Applied Materials Announces Results for the Fourth Quarter and Fiscal Year 2001
Fourth Quarter New Orders of $1.10 Billion and Net Sales of $1.26 Billion
SANTA CLARA, Calif.--(BUSINESS WIRE)--Nov. 14, 2001--Applied Materials, Inc., the world's largest supplier of wafer fabrication solutions to the semiconductor industry, reported results for its fourth fiscal quarter ended October 28, 2001. The Company implemented Staff Accounting Bulletin No. 101 (SAB 101), ``Revenue Recognition in Financial Statements,'' for the fourth fiscal quarter of 2001, retroactively effective to the beginning of fiscal 2001. Accordingly, the first three fiscal quarters of 2001 have been restated. Fiscal 2000 amounts have not been restated.
Net sales were $1.26 billion, down 20 percent from $1.58 billion for the third fiscal quarter of 2001, and down 57 percent from $2.92 billion for the fourth fiscal quarter of 2000. Ongoing net income (net income, excluding one-time items) for the fourth fiscal quarter of 2001 was $22 million, or $0.03 per diluted share, down 82 percent from $128 million, or $0.15 per diluted share, for the third fiscal quarter of 2001, and down 97 percent from $664 million, or $0.77 per diluted share, for the fourth fiscal quarter of 2000. The Company's results of operations for the fourth fiscal quarter of 2001 included a pre-tax restructuring charge of $149 million, or $0.13 per share after tax, for employee-related costs, consolidation of facilities and other costs in connection with the restructuring previously announced on September 20, 2001. The reported net loss for the fourth fiscal quarter of 2001 was $82 million, or $0.10 per share, compared to net income of $115 million, or $0.13 per diluted share, for the third fiscal quarter of 2001, and $664 million, or $0.77 per diluted share, for the fourth fiscal quarter of 2000.
New orders were $1.10 billion for the fourth fiscal quarter of 2001, decreasing 9 percent from $1.21 billion for the third fiscal quarter of 2001, and decreasing 69 percent from $3.60 billion for the fourth fiscal quarter of 2000. Regional distribution of new orders for the fourth fiscal quarter of 2001 was: North America 36 percent, Southeast Asia and China 22 percent, Taiwan 16 percent, Japan 14 percent, Europe 6 percent and Korea 6 percent. Backlog at the end of the fourth fiscal quarter of 2001 increased to $2.73 billion, from $2.65 billion at the end of the third fiscal quarter of 2001.
``The semiconductor industry continued to decline for the fourth consecutive quarter. Worsening global economic conditions and uncertainties from recent events have caused both businesses and consumers to decrease near-term spending, triggering further capital spending reductions for wafer fabrication equipment. However, customers continue to make investments for new technology applications, including copper-based and nanometer generation devices and 300mm wafers,'' said James C. Morgan, chairman and chief executive officer.
Gross margin for the fourth fiscal quarter of 2001 was 37.1 percent, down from 41.6 percent for the third fiscal quarter of 2001 and 51.7 percent for the fourth fiscal quarter of 2000. Ongoing net income as a percentage of net sales was 1.8 percent for the fourth fiscal quarter of 2001, compared to 8.1 percent for the third fiscal quarter of 2001 and 22.7 percent for the fourth fiscal quarter of 2000.
The Company also announced results for its fiscal year ended October 28, 2001. Fiscal 2001 new orders were $6.10 billion, a 50 percent decrease from fiscal 2000 new orders of $12.26 billion. Net sales for fiscal 2001 were $7.34 billion, a 23 percent decrease from fiscal 2000 net sales of $9.56 billion. Ongoing net income (net income, excluding one-time items) for fiscal 2001 was $934 million, or $1.10 per diluted share, down 55 percent from $2.05 billion, or $2.39 per diluted share, for fiscal 2000. Reported net income for fiscal 2001 was $508 million, or $0.60 per diluted share, down 75 percent from $2.06 billion, or $2.40 per diluted share, for fiscal 2000.
During the quarter, Applied Materials announced the opening of a major facility and technical training center in Shanghai, People's Republic of China. Applied Materials established operations in China over 15 years ago and was the first semiconductor equipment company to support the development of a growing semiconductor market in the region. The Company recently received an order of over $200 million from Grace Semiconductor Manufacturing Corp., a new foundry located in Shanghai.
