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): February 18, 2016
____________________________________________________________________
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) | ||
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 February 18, 2016, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its first quarter ended January 31, 2016. 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 18, 2016. | |
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: | February 18, 2016 | 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 February 18, 2016. | |
Exhibit 99.1
APPLIED MATERIALS ANNOUNCES FIRST QUARTER 2016 RESULTS
• | Applied delivers in line results and expects sequential growth in net sales and non-GAAP EPS |
• | Company returns $740 million to shareholders through dividends and share repurchases |
SANTA CLARA, Calif., Feb. 18, 2016 - Applied Materials, Inc. (NASDAQ:AMAT), the global leader in materials engineering solutions for the semiconductor, display and solar industries, today reported results for its first quarter ended January 31, 2016.
First quarter orders were $2.28 billion, down 6 percent sequentially and flat year over year. Net sales were $2.26 billion, down 5 percent sequentially and down 4 percent year over year.
On a non-GAAP adjusted basis, the company reported first quarter gross margin of 42.4 percent, operating margin of 17.8 percent, and net income of $302 million or $0.26 per diluted share. The company recorded GAAP gross margin of 40.6 percent, operating margin of 15.7 percent, and net income of $286 million or $0.25 per diluted share.
The company generated $207 million in cash from operations during the first quarter, paid dividends of $115 million and used $625 million to repurchase 35 million shares of common stock.
“As the market moves into the sweet spot for Applied’s materials engineering technology, we see strong demand for our semiconductor, display and service businesses,” said Gary Dickerson, president and CEO. “We are maintaining a positive outlook for 2016 as our customers make strategic, inflection-driven investments that play to our strengths.”
Quarterly Results Summary
Change | ||||||||||
Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | Q1 FY2016 vs. Q4 FY2015 | Q1 FY2016 vs. Q1 FY2015 | ||||||
(In millions, except per share amounts and percentages) | ||||||||||
New orders | $2,275 | $2,424 | $2,273 | (6)% | —% | |||||
Net sales | $2,257 | $2,368 | $2,359 | (5)% | (4)% | |||||
Gross margin | 40.6% | 40.5% | 40.7% | 0.1 points | (0.1) points | |||||
Operating margin | 15.7% | 17.9% | 19.4% | (2.2) points | (3.7) points | |||||
Net income | $286 | $336 | $348 | (15)% | (18)% | |||||
Diluted earnings per share (EPS) | $0.25 | $0.28 | $0.28 | (11)% | (11)% | |||||
Applied Materials, Inc.
Page 2 of 12
Change | ||||||||||
Non-GAAP Adjusted Results | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | Q1 FY2016 vs. Q4 FY2015 | Q1 FY2016 vs. Q1 FY2015 | |||||
(In millions, except per share amounts and percentages) | ||||||||||
Non-GAAP adjusted gross margin | 42.4% | 42.2% | 42.3% | 0.2 points | 0.1 points | |||||
Non-GAAP adjusted operating margin | 17.8% | 19.3% | 18.9% | (1.5) points | (1.1) points | |||||
Non-GAAP adjusted net income | $302 | $347 | $338 | (13)% | (11)% | |||||
Non-GAAP adjusted diluted EPS | $0.26 | $0.29 | $0.27 | (10)% | (4)% | |||||
Applied's non-GAAP adjusted results exclude the impact of the following, where applicable: certain items related to mergers and acquisitions; restructuring charges and any associated adjustments; impairments of assets, or investments; gain or loss on sale of strategic investments; and certain discrete adjustments and tax items. 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” section.
Business Outlook
For the second quarter of fiscal 2016, Applied expects net sales to be up 5 percent to 10 percent sequentially. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.30 to $0.34.
This outlook excludes known charges related to completed acquisitions of $0.04 per share and does not exclude other non-GAAP adjustments that may arise subsequent to this release.
First Quarter Reportable Segment Information
Silicon Systems | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | ||||||||
(In millions, except percentages) | |||||||||||
New orders | $ | 1,275 | $ | 1,444 | $ | 1,426 | |||||
Foundry | 38 | % | 35 | % | 34 | % | |||||
DRAM | 29 | % | 21 | % | 34 | % | |||||
Flash | 22 | % | 31 | % | 18 | % | |||||
Logic and other | 11 | % | 13 | % | 14 | % | |||||
Net sales | 1,373 | 1,494 | 1,446 | ||||||||
Operating income | 265 | 318 | 307 | ||||||||
Operating margin | 19.3 | % | 21.3 | % | 21.2 | % | |||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 312 | $ | 365 | $ | 350 | |||||
Non-GAAP adjusted operating margin | 22.7 | % | 24.4 | % | 24.2 | % | |||||
Applied Materials, Inc.
