability to (i) develop, deliver and support a broad range of products, expand its markets and develop new markets, (ii) timely align its cost structure with business conditions and achieve the intended objectives of cost-reduction activities, (iii) plan and manage its resources and production capability, (iv) obtain and protect intellectual property rights in key technologies, (v) attract, motivate and retain key employees, and (vi) accurately forecast future results, which depends on multiple assumptions related to, without limitation, market conditions, customer requirements and business needs; and other risks described in Applied's SEC filings, including its most recent Form 10-Q. 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 providing innovative equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products. Our technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world. Learn more at www.appliedmaterials.com.
Contact:
Kevin Winston (editorial/media) 408.235.4498
Michael Sullivan (financial community) 408.986.7977
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In millions, except per share amounts) | April 28, 2013 | January 27, 2013 | April 29, 2012 | April 28, 2013 | April 29, 2012 | |||||||||||||||
Net sales | $ | 1,973 | $ | 1,573 | $ | 2,541 | $ | 3,546 | $ | 4,730 | ||||||||||
Cost of products sold | 1,165 | 991 | 1,530 | 2,156 | 2,933 | |||||||||||||||
Gross margin | 808 | 582 | 1,011 | 1,390 | 1,797 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research, development and engineering | 344 | 304 | 321 | 648 | 625 | |||||||||||||||
Selling, general and administrative | 244 | 230 | 281 | 474 | 584 | |||||||||||||||
Impairment of goodwill and intangible assets | 278 | — | — | 278 | — | |||||||||||||||
Restructuring charges and asset impairments | 10 | 9 | — | 19 | — | |||||||||||||||
Total operating expenses | 876 | 543 | 602 | 1,419 | 1,209 | |||||||||||||||
Income (loss) from operations | (68 | ) | 39 | 409 | (29 | ) | 588 | |||||||||||||
Impairments of strategic investments | 2 | — | 3 | 2 | 3 | |||||||||||||||
Interest and other expenses | 24 | 24 | 23 | 48 | 47 | |||||||||||||||
Interest and other income, net | 4 | 3 | 4 | 7 | 8 | |||||||||||||||
Income (loss) before income taxes | (90 | ) | 18 | 387 | (72 | ) | 546 | |||||||||||||
Provision (benefit) for income taxes | 39 | (16 | ) | 98 | 23 | 140 | ||||||||||||||
Net income (loss) | $ | (129 | ) | $ | 34 | $ | 289 | $ | (95 | ) | $ | 406 | ||||||||
Earnings (loss) per share: | ||||||||||||||||||||
Basic and diluted | $ | (0.11 | ) | $ | 0.03 | $ | 0.22 | $ | (0.08 | ) | $ | 0.31 | ||||||||
Weighted average number of shares: | ||||||||||||||||||||
Basic | 1,203 | 1,198 | 1,289 | 1,200 | 1,294 | |||||||||||||||
Diluted | 1,203 | 1,212 | 1,301 | 1,200 | 1,305 | |||||||||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions) | April 28, 2013 | January 27, 2013 | October 28, 2012 | |||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 1,545 | $ | 1,523 | $ | 1,392 | ||||||
Short-term investments | 225 | 230 | 545 | |||||||||
Accounts receivable, net | 1,275 | 1,109 | 1,220 | |||||||||
Inventories | 1,318 | 1,278 | 1,272 | |||||||||
Other current assets | 750 | 625 | 673 | |||||||||
Total current assets | 5,113 | 4,765 | 5,102 | |||||||||
Long-term investments | 1,080 | 1,062 | 1,055 | |||||||||
Property, plant and equipment, net | 886 | 900 | 910 | |||||||||
Goodwill | 3,294 | 3,518 | 3,518 | |||||||||
Purchased technology and other intangible assets, net | 1,194 | 1,302 | 1,355 | |||||||||
Deferred income taxes and other assets | 128 | 167 | 162 | |||||||||
Total assets | $ | 11,695 | $ | 11,714 | $ | 12,102 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued expenses | $ | 1,462 | $ | 1,287 | $ | 1,510 | ||||||