``Based on the strength of our product portfolio and global capabilities, we believe we are well-positioned to enable our customers' successful transition to increasingly complex chip designs. Our strong balance sheet provides the Company with the ability to continue to make strategic investments in technology solutions. While these are challenging times for Applied Materials and our customers, we firmly believe that the long-term outlook for the semiconductor industry remains strong,'' concluded Morgan.
The implementation of SAB 101 resulted in the following changes to the Company's revenue recognition practices: 1) for transactions where legal title does not transfer at shipment, revenue will be recognized upon title transfer, which is typically at customer technical acceptance, and 2) for products that have been demonstrated to meet product specifications prior to shipment, a small portion of revenue associated with certain installation-related tasks will be recognized when the tasks are completed. The Company is providing, with this press release and on its Web site, restated selected quarterly financial results for the first three fiscal quarters of 2001, as if SAB 101 had been implemented during those periods.
This press release contains certain forward-looking statements, including, but not limited to, those relating to the success of the Company's products and the semiconductor industry's long-term outlook. These forward-looking 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. Such risks and uncertainties include, but are not limited to: the Company's ability to timely align its cost structure with market conditions; the length and severity of the economic and industry downturn; global uncertainties; changes in demand for semiconductors and customer capacity requirements, including capacity utilizing the latest technology; changes in the timing and amount of customers' investments in new technology; the successful and timely development of new markets, products, processes and services; changes in the timing of revenue recognition as a result of SAB 101 and other risks described in Applied Materials' filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this press release.
Applied Materials will be discussing its fourth fiscal quarter results, along with its outlook for the first fiscal quarter of 2002, 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 (Nasdaq: AMAT - news), the largest supplier of products and services to the global semiconductor industry, is one of the world's leading information infrastructure providers. Applied Materials enables Information for Everyone(TM) by helping semiconductor manufacturers produce more powerful, portable and affordable chips.
Applied Materials' Web site is appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Fiscal Year
Ended Ended
--------------------- ------------------------- -----------
(In thousands, except July 29, October 28, October 28,
per share amounts) 2001 (1) 2001 2001 (2)
--------------------- ----------- ----------- -----------
Net sales $ 1,575,904 $ 1,264,673 $ 7,343,248
Cost of products sold 920,291 795,967 4,091,215
----------- ----------- -----------
Gross margin 655,613 468,706 3,252,033
Operating expenses:
Research, development
and engineering 277,333 272,548 1,198,799
Marketing and selling 125,979 119,026 508,214
General and administrative 114,369 87,229 393,710
Non-recurring items(3) 14,150 148,600 221,164
----------- ----------- -----------
Income/(loss) from operations 123,782 (158,697) 930,146
Interest expense 10,709 12,659 47,640
Interest income 54,153 54,597 221,296
----------- ----------- -----------
Income/(loss) before income
taxes and cumulative effect
of change in accounting
principle 167,226 (116,759) 1,103,802
Provision/(benefit) for
income taxes 52,281 (34,441) 328,574
----------- ----------- -----------
Income/(loss) before cumulative
effect of change in accounting
principle 114,945 (82,318) 775,228
Cumulative effect of change
in accounting principle,
net of tax -- -- (267,399)
----------- ----------- -----------
Net income/(loss) $ 114,945 $ (82,318) $ 507,829
----------- ----------- -----------
Earnings/(loss) per share:
Basic
Income/(loss) before
cumulative effect of
change in accounting
principle $ 0.14 $ (0.10) $ 0.95
Cumulative effect of
change in accounting
principle, net of tax -- -- (0.33)
----------- ----------- -----------
Basic net income/(loss)
per share $ 0.14 $ (0.10) $ 0.62
----------- ----------- -----------
Diluted
Income/(loss) before
cumulative effect of
change in accounting
principle $ 0.13 $ (0.10) $ 0.91
Cumulative effect of
change in accounting
principle, net of tax -- -- (0.31)
----------- ----------- -----------
Diluted net income/(loss)
per share $ 0.13 $ (0.10) $ 0.60
----------- ----------- -----------
Weighted average number
of shares:
Basic 814,920 816,104 813,202
Diluted 853,905 816,104 847,329
----------------------------------------------------------------------
(1) Restated in accordance with SAB 101.
