EX-99.1 2 d256590dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

               LOGO
   LOGO            

Howard Clabo (editorial/media) 408.748.5775

Michael Sullivan (financial community) 408.986.7977

APPLIED MATERIALS REPORTS FOURTH QUARTER AND FISCAL YEAR 2011 RESULTS

Record Full -Year Revenue and Earnings Per Share

 

   

Q4 net sales of $2.18 billion down 24 percent year over year and down 22 percent sequentially

 

   

Q4 EPS of 34 cents including a one-time tax benefit; Q4 non-GAAP EPS of 21 cents

 

   

FY2011 net sales of $10.52 billion up 10 percent year over year

 

   

FY2011 EPS of $1.45 and non-GAAP EPS of $1.30 up 107 percent and 48 percent year over year, respectively

SANTA CLARA, Calif., Nov. 16, 2011 — Applied Materials, Inc. (NASDAQ:AMAT), the world’s leading supplier of manufacturing solutions for the semiconductor, display and solar industries, today reported results for its fourth quarter and fiscal year ended Oct. 30, 2011.

In the fourth quarter, Applied generated orders of $1.60 billion, net sales of $2.18 billion and operating income of $361 million. Fourth-quarter net income was $456 million or 34 cents per share including a tax benefit equivalent to 13 cents per share that was disclosed previously in a Form 8-K filed on Sept. 8, 2011. Non-GAAP operating income was $384 million, and non-GAAP net income was $271 million or 21 cents per share.

For fiscal year 2011, the company reported orders of $10.14 billion, record net sales of $10.52 billion, operating income of $2.40 billion, and net income of $1.93 billion or $1.45 per share. Non-GAAP operating income was $2.41 billion, and non-GAAP net income was $1.72 billion or $1.30 per share.

“Applied’s record year was driven by strength in our silicon business and our highest-ever revenue in solar and services, as well as strategic programs that improved the efficiency of our operations,” said Mike Splinter, chairman and chief executive officer. “While we expect the first half of fiscal 2012 to be impacted by the challenging economic environment, we anticipate that our overall business will strengthen during the second half of the year.”

After the end of the quarter, Applied completed the acquisition of Varian Semiconductor Equipment. “The combination of Applied and Varian creates the industry leader in transistor technologies,” Splinter added. “Together, we will partner with our customers to accelerate the development of new generations of chips enabling smaller, faster and more power-efficient mobile devices.”

During the quarter, Applied generated operating cash flow of $698 million or 32 percent of net sales including a $276 million tax refund. The company paid cash dividends of $106 million and used $175 million to repurchase 16 million shares of its common stock at an average price of $11.04 per share.


Applied Materials, Inc.

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“In 2011, Applied invested $1.1 billion in research, development and engineering and generated $2.4 billion in operating cash flow, the most in company history,” said George Davis, chief financial officer. “During the year, we increased our quarterly dividend payment by 14 percent and returned $865 million to our stockholders through dividends and stock buybacks.”

Quarterly Financial Results Summary

 

      Q4 FY2011    Q3 FY2011    Q4 FY2010

GAAP Results

        

Net sales

   $2.18 billion    $2.79 billion    $2.89 billion

Operating income

   $361 million    $687 million    $699 million

Net income

   $456 million    $476 million    $468 million

Earnings per share (EPS)

   $0.34    $0.36    $0.35

Non-GAAP Results

        

Non-GAAP operating income

   $384 million    $683 million    $711 million

Non-GAAP net income

   $271 million    $467 million    $476 million

Non-GAAP EPS

   $0.21    $0.35    $0.36

Non-GAAP results for the above periods exclude the impact of the following, where applicable: certain discrete tax items, restructuring and asset impairment charges and any associated adjustment related to restructuring actions, certain acquisition-related costs, investment impairments, and gain or loss on sale of facilities. A reconciliation of the GAAP and non-GAAP results is provided in the financial statements included in this release. See also “Use of Non-GAAP Financial Measures” below.