Customer deposits and deferred revenue | 739 | 678 | 755 | |||||||||
Total current liabilities | 2,201 | 1,965 | 2,265 | |||||||||
Long-term debt | 1,946 | 1,946 | 1,946 | |||||||||
Other liabilities | 650 | 662 | 656 | |||||||||
Total liabilities | 4,797 | 4,573 | 4,867 | |||||||||
Total stockholders’ equity | 6,898 | 7,141 | 7,235 | |||||||||
Total liabilities and stockholders’ equity | $ | 11,695 | $ | 11,714 | $ | 12,102 | ||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions) | Three Months Ended | Six Months Ended | |||||||||||||||||
April 28, 2013 | January 27, 2013 | April 29, 2012 | April 28, 2013 | April 29, 2012 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | (129 | ) | $ | 34 | $ | 289 | $ | (95 | ) | $ | 406 | |||||||
Adjustments required to reconcile net income (loss) to cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 106 | 106 | 108 | 212 | 220 | ||||||||||||||
Impairment of goodwill and intangible assets | 278 | — | — | 278 | — | ||||||||||||||
Restructuring charges and asset impairments | 10 | 9 | — | 19 | — | ||||||||||||||
Deferred income taxes and other | 32 | (78 | ) | 14 | (46 | ) | 53 | ||||||||||||
Share-based compensation | 39 | 42 | 43 | 81 | 96 | ||||||||||||||
Net change in operating assets and liabilities, net of amounts acquired | (112 | ) | (97 | ) | 149 | (209 | ) | 9 | |||||||||||
Cash provided by operating activities | 224 | 16 | 603 | 240 | 784 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | (51 | ) | (49 | ) | (39 | ) | (100 | ) | (76 | ) | |||||||||
Cash paid for acquisition, net of cash acquired | (1 | ) | — | (7 | ) | (1 | ) | (4,186 | ) | ||||||||||
Proceeds from sales and maturities of investments | 158 | 445 | 247 | 603 | 560 | ||||||||||||||
Purchases of investments | (167 | ) | (143 | ) | (460 | ) | (310 | ) | (714 | ) | |||||||||
Cash provided by (used in) investing activities | (61 | ) | 253 | (259 | ) | 192 | (4,416 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from common stock issuances | 67 | 18 | 43 | 85 | 45 | ||||||||||||||
Common stock repurchases | (100 | ) | (48 | ) | (200 | ) | (148 | ) | (400 | ) | |||||||||
Payments of dividends to stockholders | (108 | ) | (108 | ) | (104 | ) | (216 | ) | (208 | ) | |||||||||
Cash used in financing activities | (141 | ) | (138 | ) | (261 | ) | (279 | ) | (563 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (3 | ) | — | (4 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | 22 | 131 | 80 | 153 | (4,199 | ) | |||||||||||||
Cash and cash equivalents — beginning of period | 1,523 | 1,392 | 1,681 | 1,392 | 5,960 | ||||||||||||||
Cash and cash equivalents — end of period | $ | 1,545 | $ | 1,523 | $ | 1,761 | $ | 1,545 | $ | 1,761 | |||||||||
Supplemental cash flow information: | |||||||||||||||||||
Cash payments for income taxes | $ | 122 | $ | 32 | $ | 146 | $ | 154 | $ | 179 | |||||||||
Cash refunds from income taxes | $ | 2 | $ | 65 | $ | 1 | $ | 67 | $ | 4 | |||||||||
Cash payments for interest | $ | 7 | $ | 39 | $ | 7 | $ | 46 | $ | 48 | |||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Reportable Segment Results
Q2 FY2013 | Q1 FY2013 | Q2 FY2012 | ||||||||||||||||||||||||||||||||||
(In millions) | New Orders | Net Sales | Operating Income (Loss) | New Orders | Net Sales | Operating Income (Loss) | New Orders | Net Sales | Operating Income (Loss) | |||||||||||||||||||||||||||
SSG | $ | 1,551 | $ | 1,291 | $ | 283 | $ | 1,363 | $ | 969 | $ | 134 | $ | 1,969 | $ | 1,777 | $ | 504 | ||||||||||||||||||
AGS | 481 | 517 | 118 | 544 | 471 | 89 | 650 | 551 | 109 | |||||||||||||||||||||||||||
Display | 195 | 127 | 19 | 138 | 87 | 3 | 84 | 134 | 7 | |||||||||||||||||||||||||||