(2) Fiscal 2001 includes a cumulative effect of change in accounting
principle, net of tax, of $267 million. Included in the cumulative
effect was $651 million of revenue recognized prior to fiscal
2001, of which $642 million was recognized during fiscal 2001.
(3) The Company's reported results of operations for the fourth fiscal
quarter of 2001 included a pre-tax restructuring charge of $149
million, or $0.13 per share after tax.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
----------------------------------------------------------------------
October 29, October 28,
(In thousands) 2000 2001
----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,647,604 $ 1,356,304
Short-term investments 2,580,435 3,485,088
Accounts receivable, net 2,351,379 776,451
Inventories 1,503,751 1,412,997
Deferred income taxes 549,108 551,785
Other current assets 206,870 199,549
------------ ------------
Total current assets 8,839,147 7,782,174
Property, plant and equipment, net 1,366,782 1,706,488
Other assets 339,801 339,848
------------ ------------
Total assets $ 10,545,730 $ 9,828,510
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 94,676 $ --
Current portion of long-term debt 11,621 4,807
Accounts payable and accrued expenses 2,268,608 1,477,531
Income taxes payable 384,806 50,478
------------ ------------
Total current liabilities 2,759,711 1,532,816
Long-term debt 573,126 564,805
Deferred income taxes and other
liabilities 108,545 124,152
------------ ------------
Total liabilities 3,441,382 2,221,773
------------ ------------
Stockholders' equity:
Common stock 8,125 8,158
Additional paid-in capital 1,930,212 1,881,124
Retained earnings 5,185,181 5,693,010
Accumulated other comprehensive
income/(loss) (19,170) 24,445
------------ ------------
Total stockholders' equity 7,104,348 7,606,737
------------ ------------
Total liabilities and
stockholders' equity $ 10,545,730 $ 9,828,510
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
SELECTED QUARTERLY RESULTS RESTATED IN ACCORDANCE WITH SAB 101
(Unaudited) Fiscal Year
Three Months Ended Ended
----------- ------------------------------------------- -----------
(In
thousands,
except per
share Jan. 28, April 29, July 29, Oct. 28, Oct. 28,
amounts) 2001 2001 2001 2001 (4) 2001
----------- ------------------------------------------- ----------
Net sales:
As reported $2,731,132 $1,909,435 $1,333,871 $1,264,673 $7,239,111
Effect of
change in
accounting
principle (367,878) 229,982 242,033 -- 104,137
---------- ---------- ---------- ---------- ----------
As restated
or as
reported
in Q4 $2,363,254 $2,139,417 $1,575,904 $1,264,673 $7,343,248
---------- ---------- ---------- ---------- ----------
Gross margin:
As reported $1,332,651 $ 854,972 $ 533,032 $ 468,706 $3,189,361
Effect of
change in
accounting
principle (189,905) 129,996 122,581 -- 62,672
---------- ---------- ---------- ---------- ----------
As restated
or as
reported
in Q4 $1,142,746 $ 984,968 $ 655,613 $ 468,706 $3,252,033
---------- ---------- ---------- ---------- ----------
Net income/
(loss):
As reported $ 558,107 $ 226,730 $ 28,525 $ (82,318) $ 731,044
Effect of
change in
accounting
principle (133,883) 91,647 86,420 -- 44,184
Cumulative
effect of
change in
accounting
principle (267,399) -- -- -- (267,399)
---------- ---------- ---------- ---------- ----------
As restated
or as
reported
in Q4 $ 156,825 $ 318,377 $ 114,945 $ (82,318) $ 507,829
---------- ---------- ---------- ---------- ----------
Earnings/
(loss) per
share:
As reported $ 0.66 $ 0.27 $ 0.03 $ (0.10) $ 0.86
Effect of
change in
accounting
principle (0.16) 0.11 0.10 -- 0.05
Cumulative
effect of
change in
accounting
principle (0.31) -- -- -- (0.31)
---------- ---------- ---------- ---------- ----------
As restated
or as
reported
in Q4 $ 0.19 $ 0.38 $ 0.13 $ (0.10) $ 0.60
---------- ---------- ---------- ---------- ----------
Ongoing
earnings
per diluted
share(5) $ 0.50 $ 0.42 $ 0.15 $ 0.03 $ 1.10
---------------------------------------------------------------------
(4) The fourth fiscal quarter of 2001 is reported in accordance with
SAB 101.
(5) Ongoing earnings per diluted share excludes one-time items. |
