Applied Materials Announces Results for Second Fiscal Quarter 2004; New Orders Increase to $2.21 Billion; Net Sales Increase to $2.02 Billion
SANTA CLARA, Calif.--(
BUSINESS WIRE)--May 18, 2004--Applied Materials, Inc. (Nasdaq:AMAT), the world's largest supplier of wafer fabrication solutions to the semiconductor industry, reported results for its second fiscal quarter ended May 2, 2004. Net sales were $2.02 billion, up 30 percent from $1.56 billion for the first fiscal quarter of 2004, and up 82 percent from $1.11 billion for the second fiscal quarter of 2003. Gross margin for the second fiscal quarter of 2004 was 46.5 percent, up from 43.5 percent for the first fiscal quarter of 2004 and up from 33.7 percent for the second fiscal quarter of 2003. Net income for the second fiscal quarter of 2004 was $373 million, or $0.22 per share, up from net income of $82 million, or $0.05 per share, for the first fiscal quarter of 2004, and up from a net loss of $62 million, or $0.04 per share, for the second fiscal quarter of 2003.
The company's ongoing net income was $373 million, or $0.22 per share, for the second fiscal quarter of 2004, up from $200 million, or $0.12 per share, for the first fiscal quarter of 2004, and up from $45 million, or $0.03 per share, for the second fiscal quarter of 2003. Ongoing results for the second fiscal quarter of 2004 were the same as reported net income since there were no special items.
“Investment in 300mm semiconductor equipment for leading-edge technology, combined with capacity purchases of our 200mm systems, drove Applied Materials' strong revenue and order growth this quarter. As semiconductor demand rose and our customers' confidence grew, orders for 300mm equipment, copper interconnect and sub-100 nanometer geometries increased”
New orders of $2.21 billion for the second fiscal quarter of 2004 increased 32 percent from $1.68 billion for the first fiscal quarter of 2004, and increased 128 percent from $971 million for the second fiscal quarter of 2003. Regional distribution of new orders for the second fiscal quarter of 2004 was: Southeast Asia and China 22 percent, Taiwan 21 percent, North America 19 percent, Japan 17 percent, Korea 13 percent, and Europe 8 percent. Backlog at the end of the second fiscal quarter of 2004 was $2.80 billion, compared to $2.63 billion at the end of the first fiscal quarter of 2004.
"Investment in 300mm semiconductor equipment for leading-edge technology, combined with capacity purchases of our 200mm systems, drove Applied Materials' strong revenue and order growth this quarter. As semiconductor demand rose and our customers' confidence grew, orders for 300mm equipment, copper interconnect and sub-100 nanometer geometries increased," said Mike Splinter, president and chief executive officer. "Applied Materials continues to experience strong market acceptance across its broad array of products and is converting its leadership into outstanding operating performance.
"Through close collaboration with customers, Applied Materials continues to develop highly differentiated and integrated products that address advanced design requirements. New products, such as the Applied Endura2 system, the Applied VeritySEM metrology tool, the AKT-40K PECVD system, and the recently announced strategic service agreement with Brooks Automation, Inc., exemplify the company's dedication to delivering innovative solutions. Our focus is to achieve world class performance in everything we do, from product design through manufacturing to customer support," concluded Splinter.
Reconciliations of reported results of operations under U.S. Generally Accepted Accounting Principles (GAAP) to ongoing results have been included as a supplement to this press release. Due to the amount of charges incurred in prior periods as a result of realignment activities, Applied Materials believes that ongoing results are useful to investors because they reflect baseline performance exclusive of charges associated with realignment activities. Ongoing results are the primary indicator used by Applied Materials' management to plan and forecast future periods. These non-GAAP measures are neither in accordance with, nor an alternative for, GAAP, and may be materially different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered as a substitute for net income prepared in accordance with GAAP.