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Applied Global Services | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | ||||||||
(In millions, except percentages) | |||||||||||
New orders | $ | 773 | $ | 761 | $ | 690 | |||||
Net sales | 626 | 637 | 583 | ||||||||
Operating income | 156 | 171 | 153 | ||||||||
Operating margin | 24.9 | % | 26.8 | % | 26.2 | % | |||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 156 | $ | 170 | $ | 154 | |||||
Non-GAAP adjusted operating margin | 24.9 | % | 26.7 | % | 26.4 | % | |||||
Display | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | ||||||||
(In millions, except percentages) | |||||||||||
New orders | $ | 183 | $ | 195 | $ | 107 | |||||
Net sales | 213 | 191 | 275 | ||||||||
Operating income | 38 | 19 | 72 | ||||||||
Operating margin | 17.8 | % | 9.9 | % | 26.2 | % | |||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 38 | $ | 19 | $ | 73 | |||||
Non-GAAP adjusted operating margin | 17.8 | % | 9.9 | % | 26.5 | % | |||||
Energy and Environmental Solutions | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | ||||||||
(In millions, except percentages) | |||||||||||
New orders | $ | 44 | $ | 24 | $ | 50 | |||||
Net sales | 45 | 46 | 55 | ||||||||
Operating income (loss) | 6 | — | (4 | ) | |||||||
Operating margin | 13.3 | % | — | % | (7.3 | )% | |||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income (loss) | $ | 4 | $ | (1 | ) | $ | (3 | ) | |||
Non-GAAP adjusted operating margin | 8.9 | % | (2.2 | )% | (5.5 | )% | |||||
Backlog Information
Applied's backlog decreased 1% to $3.11 billion and included negative adjustments of $51 million. Backlog composition by reportable segment was as follows:
Silicon Systems | 51 | % |
Applied Global Services | 30 | % |
Display | 16 | % |
Energy and Environmental Solutions | 3 | % |
Applied Materials, Inc.
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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.
Forward-Looking Statements
This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks, technology transitions, our financial performance and market share positions, our business outlook for the second quarter of fiscal 2016, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; and other risks and uncertainties described in our SEC filings, including our most recent Forms 10-K and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.
About Applied Materials
Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. 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.
Page 5 of 12
APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended | ||||||||||||
(In millions, except per share amounts) | January 31, 2016 | October 25, 2015 | January 25, 2015 | |||||||||
Net sales | $ | 2,257 | $ | 2,368 | $ | 2,359 | ||||||
Cost of products sold | 1,341 | 1,409 | 1,400 | |||||||||
Gross profit | 916 | 959 | 959 | |||||||||
Operating expenses: | ||||||||||||
Research, development and engineering | 374 | 363 | 351 | |||||||||
Marketing and selling | 106 | 96 | 111 | |||||||||
General and administrative | 82 | 77 | 117 | |||||||||
Gain on derivatives associated with terminated business combination | — | — | (78 | ) | ||||||||
Total operating expenses | 562 | 536 | 501 | |||||||||
Income from operations | 354 | 423 | 458 | |||||||||
Interest expense | 42 | 32 | 23 | |||||||||
Interest income and other income, net | 2 | 6 | 2 | |||||||||
Income before income taxes | 314 | 397 | 437 | |||||||||
Provision for income taxes | 28 | 61 | 89 | |||||||||
Net income | $ | 286 | $ | 336 | $ | 348 | ||||||
Earnings per share: | ||||||||||||
Basic and diluted | $ | 0.25 | $ | 0.28 | $ | 0.28 | ||||||
Weighted average number of shares: | ||||||||||||
Basic | 1,146 | 1,182 | 1,224 | |||||||||
Diluted | 1,154 | 1,190 | 1,240 | |||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions) | January 31, 2016 | October 25, 2015 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,962 | $ | 4,797 | ||||
Short-term investments | 154 | 168 | ||||||
Accounts receivable, net | 1,625 | 1,739 | ||||||
Inventories | 1,835 | 1,833 | ||||||
Other current assets | 334 | 724 | ||||||
Total current assets | 6,910 | 9,261 | ||||||