Fourth Quarter Reportable Segment Results and Comparisons to the Prior Quarter

Silicon Systems Group (SSG) orders were $925 million, down 25 percent primarily due to weaker demand in flash and DRAM. Net sales were $1.07 billion, down 24 percent. Operating income decreased to $278 million or 26 percent of net sales, reflecting the decrease in net sales. New order composition was: foundry 46 percent, logic and other 32 percent, flash 15 percent, and DRAM 7 percent.

Applied Global Services (AGS) orders were $564 million, down 8 percent. Net sales were $629 million, up 4 percent and included $70 million in net sales for two thin film solar production lines. Operating income increased to $160 million or 26 percent of net sales, reflecting the increase in net sales.

Display orders were $20 million, down 91 percent, due to lower demand for TV and mobile device display equipment. Net sales were $171 million, down 23 percent, and operating income decreased to $31 million or 18 percent of net sales, driven by lower net sales and a higher proportion of lower-margin products.

Energy and Environmental Solutions (EES) orders were $86 million, down 73 percent, as customers continued to absorb recent capital additions. Net sales were $315 million, down 44 percent. Operating income decreased to $17 million or 5 percent of net sales, reflecting the net sales decline.


Applied Materials, Inc.

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Full-Year Reportable Segment Results and Comparisons to the Prior Year

SSG orders decreased by 5 percent to $5.49 billion, net sales increased by 2 percent to $5.41 billion, and operating income decreased to $1.76 billion or 33 percent of net sales.

AGS orders increased by 7 percent to $2.33 billion, net sales increased by 29 percent to a record $2.41 billion, and operating income rose to $482 million or 20 percent of net sales.

Display orders decreased by 20 percent to $636 million, net sales decreased by 22 percent to $699 million, and operating income decreased to $147 million or 21 percent of net sales.

EES orders increased by 12 percent to $1.68 billion, net sales increased by 34 percent to a record $1.99 billion, and operating income increased to a record $453 million or 23 percent of net sales.

Additional Quarterly Financial Information

 

   

Backlog decreased by $851 million to $2.39 billion and included $271 million in negative adjustments.

 

   

Gross margin was 39.0 percent, down from 42.5 percent in the third quarter, driven primarily by the overall decline in net sales.

 

   

The effective tax rate was a benefit of 32.7 percent including the tax benefit described above. The non-GAAP effective tax rate was a provision of 26.6 percent.

 

   

Cash, cash equivalents and investments increased to $7.17 billion. After the end of the quarter, Applied completed the acquisition of Varian Semiconductor Equipment for approximately $4.2 billion net of cash received. Applied funded the acquisition and certain associated costs through a combination of existing cash balances and the net proceeds of senior unsecured notes in the aggregate principal amount of $1.75 billion issued on June 8, 2011.

Business Outlook

For the first quarter of fiscal 2012, and including the impact of the recent acquisition of Varian Semiconductor Equipment, Applied expects net sales to be down 5 percent to 15 percent sequentially. The company expects non-GAAP EPS to be in the range of $0.08 to $0.16. The non-GAAP EPS outlook excludes known charges related to completed acquisitions of approximately $0.10 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release.

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 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.


Applied Materials, Inc.

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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, operational efficiencies, economic outlook, business expectation for fiscal 2012, expected benefits of the Varian acquisition, and business outlook for the first quarter of fiscal 2012. Forward-looking statements may contain words such as “expect,” “believe,” “may,” “can,” “should,” “will,” “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 Applied’s products, which is subject to many factors, including uncertain global economic and industry conditions, business and consumer spending, demand for electronic products and semiconductors, government renewable energy policies and incentives, and customers’ utilization rates and new technology and capacity requirements; 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 align its cost structure with business conditions, (iii) plan and manage its resources and production capability, including its supply chain, (iv) implement initiatives that enhance global operations and efficiencies, (v) integrate Varian’s Semiconductor Equipment’s operations, product lines, technology and employees and realize synergies, (vi) obtain and protect intellectual property rights in key technologies, (vii) attract, motivate and retain key employees, and (viii) accurately forecast future operating and financial results, which depends on multiple assumptions related to, without limitation, market conditions, customer requirements 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 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. At Applied Materials, we turn today’s innovations into the industries of tomorrow. Learn more at www.appliedmaterials.com.