This press release contains forward-looking statements, including, but not limited to, those relating to the semiconductor and semiconductor equipment industries' growth and positive trends, and the company's industry position and business outlook. Forward-looking statements may contain words such as "expect," "anticipate," "believe," "may," "should," "will," "estimate," "forecast," "see," 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. Risks and uncertainties include, but are not limited to: the sustainability of increased demand in the semiconductor and semiconductor equipment industries, which is subject to many factors, including global economic conditions, business spending, consumer confidence, demand for electronic products and semiconductors, and geopolitical uncertainties; customers' capacity requirements, including capacity utilizing the latest technology; the timing, rate, amount and sustainability of increases in capital spending for new technology, such as 300mm and nanometer applications; the company's ability to develop, deliver and support a broad range of products and services on a timely basis; the company's successful and timely development of new markets, products, processes and services; the company's ability to timely satisfy manufacturing requirements; the company's ability to maintain effective cost controls and to timely align its cost structure with business conditions; changes in management; and other risks described in Applied Materials' Securities and Exchange Commission filings. All forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof. The company assumes no obligation to update the information in this press release.
Applied Materials will be discussing its second fiscal quarter results, along with its outlook for the third fiscal quarter of 2004, on a conference call today beginning at 1:30 p.m. Pacific Time. A webcast of the conference call will be available on Applied Materials' web site under the "Investors" section.
Applied Materials, Inc. (Nasdaq:AMAT) is the largest supplier of equipment and services to the global semiconductor industry. Applied Materials' web site is http://www.appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
----------------------------------------------------------------------
(In thousands, except April 27, May 2, April 27, May 2,
per share amounts) 2003 2004 2003 2004
----------------------------------------------------------------------
Net sales $1,107,177 $2,018,105 $2,161,386 $3,573,553
Cost of products sold 734,403 1,079,464 1,398,230 1,958,743
----------- ----------- ----------- -----------
Gross margin 372,774 938,641 763,156 1,614,810
Operating expenses:
Research,
development and
engineering 232,438 244,175 475,643 486,820
Marketing and
selling 83,568 95,975 175,785 184,373
General and
administrative 78,198 83,457 150,999 163,751
Restructuring, asset
impairments and
other charges 92,731 - 192,069 167,459
----------- ----------- ----------- -----------
Income/(loss) from
operations (114,161) 515,034 (231,340) 612,407
Interest expense 12,217 11,682 23,559 23,482
Interest income 38,256 26,220 73,628 57,493
----------- ----------- ----------- -----------
Income/(loss) before
income taxes (88,122) 529,572 (181,271) 646,418
Provision for/(benefit
from) income taxes (25,996) 156,224 (53,475) 190,694
----------- ----------- ----------- -----------
Net income/(loss) $ (62,126) $ 373,348 $ (127,796) $ 455,724
----------- ----------- ----------- -----------
Earnings/(loss) per
share:
Basic $ (0.04) $ 0.22 $ (0.08) $ 0.27
Diluted $ (0.04) $ 0.22 $ (0.08) $ 0.26
Weighted average
number of shares:
Basic 1,655,927 1,690,617 1,652,981 1,686,193
Diluted 1,655,927 1,729,506 1,652,981 1,732,542
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
----------------------------------------------------------------------
October 26, May 2,
(In thousands) 2003 2004
----------------------------------------------------------------------
(AUDITED) (UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,857 $ 1,448,078
Short-term investments 4,128,349 4,458,611
Accounts receivable, net 912,875 1,405,067
Inventories 950,692 1,110,731
Deferred income taxes 782,823 704,365
Other current assets 231,177 266,505
------------ ------------
Total current assets 8,370,773 9,393,357
Property, plant and equipment 3,094,427 2,901,878
Less: accumulated depreciation and
amortization (1,534,597) (1,475,531)
------------ ------------
Net property, plant and equipment 1,559,830 1,426,347
Goodwill, net 223,521 230,676
Purchased technology and other intangible
assets, net 92,512 75,155
Other assets 64,986 81,914
------------ ------------
Total assets $10,311,622 $11,207,449
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 105,292 $ 104,431
Accounts payable and accrued expenses 1,319,471 1,564,120
Income taxes payable 216,114 301,243
------------ ------------
Total current liabilities 1,640,877 1,969,794
Long-term debt 456,422 454,491