EES* | 39 | 38 | (322 | ) | 68 | 46 | (54 | ) | 62 | 79 | (63 | ) | ||||||||||||||||||||||||
Corporate | — | — | (166 | ) | — | — | (133 | ) | — | — | (148 | ) | ||||||||||||||||||||||||
Consolidated | $ | 2,266 | $ | 1,973 | $ | (68 | ) | $ | 2,113 | $ | 1,573 | $ | 39 | $ | 2,765 | $ | 2,541 | $ | 409 | |||||||||||||||||
* Operating loss for the second quarter of fiscal 2013 includes $278 million in goodwill and intangible asset impairment charges
Corporate Unallocated Expenses
(In millions) | Q2 FY2013 | Q1 FY2013 | Q2 FY2012 | |||||||||
Restructuring charges and asset impairments, net | $ | 4 | $ | 4 | $ | — | ||||||
Share-based compensation | 39 | 42 | 43 | |||||||||
Other unallocated expenses | 123 | 87 | 105 | |||||||||
Corporate | $ | 166 | $ | 133 | $ | 148 | ||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Additional Information
Q2 FY2013 | Q1 FY2013 | Q2 FY2012 | ||||||||||||||||
New Orders and Net Sales by Geography | ||||||||||||||||||
(In $ millions) | New Orders | Net Sales | New Orders | Net Sales | New Orders | Net Sales | ||||||||||||
United States | 398 | 362 | 391 | 401 | 673 | 518 | ||||||||||||
% of Total | 18 | % | 18 | % | 19 | % | 25 | % | 24 | % | 20 | % | ||||||
Europe | 173 | 144 | 134 | 119 | 271 | 229 | ||||||||||||
% of Total | 8 | % | 7 | % | 6 | % | 8 | % | 10 | % | 9 | % | ||||||
Japan | 191 | 157 | 181 | 98 | 121 | 169 | ||||||||||||
% of Total | 8 | % | 8 | % | 9 | % | 6 | % | 4 | % | 7 | % | ||||||
Korea | 259 | 226 | 198 | 205 | 704 | 750 | ||||||||||||
% of Total | 11 | % | 12 | % | 9 | % | 13 | % | 26 | % | 30 | % | ||||||
Taiwan | 902 | 828 | 906 | 565 | 810 | 654 | ||||||||||||
% of Total | 40 | % | 42 | % | 43 | % | 36 | % | 29 | % | 26 | % | ||||||
Southeast Asia | 67 | 73 | 65 | 58 | 68 | 64 | ||||||||||||
% of Total | 3 | % | 4 | % | 3 | % | 4 | % | 3 | % | 2 | % | ||||||
China | 276 | 183 | 238 | 127 | 118 | 157 | ||||||||||||
% of Total | 12 | % | 9 | % | 11 | % | 8 | % | 4 | % | 6 | % | ||||||
Employees (In thousands) | ||||||||||||||||||
Regular Full Time | 13.6 | 13.7 | 14.6 | |||||||||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In millions, except percentages) | April 28, 2013 | January 27, 2013 | April 29, 2012 | April 28, 2013 | April 29, 2012 | |||||||||||||||
Non-GAAP Adjusted Gross Margin | ||||||||||||||||||||
Reported gross margin (GAAP basis) | $ | 808 | $ | 582 | $ | 1,011 | $ | 1,390 | $ | 1,797 | ||||||||||
Certain items associated with acquisitions1 | 43 | 43 | 59 | 86 | 163 | |||||||||||||||
Acquisition integration and deal costs | 1 | 1 | — | 2 | — | |||||||||||||||
Non-GAAP adjusted gross margin | $ | 852 | $ | 626 | $ | 1,070 | $ | 1,478 | $ | 1,960 | ||||||||||
Non-GAAP adjusted gross margin percent (% of net sales) | 43.2 | % | 39.8 | % | 42.1 | % | 41.7 | % | 41.4 | % | ||||||||||
Non-GAAP Adjusted Operating Income | ||||||||||||||||||||
Reported operating income (loss) (GAAP basis) | $ | (68 | ) | $ | 39 | $ | 409 | $ | (29 | ) | $ | 588 | ||||||||
Impairment of goodwill and intangible assets | 278 | — | — | 278 | — | |||||||||||||||
Certain items associated with acquisitions1 | 53 | 54 | 71 | 107 | 186 | |||||||||||||||
Acquisition integration and deal costs | 12 | 10 | 10 | 22 | 60 | |||||||||||||||
Restructuring charges and asset impairments2, 3, 4 | 10 | 9 | — | 19 | — | |||||||||||||||
Non-GAAP adjusted operating income | $ | 285 | $ | 112 | $ | 490 | $ | 397 | $ | 834 | ||||||||||
Non-GAAP adjusted operating margin percent (% of net sales) | 14.4 | % | 7.1 | % | 19.3 | % | 11.2 | % | 17.6 | % | ||||||||||
Non-GAAP Adjusted Net Income | ||||||||||||||||||||
Reported net income (loss) (GAAP basis) | $ | (129 | ) | $ | 34 | $ | 289 | $ | (95 | ) | $ | 406 | ||||||||