Applied Materials, Inc.

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APPLIED MATERIALS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

 

     Three Months Ended     Twelve Months Ended  
     October 30,     October 31,     October 30,     October 31,  

(In millions, except per share amounts)

   2011     2010     2011     2010  

Net sales

   $ 2,182      $ 2,886      $ 10,517      $ 9,549   

Cost of products sold

     1,330        1,669        6,157        5,834   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     852        1,217        4,360        3,715   

Operating expenses:

        

Research, development and engineering

     269        278        1,118        1,143   

Selling, general and administrative

     222        242        901        942   

Restructuring charges and asset impairments

     —          (2     (30     246   

Gain on sale of facilities, net

     —          —          (27     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     491        518        1,962        2,331   

Income from operations

     361        699        2,398        1,384   

Impairment of strategic investments

     3        —          3        13   

Interest and other expense

     24        6        59        21   

Interest and other income, net

     10        10        42        37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     344        703        2,378        1,387   

Provision (benefit) for income taxes

     (112     235        452        449   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 456      $ 468      $ 1,926      $ 938   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.35      $ 0.35      $ 1.46      $ 0.70   

Diluted

   $ 0.34      $ 0.35      $ 1.45      $ 0.70   

Weighted average number of shares:

        

Basic

     1,312        1,333        1,319        1,340   

Diluted

     1,321        1,340        1,330        1,349   


Applied Materials, Inc.

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APPLIED MATERIALS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

 

(In millions)

   October 30,
2011
     October 31,
2010
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 5,960       $ 1,858   

Short-term investments

     283         727   

Accounts receivable, net

     1,532         1,831   

Inventories

     1,701         1,547   

Deferred income taxes, net

     580         513   

Other current assets

     299         289   
  

 

 

    

 

 

 

Total current assets

     10,355         6,765   

Long-term investments

     931         1,307   

Property, plant and equipment, net

     866         963   

Goodwill

     1,335         1,336   

Purchased technology and other intangible assets, net

     211         287   

Deferred income taxes and other assets

     163         285   
  

 

 

    

 

 

 

Total assets

   $ 13,861       $ 10,943   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ —         $ 1   

Accounts payable and accrued expenses

     1,520         1,766   

Customer deposits and deferred revenue

     1,116         847   

Income taxes payable

     158         274   
  

 

 

    

 

 

 

Total current liabilities

     2,794         2,888   

Long-term debt

     1,947         204   

Employee benefits and other liabilities

     320         315   
  

 

 

    

 

 

 

Total liabilities

     5,061         3,407   
  

 

 

    

 

 

 

Total stockholders’ equity

     8,800         7,536   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $  13,861       $  10,943   
  

 

 

    

 

 

 


Applied Materials, Inc.

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APPLIED MATERIALS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

 

     Twelve Months Ended  

(In millions)

   October 30,
2011
    October 31,
2010
 

Cash flows from operating activities:

    

Net income

   $ 1,926      $ 938   

Adjustments required to reconcile net income to cash provided by operating activities:

    

Depreciation and amortization

     246        305   

Net loss (gain) on dispositions and fixed asset retirements

     (13     20   

Provision for bad debts

     5        17   

Restructuring charges and asset impairments

     (30     246   

Deferred income taxes

     122        (186

Net recognized loss on investments

     19        33   

Debt issuance costs amortization

     1        —     

Share-based compensation

     146        126   

Net change in operating assets and liabilities, net of amounts acquired

     4        224   
  

 

 

   

 

 

 

Cash provided by operating activities

     2,426        1,723   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (209     (169

Proceeds from sale of facilities and dispositions

     130        —     

Cash paid for acquisition, net of cash acquired

     —          (323

Proceeds from sales and maturities of investments

     1,926        1,408   

Purchases of investments

     (1,137     (1,778
  

 

