Applied Materials Announces Results for Fourth Fiscal Quarter 2004
Wednesday November 17, 4:01 pm ET
New Orders of $2.62 Billion
Net Sales of $2.20 Billion
SANTA CLARA, Calif.--(BUSINESS WIRE)--Nov. 17, 2004--Applied Materials, Inc. (Nasdaq:AMAT - News), the world's largest supplier of wafer fabrication solutions to the global semiconductor industry, reported results for its fourth fiscal quarter ended October 31, 2004. Net sales were $2.20 billion, down 1 percent from $2.24 billion for the third fiscal quarter of 2004, and up 80 percent from $1.22 billion for the fourth fiscal quarter of 2003. Gross margin for the fourth fiscal quarter of 2004 was 46.6 percent, down from 47.4 percent for the third fiscal quarter of 2004 and up from 40.5 percent for the fourth fiscal quarter of 2003. Net income for the fourth fiscal quarter of 2004 was $455 million, or $0.27 per share, up from net income of $441 million, or $0.26 per share, for the third fiscal quarter of 2004, and up from net income of $15 million, or $0.01 per share, for the fourth fiscal quarter of 2003. The results of the fourth fiscal quarter of 2004 include litigation settlements and a favorable tax rate adjustment due primarily to changes in export tax benefits and the global effective tax rate with respect to foreign operations.
The company's ongoing net income was $455 million, or $0.27 per share, for the fourth fiscal quarter of 2004, up from $441 million, or $0.26 per share, for the third fiscal quarter of 2004, and up from $95 million, or $0.06 per share, for the fourth fiscal quarter of 2003. Ongoing results for the third and fourth fiscal quarters of 2004 were the same as reported net income.
New orders of $2.62 billion for the fourth fiscal quarter of 2004 increased 7 percent from $2.46 billion for the third fiscal quarter of 2004, and increased 105 percent from $1.28 billion for the fourth fiscal quarter of 2003. Regional distribution of new orders for the fourth fiscal quarter of 2004 was: Taiwan 25 percent, Japan 20 percent, North America 17 percent, Korea 16 percent, Southeast Asia and China 11 percent, and Europe 11 percent. Backlog at the end of the fourth fiscal quarter of 2004 was $3.37 billion, compared to $2.99 billion at the end of the third fiscal quarter of 2004.
During the fourth fiscal quarter of 2004, the company repurchased 31 million shares of common stock at an average price of $16.13 per share for an aggregate purchase price of $500 million.
"We are pleased with our financial performance this quarter and our strong growth for this fiscal year," said Mike Splinter, president and chief executive officer. "Our team delivered solid results with increased orders driven by customer demand for our industry-leading 300mm and sub-100 nanometer products."
The company also announced its results for its fiscal year ended October 31, 2004. Fiscal 2004 new orders were $8.98 billion, a 108 percent increase from fiscal 2003 new orders of $4.32 billion. Net sales for fiscal 2004 were $8.01 billion, a 79 percent increase from fiscal 2003 net sales of $4.48 billion. Net income for fiscal 2004 was $1.35 billion, or $0.78 per diluted share, up from a loss of $149 million, or $0.09 loss per share, for fiscal 2003.
"We introduced 10 breakthrough products in critical technology areas for transistors, interconnects, defect review and flat panel displays, as well as new service products," Splinter continued. "Applied Materials increased its market share in a number of its core product areas and won customer awards for outstanding reliability and quality.
"As the fourth quarter progressed, some customers became more cautious in response to inventory concerns, slowing their 200mm investments," said Splinter. "Even with these near-term market challenges, we believe our customers will continue to invest in advanced technology and 300mm manufacturing. We remain focused on translating our proven product and process expertise into cost-effective, innovative solutions for our customers," concluded Splinter.
Reconciliations of reported results of operations under U.S. Generally Accepted Accounting Principles (GAAP) to ongoing results are 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 customers' investments, market conditions, and the company's strategic 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 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, which depend in part on customers' inventory levels relative to demand for their products; the timing, rate, amount and sustainability of capital spending for new technology, such as 300mm and sub-100 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; the successful integration and performance of acquired businesses; the effectiveness of strategic transactions; 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 undertakes no obligation to update the forward-looking statements in this press release.