Impairment of goodwill and intangible assets | 278 | — | — | 278 | — | |||||||||||||||
Certain items associated with acquisitions1 | 53 | 54 | 71 | 107 | 186 | |||||||||||||||
Acquisition integration and deal costs | 12 | 10 | 10 | 22 | 60 | |||||||||||||||
Restructuring charges and asset impairments2, 3, 4 | 10 | 9 | — | 19 | — | |||||||||||||||
Impairment of strategic investments | 2 | — | 3 | 2 | 3 | |||||||||||||||
Reinstatement of federal R&D tax credit | (3 | ) | (10 | ) | — | (13 | ) | — | ||||||||||||
Resolution of audits of prior years’ income tax filings | — | (11 | ) | (7 | ) | (11 | ) | (7 | ) | |||||||||||
Income tax effect of non-GAAP adjustments | (24 | ) | (17 | ) | (17 | ) | (41 | ) | (59 | ) | ||||||||||
Non-GAAP adjusted net income | $ | 199 | $ | 69 | $ | 349 | $ | 268 | $ | 589 | ||||||||||
1 | These items are incremental charges attributable to acquisitions, consisting of inventory fair value adjustments on products sold, and amortization of purchased intangible assets. |
2 | Results for the three months ended April 28, 2013 included $4 million of employee-related costs related to the restructuring program announced on October 3, 2012 and restructuring and asset impairment charges of $6 million related to the restructuring program announced on May 10, 2012. |
3 | Results for the three months ended January 27, 2013 included $4 million of employee-related costs, net, related to the restructuring program announced on October 3, 2012, asset impairment charges of $3 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian. |
4 | Results for the six months ended April 28, 2013 included $8 million of employee-related costs, net, related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of $9 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In millions except per share amounts) | April 28, 2013 | January 27, 2013 | April 29, 2012 | April 28, 2013 | April 29, 2012 | |||||||||||||||
Non-GAAP Adjusted Earnings Per Diluted Share | ||||||||||||||||||||
Reported earnings (loss) per diluted share (GAAP basis) | $ | (0.11 | ) | $ | 0.03 | $ | 0.22 | $ | (0.08 | ) | $ | 0.31 | ||||||||
Impairment of goodwill and intangible assets | 0.22 | — | — | 0.22 | — | |||||||||||||||
Certain items associated with acquisitions | 0.04 | 0.03 | 0.04 | 0.07 | 0.11 | |||||||||||||||
Acquisition integration and deal costs | 0.01 | 0.01 | 0.01 | 0.02 | 0.03 | |||||||||||||||
Restructuring charges and asset impairments | — | 0.01 | — | 0.01 | — | |||||||||||||||
Reinstatement of federal R&D tax credit and resolution of audits of prior years’ income tax filings | — | (0.02 | ) | — | (0.02 | ) | — | |||||||||||||
Non-GAAP adjusted earnings per diluted share | $ | 0.16 | $ | 0.06 | $ | 0.27 | $ | 0.22 | $ | 0.45 | ||||||||||
Weighted average number of diluted shares | 1,217 | 1,212 | 1,301 | 1,216 | 1,305 | |||||||||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In millions, except percentages) | April 28, 2013 | January 27, 2013 | April 29, 2012 | April 28, 2013 | April 29, 2012 | |||||||||||||||
SSG Non-GAAP Adjusted Operating Income | ||||||||||||||||||||
Reported operating income (GAAP basis) | $ | 283 | $ | 134 | $ | 504 | $ | 417 | $ | 775 | ||||||||||
Certain items associated with acquisitions1 | 45 | 44 | 60 | 89 | 161 | |||||||||||||||
Acquisition integration and deal costs | 1 | 1 | 10 | 2 | 24 | |||||||||||||||
Restructuring charges and asset impairments3, 4 | — | 1 | — | 1 | — | |||||||||||||||
Non-GAAP adjusted operating income | $ | 329 | $ | 180 | $ | 574 | $ | 509 | $ | 960 | ||||||||||
Non-GAAP adjusted operating margin percent (% of net sales) | 25.5 | % | 18.6 | % | 32.3 | % | 22.5 | % | 30.8 | % | ||||||||||
AGS Non-GAAP Adjusted Operating Income | ||||||||||||||||||||