Long-term investments | 996 | 946 | ||||||
Property, plant and equipment, net | 908 | 892 | ||||||
Goodwill | 3,302 | 3,302 | ||||||
Purchased technology and other intangible assets, net | 714 | 762 | ||||||
Deferred income taxes and other assets | 496 | 145 | ||||||
Total assets | $ | 13,326 | $ | 15,308 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | — | $ | 1,200 | ||||
Accounts payable and accrued expenses | 1,457 | 1,833 | ||||||
Customer deposits and deferred revenue | 850 | 765 | ||||||
Total current liabilities | 2,307 | 3,798 | ||||||
Long-term debt | 3,343 | 3,342 | ||||||
Other liabilities | 508 | 555 | ||||||
Total liabilities | 6,158 | 7,695 | ||||||
Total stockholders’ equity | 7,168 | 7,613 | ||||||
Total liabilities and stockholders’ equity | $ | 13,326 | $ | 15,308 | ||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions) | Three Months Ended | ||||||||||
January 31, 2016 | October 25, 2015 | January 25, 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 286 | $ | 336 | $ | 348 | |||||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 96 | 96 | 92 | ||||||||
Share-based compensation | 54 | 46 | 48 | ||||||||
Excess tax benefits from share-based compensation | (10 | ) | (2 | ) | (39 | ) | |||||
Deferred income taxes | 15 | (159 | ) | 28 | |||||||
Other | 10 | (11 | ) | 8 | |||||||
Net change in operating assets and liabilities | (244 | ) | 165 | (425 | ) | ||||||
Cash provided by operating activities | 207 | 471 | 60 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (68 | ) | (55 | ) | (49 | ) | |||||
Proceeds from sales and maturities of investments | 241 | 200 | 140 | ||||||||
Purchases of investments | (282 | ) | (202 | ) | (141 | ) | |||||
Cash used in investing activities | (109 | ) | (57 | ) | (50 | ) | |||||
Cash flows from financing activities: | |||||||||||
Debt borrowings (repayments), net of issuance costs | (1,205 | ) | 2,581 | — | |||||||
Proceeds from common stock issuances and others, net | 2 | 45 | — | ||||||||
Common stock repurchases | (625 | ) | (700 | ) | — | ||||||
Excess tax benefits from share-based compensation | 10 | 2 | 39 | ||||||||
Payments of dividends to stockholders | (115 | ) | (119 | ) | (122 | ) | |||||
Cash provided by (used in) financing activities | (1,933 | ) | 1,809 | (83 | ) | ||||||
Increase (decrease) in cash and cash equivalents | (1,835 | ) | 2,223 | (73 | ) | ||||||
Cash and cash equivalents — beginning of period | 4,797 | 2,574 | 3,002 | ||||||||
Cash and cash equivalents — end of period | $ | 2,962 | $ | 4,797 | $ | 2,929 | |||||
Supplemental cash flow information: | |||||||||||
Cash payments for income taxes | $ | 44 | $ | 149 | $ | 89 | |||||
Cash refunds from income taxes | $ | 5 | $ | 2 | $ | 3 | |||||
Cash payments for interest | $ | 34 | $ | 7 | $ | 39 | |||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Corporate Unallocated Expenses
(In millions) | Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | |||||||||
Share-based compensation | $ | 54 | $ | 46 | $ | 48 | ||||||
Certain items associated with terminated business combination | — | — | 20 | |||||||||
Gain on derivatives associated with terminated business combination, net | — | — | (78 | ) | ||||||||
Other unallocated expenses | 57 | 39 | 80 | |||||||||
Total corporate | $ | 111 | $ | 85 | $ | 70 | ||||||
Additional Information
Q1 FY2016 | Q4 FY2015 | Q1 FY2015 | ||||||||||||||||
New Orders and Net Sales by Geography | ||||||||||||||||||
(In $ millions) | New Orders | Net Sales | New Orders | Net Sales | New Orders | Net Sales | ||||||||||||
United States | 369 | 293 | 282 | 301 | 411 | 369 | ||||||||||||
% of Total | 16 | % | 13 | % | 12 | % | 13 | % | 18 | % | 16 | % | ||||||
Europe | 156 | 138 | 155 | 172 | 148 | 153 | ||||||||||||
% of Total | 7 | % | 6 | % | 6 | % | 7 | % | 6 | % | 6 | % | ||||||
Japan | 109 | 334 | 452 | 278 | 242 | 243 | ||||||||||||
% of Total | 5 | % | 15 | % | 19 | % | 12 | % | 11 | % | 10 | % | ||||||
Korea | 373 | 268 | 207 | 239 | 546 | 536 | ||||||||||||
% of Total | 17 | % | 12 | % | 8 | % | 10 | % | 24 | % | 23 | % | ||||||
Taiwan | 574 | 637 | 846 | 758 | 545 | 556 | ||||||||||||