Deferred income taxes and other liabilities 146,289 146,788
------------ ------------
Total liabilities 2,243,588 2,571,073
------------ ------------
Stockholders' equity:
Common stock 16,774 16,944
Additional paid-in capital 2,223,553 2,329,952
Deferred stock compensation, net (1,543) (761)
Retained earnings 5,812,867 6,268,591
Accumulated other comprehensive income 16,383 21,650
------------ ------------
Total stockholders' equity 8,068,034 8,636,376
------------ ------------
Total liabilities and stockholders' equity $10,311,622 $11,207,449
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
April 27, 2003
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $1,107,177 $ - $1,107,177
Cost of products sold 734,403 (49,000)(a) 685,403
----------- ----------- -----------
Gross margin 372,774 49,000 421,774
Operating expenses:
Research, development and
engineering 232,438 (10,000)(b) 222,438
Marketing and selling 83,568 - 83,568
General and administrative 78,198 - 78,198
Restructuring, asset
impairments and other
charges 92,731 (92,731)(c) -
----------- ----------- -----------
Income/(loss) from operations (114,161) 151,731 37,570
Interest expense 12,217 - 12,217
Interest income 38,256 - 38,256
----------- ----------- -----------
Income/(loss) before income
taxes (88,122) 151,731 63,609
Provision for/(benefit from)
income taxes (25,996) 44,761 (d) 18,765
----------- ----------- -----------
Net income/(loss) $ (62,126) $ 106,970 $ 44,844
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.04) $ 0.06 $ 0.03
Diluted $ (0.04) $ 0.06 $ 0.03
Weighted average number of
shares:
Basic 1,655,927 1,655,927 1,655,927
Diluted 1,655,927 1,681,571 1,681,571
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the second fiscal quarter of 2003 consisted
of the following:
(a) Charges to cost of products sold for inventory deemed to
be excess as a result of refocused product efforts
associated with realignment activities.
(b) Charges to research, development and engineering expense
for laboratory tool write-offs as a result of refocused
product efforts associated with realignment activities.
(c) Restructuring, asset impairments and other charges
consisted of employee-related costs, impairment of certain
assets and facilities consolidation costs associated with
realignment activities.
(d) Pro forma tax provision for the tax effect of special
items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
May 2, 2004
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $2,018,105 $ - $2,018,105
Cost of products sold 1,079,464 - 1,079,464
----------- ----------- -----------
Gross margin 938,641 - 938,641
Operating expenses:
Research, development and
engineering 244,175 - 244,175
Marketing and selling 95,975 - 95,975
General and administrative 83,457 - 83,457
Restructuring, asset
impairments and other
charges - - -
----------- ----------- -----------
Income/(loss) from operations 515,034 - 515,034
Interest expense 11,682 - 11,682
Interest income 26,220 - 26,220
----------- ----------- -----------
Income/(loss) before income
taxes 529,572 - 529,572
Provision for/(benefit from)
income taxes 156,224 - 156,224
----------- ----------- -----------
Net income/(loss) $ 373,348 $ - $ 373,348
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ 0.22 $ - $ 0.22
Diluted $ 0.22 $ - $ 0.22
Weighted average number of
shares:
Basic 1,690,617 1,690,617 1,690,617
Diluted 1,729,506 1,729,506 1,729,506
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(3) There were no special items for the second fiscal quarter of
2004. Therefore, ongoing results are the same as reported
results of operations.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
February 1, 2004
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $1,555,448 $ - $1,555,448
Cost of products sold 879,279 - 879,279
----------- ----------- -----------
Gross margin 676,169 - 676,169
Operating expenses:
Research, development and
engineering 242,645 - 242,645
Marketing and selling 88,398 - 88,398
General and administrative 80,294 - 80,294
Restructuring, asset
impairments and other
charges 167,459 (167,459)(a) -
----------- ----------- -----------
Income from operations 97,373 167,459 264,832
Interest expense 11,800 - 11,800
Interest income 31,273 - 31,273
----------- ----------- -----------
Income before income taxes 116,846 167,459 284,305
Provision for income taxes 34,470 49,400 (b) 83,870
----------- ----------- -----------
Net income $ 82,376 $ 118,059 $ 200,435
----------- ----------- -----------
Earnings per share:
Basic $ 0.05 $ 0.07 $ 0.12
Diluted $ 0.05 $ 0.07 $ 0.12
Weighted average number of
shares:
Basic 1,682,025 1,682,025 1,682,025
Diluted 1,735,268 1,735,268 1,735,268
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the first fiscal quarter of 2004 consisted
of the following:
(a) Restructuring, asset impairments and other charges
resulting primarily from the consolidation of facilities
associated with realignment activities.