Reported operating income (GAAP basis) | $ | 118 | $ | 89 | $ | 109 | $ | 207 | $ | 216 | ||||||||||
Certain items associated with acquisitions1 | 1 | 1 | 2 | 2 | 8 | |||||||||||||||
Restructuring charges and asset impairments2, 3, 4 | 1 | 1 | — | 2 | — | |||||||||||||||
Non-GAAP adjusted operating income | $ | 120 | $ | 91 | $ | 111 | $ | 211 | $ | 224 | ||||||||||
Non-GAAP adjusted operating margin percent (% of net sales) | 23.2 | % | 19.3 | % | 20.1 | % | 21.4 | % | 20.6 | % | ||||||||||
Display Non-GAAP Adjusted Operating Income | ||||||||||||||||||||
Reported operating income (GAAP basis) | $ | 19 | $ | 3 | $ | 7 | $ | 22 | $ | 12 | ||||||||||
Certain items associated with acquisitions1 | 2 | 2 | 2 | 4 | 4 | |||||||||||||||
Non-GAAP adjusted operating income | $ | 21 | $ | 5 | $ | 9 | $ | 26 | $ | 16 | ||||||||||
Non-GAAP adjusted operating margin percent (% of net sales) | 16.5 | % | 5.7 | % | 6.7 | % | 12.1 | % | 6.7 | % | ||||||||||
EES Non-GAAP Adjusted Operating Loss | ||||||||||||||||||||
Reported operating loss (GAAP basis) | $ | (322 | ) | $ | (54 | ) | $ | (63 | ) | $ | (376 | ) | $ | (86 | ) | |||||
Impairment of goodwill and intangible assets | 278 | — | — | 278 | — | |||||||||||||||
Certain items associated with acquisitions1 | 5 | 7 | 6 | 12 | 12 | |||||||||||||||
Restructuring charges and asset impairments2, 3, 4 | 5 | 3 | — | 8 | — | |||||||||||||||
Non-GAAP adjusted operating loss | $ | (34 | ) | $ | (44 | ) | $ | (57 | ) | $ | (78 | ) | $ | (74 | ) | |||||
Non-GAAP adjusted operating margin percent (% of net sales) | (89.5 | )% | (95.7 | )% | (72.2 | )% | (92.9 | )% | (25.9 | )% | ||||||||||
1 | These items are incremental charges attributable to acquisitions, consisting of inventory fair value adjustments on products sold, and amortization of purchased intangible assets. |
2 | Results for the three months ended April 28, 2013 included restructuring and asset impairment charges of $6 million related to the restructuring program announced on May 10, 2012. |
3 | Results for the three months ended January 27, 2013 included asset impairment charges of $3 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian. |
4 | Results for the six months ended April 28, 2013 included restructuring and asset impairment charges of $9 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian. |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED OPERATING EXPENSES
Three Months Ended | |||||||
(In millions) | April 28, 2013 | January 27, 2013 | |||||
Operating expenses (GAAP basis) | $ | 876 | $ | 543 | |||
Impairment of goodwill and intangible assets | (278 | ) | — | ||||
Acquisition integration and deal costs | (11 | ) | (9 | ) | |||
Certain items associated with acquisitions | (10 | ) | (11 | ) | |||
Restructuring charges and asset impairments | (10 | ) | (9 | ) | |||
Non-GAAP adjusted operating expenses | $ | 567 | $ | 514 | |||
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
Three Months Ended | |||
(In millions, except percentages) | April 28, 2013 | ||
Provision for income taxes (GAAP basis) (a) | $ | 39 | |
Reinstatement of federal R&D tax credit | 3 | ||
Income tax effect of non-GAAP adjustments | 24 | ||
Non-GAAP adjusted provision for income taxes (b) | $ | 66 | |
Income (loss) before income taxes (GAAP basis) (c) | $ | (90 | ) |
Impairment of goodwill and intangible assets | 278 | ||
Certain items associated with acquisitions | 53 | ||
Acquisition integration costs | 12 | ||
Restructuring charges and asset impairments | 10 | ||
Impairment of strategic investments | 2 | ||
Non-GAAP adjusted income before income taxes (d) | $ | 265 | |
Effective income tax rate (GAAP basis) (a/c) | (43.3 | )% | |
Non-GAAP adjusted effective income tax rate (b/d) | 24.9 | % | |