% of Total | 25 | % | 28 | % | 35 | % | 32 | % | 24 | % | 24 | % | ||||||
Southeast Asia | 232 | 90 | 100 | 143 | 85 | 92 | ||||||||||||
% of Total | 10 | % | 4 | % | 4 | % | 6 | % | 4 | % | 4 | % | ||||||
China | 462 | 497 | 382 | 477 | 296 | 410 | ||||||||||||
% of Total | 20 | % | 22 | % | 16 | % | 20 | % | 13 | % | 17 | % | ||||||
Employees (In thousands) | ||||||||||||||||||
Regular Full Time | 14.6 | 14.6 | 14.1 | |||||||||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | ||||||||||||
(In millions, except percentages) | January 31, 2016 | October 25, 2015 | January 25, 2015 | |||||||||
Non-GAAP Adjusted Gross Profit | ||||||||||||
Reported gross profit - GAAP basis | $ | 916 | $ | 959 | $ | 959 | ||||||
Certain items associated with acquisitions1 | 42 | 42 | 40 | |||||||||
Inventory charges (reversals) related to restructuring3, 4 | (1 | ) | 1 | — | ||||||||
Other significant gains, losses or charges, net5 | — | (2 | ) | — | ||||||||
Non-GAAP adjusted gross profit | $ | 957 | $ | 1,000 | $ | 999 | ||||||
Non-GAAP adjusted gross margin | 42.4 | % | 42.2 | % | 42.3 | % | ||||||
Non-GAAP Adjusted Operating Income | ||||||||||||
Reported operating income - GAAP basis | $ | 354 | $ | 423 | $ | 458 | ||||||
Certain items associated with acquisitions1 | 48 | 47 | 46 | |||||||||
Acquisition integration costs | — | — | 1 | |||||||||
Gain on derivatives associated with terminated business combination, net | — | — | (78 | ) | ||||||||
Certain items associated with terminated business combination2 | — | — | 20 | |||||||||
Reversals related to restructuring, net3, 4 | (1 | ) | (1 | ) | — | |||||||
Other significant gains, losses or charges, net5 | — | (13 | ) | — | ||||||||
Non-GAAP adjusted operating income | $ | 401 | $ | 456 | $ | 447 | ||||||
Non-GAAP adjusted operating margin | 17.8 | % | 19.3 | % | 18.9 | % | ||||||
Non-GAAP Adjusted Net Income | ||||||||||||
Reported net income - GAAP basis | $ | 286 | $ | 336 | $ | 348 | ||||||
Certain items associated with acquisitions1 | 48 | 47 | 46 | |||||||||
Acquisition integration costs | — | — | 1 | |||||||||
Gain on derivatives associated with terminated business combination, net | — | — | (78 | ) | ||||||||
Certain items associated with terminated business combination2 | — | — | 20 | |||||||||
Reversals related to restructuring, net3, 4 | (1 | ) | (1 | ) | — | |||||||
Impairment (gain on sale) of strategic investments, net | (2 | ) | (2 | ) | 1 | |||||||
Loss on early extinguishment of debt | 5 | — | — | |||||||||
Other significant gains, losses or charges, net5 | — | (13 | ) | — | ||||||||
Reinstatement of federal R&D tax credit, resolution of prior years’ income tax filings and other tax items | (29 | ) | (18 | ) | (17 | ) | ||||||
Income tax effect of non-GAAP adjustments | (5 | ) | (2 | ) | 17 | |||||||
Non-GAAP adjusted net income | $ | 302 | $ | 347 | $ | 338 | ||||||
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
2 | These items are incremental charges related to the terminated business combination agreement with Tokyo Electron Limited, consisting of acquisition-related and integration planning costs. |
3 | Results for three months ended January 31, 2016 included a $1 million reversal of inventory charges related to cost reductions in the solar business. |
4 | Results for the three months ended October 25, 2015 included a $2 million favorable adjustment of restructuring reserves related to prior restructuring plans and $1 million of inventory charges related to cost reductions in the solar business. |
5 | These items are significant gains, losses, or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future. |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | ||||||||||||
(In millions except per share amounts) | January 31, 2016 | October 25, 2015 | January 25, 2015 | |||||||||
Non-GAAP Adjusted Earnings Per Diluted Share | ||||||||||||
Reported earnings per diluted share - GAAP basis | $ | 0.25 | $ | 0.28 | $ | 0.28 | ||||||
Certain items associated with acquisitions | 0.04 | 0.04 | 0.03 | |||||||||
Certain items associated with terminated business combination | — | — | 0.01 | |||||||||
Gain on derivatives associated with terminated business combination, net | — | — | (0.04 | ) | ||||||||