 

   

 

 

 

Cash provided by (used in) investing activities

     710        (862
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Debt borrowings (repayments), net

     1,744        (6

Payments of debt issuance costs

     (14     —     

Proceeds from common stock issuances

     95        129   

Common stock repurchases

     (468     (350

Payment of dividends to stockholders

     (397     (349
  

 

 

   

 

 

 

Cash provided by (used in) financing activities

     960        (576
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     6        (3
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     4,102        282   

Cash and cash equivalents — beginning of period

     1,858        1,576   
  

 

 

   

 

 

 

Cash and cash equivalents — end of period

   $ 5,960      $ 1,858   
  

 

 

   

 

 

 

Supplemental cash flow information:

    

Cash payments for income taxes

   $ 472      $ 187   

Cash payments for interest

   $ 14      $ 14   


Applied Materials, Inc.

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Reportable Segment Results

 

     Q4 FY2011     Q3 FY2011     Q4 FY2010  

(In millions)

   New
Orders
     Net
Sales
     Operating
Income
(Loss)
    New
Orders
     Net
Sales
     Operating
Income
(Loss)
    New
Orders
     Net
Sales
     Operating
Income
(Loss)
 

SSG

   $ 925       $ 1,067       $ 278      $ 1,239       $ 1,398       $ 452      $ 1,673       $ 1,483       $ 564   

AGS

   $ 564       $ 629       $ 160      $ 613       $ 603       $ 146      $ 632       $ 516       $ 100   

Display

   $ 20       $ 171       $ 31      $ 220       $ 223       $ 58      $ 175       $ 281       $ 89   

EES

   $ 86       $ 315       $ 17      $ 318       $ 563       $ 123      $ 546       $ 606       $ 86   

Corporate

     —           —         $ (125     —           —         $ (92     —           —         $ (140
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Consolidated

   $ 1,595       $ 2,182       $ 361      $ 2,390       $ 2,787       $ 687      $ 3,026       $ 2,886       $ 699   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

     FY2011     FY2010  

(In millions)

   New
Orders
     Net
Sales
     Operating
Income
(Loss)
    New
Orders
     Net
Sales
     Operating
Income
(Loss)
 

SSG

   $ 5,489       $ 5,415       $ 1,764      $ 5,759       $ 5,304       $ 1,892   

AGS

   $ 2,333       $ 2,413       $ 482      $ 2,183       $ 1,865       $ 337   

Display

   $ 636       $ 699       $ 147      $ 799       $ 899       $ 267   

EES

   $ 1,684       $ 1,990       $ 453      $ 1,508       $ 1,481       $ (466

Corporate

     —           —         $ (448     —           —         $ (646
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Consolidated

   $ 10,142       $ 10,517       $ 2,398      $ 10,249       $ 9,549       $ 1,384   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Corporate Unallocated Expenses

 

(In millions)

   Q4 FY2011      Q3 FY2011     Q4 FY2010      FY2011     FY2010  

Restructuring charges and asset impairments, net

   $ —         $ —        $ —         $ (21   $ 93   

Share-based compensation

   $ 36       $ 38      $ 31       $ 146      $ 126   

Gain on sale of facilities

   $ —         $ (28   $ —         $ (27   $ —     

Other unallocated expenses

   $ 89       $ 82      $ 109       $ 350      $ 427   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Corporate

   $ 125       $ 92      $ 140       $ 448      $ 646   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 


Applied Materials, Inc.