(b) Pro forma tax provision for the tax effect of special
items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
----------------------------------------------------------------------
May 2, 2004
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $2,018,105 $ - $2,018,105
Cost of products sold 1,079,464 - 1,079,464
----------- ----------- -----------
Gross margin 938,641 - 938,641
Operating expenses:
Research, development and
engineering 244,175 - 244,175
Marketing and selling 95,975 - 95,975
General and administrative 83,457 - 83,457
Restructuring, asset
impairments and other
charges - - -
----------- ----------- -----------
Income from operations 515,034 - 515,034
Interest expense 11,682 - 11,682
Interest income 26,220 - 26,220
----------- ----------- -----------
Income before income taxes 529,572 - 529,572
Provision for income taxes 156,224 - 156,224
----------- ----------- -----------
Net income $ 373,348 $ - $ 373,348
----------- ----------- -----------
Earnings per share:
Basic $ 0.22 $ - $ 0.22
Diluted $ 0.22 $ - $ 0.22
Weighted average number of
shares:
Basic 1,690,617 1,690,617 1,690,617
Diluted 1,729,506 1,729,506 1,729,506
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(3) There were no special items for the second fiscal quarter of
2004. Therefore, ongoing results are the same as reported
results of operations.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Six Months Ended
----------------------------------------------------------------------
April 27, 2003
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $2,161,386 $ - $2,161,386
Cost of products sold 1,398,230 (49,000)(a) 1,349,230
----------- ----------- -----------
Gross margin 763,156 49,000 812,156
Operating expenses:
Research, development and
engineering 475,643 (10,000)(b) 465,643
Marketing and selling 175,785 - 175,785
General and administrative 150,999 - 150,999
Restructuring, asset
impairments and other
charges 192,069 (192,069)(c) -
----------- ----------- -----------
Income/(loss) from operations (231,340) 251,069 19,729
Interest expense 23,559 - 23,559
Interest income 73,628 - 73,628
----------- ----------- -----------
Income/(loss) before income
taxes (181,271) 251,069 69,798
Provision for/(benefit from)
income taxes (53,475) 74,065 (d) 20,590
----------- ----------- -----------
Net income/(loss) $ (127,796) $ 177,004 $ 49,208
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.08) $ 0.11 $ 0.03
Diluted $ (0.08) $ 0.11 $ 0.03
Weighted average number of
shares:
Basic 1,652,981 1,652,981 1,652,981
Diluted 1,652,981 1,681,846 1,681,846
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the six months ended April 27, 2003
consisted of the following:
(a) Charges to cost of products sold for inventory deemed to
be excess as a result of refocused product efforts
associated with realignment activities.
(b) Charges to research, development and engineering expense
for laboratory tool write-offs as a result of refocused
product efforts associated with realignment activities.
(c) Restructuring, asset impairments and other charges
consisted of employee-related costs, impairment of certain
assets and facilities consolidation costs associated with
realignment activities.
(d) Pro forma tax provision for the tax effect of special
items.
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Six Months Ended
----------------------------------------------------------------------
May 2, 2004
--------------------------------------
(In thousands, except per share Special Ongoing
amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $3,573,553 $ - $3,573,553
Cost of products sold 1,958,743 - 1,958,743
----------- ----------- -----------
Gross margin 1,614,810 - 1,614,810
Operating expenses:
Research, development and
engineering 486,820 - 486,820
Marketing and selling 184,373 - 184,373
General and administrative 163,751 - 163,751
Restructuring, asset
impairments and other
charges 167,459 (167,459)(e) -
----------- ----------- -----------
Income/(loss) from operations 612,407 167,459 779,866
Interest expense 23,482 - 23,482
Interest income 57,493 - 57,493
----------- ----------- -----------
Income/(loss) before income
taxes 646,418 167,459 813,877
Provision for/(benefit from)
income taxes 190,694 49,400 (f) 240,094
----------- ----------- -----------
Net income/(loss) $ 455,724 $ 118,059 $ 573,783
----------- ----------- -----------
Earnings/(loss) per share:
Basic $ 0.27 $ 0.07 $ 0.34
Diluted $ 0.26 $ 0.07 $ 0.33
Weighted average number of
shares:
Basic 1,686,193 1,686,193 1,686,193
Diluted 1,732,542 1,732,542 1,732,542
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
(3) Special items for the six months ended May 2, 2004, all of
which occurred in the first fiscal quarter of 2004, consisted
of the following:
(e) Restructuring, asset impairments and other charges
resulting primarily from the consolidation of facilities
associated with realignment activities.
(f) Pro forma tax provision for the tax effect of special
items.