Reinstatement of federal R&D tax credit, resolution of prior years’ income tax filings and other tax items | (0.03 | ) | (0.02 | ) | (0.01 | ) | ||||||
Other significant gains, losses or charges, net | — | (0.01 | ) | — | ||||||||
Non-GAAP adjusted earnings per diluted share | $ | 0.26 | $ | 0.29 | $ | 0.27 | ||||||
Weighted average number of diluted shares | 1,154 | 1,190 | 1,240 | |||||||||
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended | ||||||||||||
(In millions, except percentages) | January 31, 2016 | October 25, 2015 | January 25, 2015 | |||||||||
Silicon Systems Non-GAAP Adjusted Operating Income | ||||||||||||
Reported operating income - GAAP basis | $ | 265 | $ | 318 | $ | 307 | ||||||
Certain items associated with acquisitions1 | 47 | 47 | 43 | |||||||||
Non-GAAP adjusted operating income | $ | 312 | $ | 365 | $ | 350 | ||||||
Non-GAAP adjusted operating margin | 22.7 | % | 24.4 | % | 24.2 | % | ||||||
AGS Non-GAAP Adjusted Operating Income | ||||||||||||
Reported operating income - GAAP basis | $ | 156 | $ | 171 | $ | 153 | ||||||
Certain items associated with acquisitions1 | — | — | 1 | |||||||||
Other significant gains, losses or charges, net4 | — | (1 | ) | — | ||||||||
Non-GAAP adjusted operating income | $ | 156 | $ | 170 | $ | 154 | ||||||
Non-GAAP adjusted operating margin | 24.9 | % | 26.7 | % | 26.4 | % | ||||||
Display Non-GAAP Adjusted Operating Income | ||||||||||||
Reported operating income - GAAP basis | $ | 38 | $ | 19 | $ | 72 | ||||||
Certain items associated with acquisitions1 | — | — | 1 | |||||||||
Non-GAAP adjusted operating income | $ | 38 | $ | 19 | $ | 73 | ||||||
Non-GAAP adjusted operating margin | 17.8 | % | 9.9 | % | 26.5 | % | ||||||
EES Non-GAAP Adjusted Operating Income (Loss) | ||||||||||||
Reported operating income (loss) - GAAP basis | $ | 6 | $ | — | $ | (4 | ) | |||||
Certain items associated with acquisitions1 | 1 | — | 1 | |||||||||
Reversals related to restructuring, net2,3 | (3 | ) | (1 | ) | — | |||||||
Non-GAAP adjusted operating income (loss) | $ | 4 | $ | (1 | ) | $ | (3 | ) | ||||
Non-GAAP adjusted operating margin | 8.9 | % | (2.2 | )% | (5.5 | )% | ||||||
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
2 | Results for the three months ended January 31, 2016 included $3 million of favorable adjustment of employee-related costs and $1 million reversal of inventory charges, partially offset by $1 million of fixed asset impairment charges related to cost reductions in the solar business. |
3 | Results for the three months ended October 25, 2015 included a $2 million favorable adjustment of restructuring reserves related to prior restructuring plans and $1 million of inventory charges related to cost reductions in the solar business. |
4 | These items are significant gains, losses, or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future. |
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) | January 31, 2016 | October 25, 2015 | |||||
Operating expenses - GAAP basis | $ | 562 | $ | 536 | |||
Reversals related to restructuring, net | — | 2 | |||||
Certain items associated with acquisitions | (6 | ) | (5 | ) | |||
Other significant gains, losses or charges, net | — | 11 | |||||
Non-GAAP adjusted operating expenses | $ | 556 | $ | 544 | |||
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
Three Months Ended | |||
(In millions, except percentages) | January 31, 2016 | ||
Provision for income taxes - GAAP basis (a) | $ | 28 | |
Reinstatement of federal R&D tax credit, resolutions of prior years’ income tax filings and other tax items | 29 | ||
Income tax effect of non-GAAP adjustments | 5 | ||
Non-GAAP adjusted provision for income taxes (b) | $ | 62 | |
Income before income taxes - GAAP basis (c) | $ | 314 | |
Certain items associated with acquisitions | 48 | ||
Reversals related to restructuring, net | (1 | ) | |
Gain on sale of strategic investments, net | (2 | ) | |
Loss on early extinguishment of debt | 5 | ||
Non-GAAP adjusted income before income taxes (d) | $ | 364 | |
Effective income tax rate - GAAP basis (a/c) | 8.9 | % | |
Non-GAAP adjusted effective income tax rate (b/d) | 17.0 | % | |