Page 9 of 10

 

Additional Information

 

     Q4 FY2011      Q3 FY2011      Q4 FY2010  

New Orders and Net Sales by Geography

                                         

(In $ millions)

   New
Orders
     Net
Sales
     New
Orders
     Net
Sales
     New
Orders
     Net
Sales
 

North America

     324         434         356         451         450         380   

% of Total

     20         20         15         16         15         13   

Europe

     176         271         254         259         327         223   

% of Total

     11         12         11         9         11         8   

Japan

     173         255         372         284         173         158   

% of Total

     11         12         15         10         6         5   

Korea

     330         363         362         432         237         407   

% of Total

     21         17         15         16         8         14   

Taiwan

     283         353         425         454         713         829   

% of Total

     18         16         18         16         23         29   

Southeast Asia

     98         98         87         156         152         175   

% of Total

     6         4         4         6         5         6   

China

     211         408         534         751         974         714   

% of Total

     13         19         22         27         32         25   

Employees (In thousands)

                                         

Regular Full Time

     12.9         12.7         13.0   


Applied Materials, Inc.

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APPLIED MATERIALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

 

     Three Months Ended     Twelve Months Ended  

(In millions, except per share amounts)

   October 30,
2011
    July 31,
2011
    October 31,
2010
    October 30,
2011
    October 31,
2010
 

Non-GAAP Operating Income

          

Reported operating income (GAAP basis)

   $ 361      $ 687      $ 699      $ 2,398      $ 1,384   

Certain items associated with acquisitions 1

     13        12        14        51        91   

Varian and Semitool deal cost

     10        9        —          19        10   

Restructuring charges and asset impairments 2,3,4,5

     —          3        (2     (30     246   

Gain on sale of facilities, net

     —          (28     —          (27     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 384      $ 683      $ 711      $ 2,411      $ 1,731   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income

          

Reported net income (GAAP basis)

   $ 456      $ 476      $ 468      $ 1,926      $ 938   

Certain items associated with acquisitions 1

     13        12        14        51        91   

Varian and Semitool deal cost

     10        9        —          19        10   

Restructuring charges and asset impairments 2,3,4,5

     —          3        (2     (30     246   

Impairment of strategic investments

     3        —          —          3        13   

Gain on sale of facilities, net

     —          (28     —          (27     —     

Reinstatement of federal R&D tax credit

     —          —          —          (13     —     

Resolution of audits of prior years’ income tax filings

     (203     —          —          (203     —     

Income tax effect of non-GAAP adjustments

     (8     (5     (4     (3     (117
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 271      $ 467      $ 476      $ 1,723      $ 1,181   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Earnings Per Diluted Share

          

Reported earnings per diluted share (GAAP basis)

   $ 0.34      $ 0.36      $ 0.35      $ 1.45      $ 0.70   

Certain items associated with acquisitions

     0.01        0.01        0.01        0.03        0.05   

Varian and Semitool deal cost

     0.01        —          —          0.01        0.01   

Restructuring charges and asset impairments

     —          —          —          (0.01     0.12   

Impairment of strategic investments

     —          —          —          —          —     

Gain on sale of facilities, net

     —          (0.02     —          (0.02     —     

Reinstatement of federal R&D tax credit and resolution of audits of prior years’ income tax filings

     (0.15     —          —          (0.16     —     

Non-GAAP earnings per diluted share

   $ 0.21      $ 0.35      $ 0.36      $ 1.30      $ 0.88   

Weighted average number of diluted shares

     1,321        1,330        1,340        1,330        1,349   

 

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 July 31, 2011 included asset impairment charges of $3 million related to certain fixed assets.

3 

Results for the three months ended October 31, 2010 included a $2 million reinstatement of certain fixed assets that were previously impaired in connection with a restructuring program announced on July 21, 2010.

4

Results for the twelve months ended October 30, 2011 included asset impairment charges of $30 million primarily related to certain intangible assets, offset by favorable adjustments of $36 million related to a restructuring program announced on July 21, 2010, $19 million related to a restructuring program announced on November 11, 2009, and $5 million related to a restructuring program announced on November 12, 2008.

5

Results for the twelve months ended October 31, 2010 included asset impairment charges of $108 million and restructuring charges of $45 million related to a restructuring program announced on July 21, 2010, restructuring charges of $84 million associated with a restructuring program announced on November 11, 2009, and asset impairment charges of $9 million related to a facility held for sale.