Applied Materials will be discussing its fourth quarter and fiscal 2004 results, along with its outlook for the first fiscal quarter of 2005, 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 - News) is the largest supplier of equipment and services to the global semiconductor industry. Applied Materials' web site is appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Fiscal Year Ended
----------------------------------------------------------------------
(In thousands, except October October October October
per share amounts) 26, 2003 31, 2004 26, 2003 31, 2004
----------------------------------------------------------------------
Net sales $1,220,998 $2,203,348 $4,477,291 $8,013,053
Cost of products sold 726,627 1,176,145 2,872,836 4,311,808
---------- ---------- ---------- ----------
Gross margin 494,371 1,027,203 1,604,455 3,701,245
Operating expenses:
Research, development
and engineering 227,950 248,272 920,618 991,873
Marketing and selling 71,283 108,490 325,189 394,376
General and
administrative 77,370 106,100 300,676 357,245
Restructuring, asset
impairments and
other charges 113,504 - 371,754 167,459
Litigation
settlements, net - 26,627 - 26,627
---------- ---------- ---------- ----------
Income/(loss) from
operations 4,264 537,714 (313,782) 1,763,665
Interest expense 11,690 15,906 46,875 52,877
Interest income 29,342 36,100 149,101 118,462
---------- ---------- ---------- ----------
Income/(loss) before
income taxes 21,916 557,908 (211,556) 1,829,250
Provision for/(benefit
from) income taxes 6,465 102,900 (62,409) 477,947
---------- ---------- ---------- ----------
Net income/(loss) $ 15,451 $ 455,008 $ (149,147) $1,351,303
---------- ---------- ---------- ----------
Earnings/(loss) per
share:
Basic $ 0.01 $ 0.27 $ (0.09) $ 0.80
Diluted $ 0.01 $ 0.27 $ (0.09) $ 0.78
Weighted average
number of shares:
Basic 1,671,926 1,683,671 1,659,557 1,688,121
Diluted 1,715,763 1,703,331 1,659,557 1,721,645
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
----------------------------------------------------------------------
October October
(In thousands) 26, 2003 31, 2004
----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,857 $ 2,281,844
Short-term investments 4,128,349 4,296,152
Accounts receivable, net 912,875 1,670,153
Inventories 950,692 1,139,368
Deferred income taxes 782,823 610,095
Other current assets 231,177 283,907
----------- -----------
Total current assets 8,370,773 10,281,519
Property, plant and equipment 3,094,427 2,953,130
Less: accumulated depreciation and
amortization (1,534,597) (1,607,602)
----------- -----------
Net property, plant and equipment 1,559,830 1,345,528
Goodwill, net 223,521 257,321
Purchased technology and other intangible
assets, net 92,512 50,291
Other assets 64,986 158,786
----------- -----------
Total assets $10,311,622 $12,093,445
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 105,292 $ 45,864
Accounts payable and accrued expenses 1,319,471 1,895,061
Income taxes payable 216,114 347,056
----------- -----------
Total current liabilities 1,640,877 2,287,981
Long-term debt 456,422 410,436
Deferred income taxes and other liabilities 146,289 133,001
----------- -----------
Total liabilities 2,243,588 2,831,418
----------- -----------
Stockholders' equity:
Common stock 16,774 16,803
Additional paid-in capital 2,223,553 2,070,733
Deferred stock compensation, net (1,543) (96)
Retained earnings 5,812,867 7,164,170
Accumulated other comprehensive income 16,383 10,417
----------- -----------
Total stockholders' equity 8,068,034 9,262,027
----------- -----------
Total liabilities and stockholders' equity $10,311,622 $12,093,445
----------------------------------------------------------------------
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS -- ONGOING BASIS
Three Months Ended
----------------------------------------------------------------------
October 26, 2003
--------------------------------------
(In thousands, except Special Ongoing
per share amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $1,220,998 $ - $1,220,998
Cost of products sold 726,627 - 726,627
---------- ---------- ----------
Gross margin 494,371 - 494,371
Operating expenses:
Research, development and
engineering 227,950 - 227,950
Marketing and selling 71,283 - 71,283
General and administrative 77,370 - 77,370
Restructuring, asset
impairments and
other charges 113,504 (113,504)(a) -
Litigation settlements, net - - -
---------- ---------- ----------
Income from operations 4,264 113,504 117,768
Interest expense 11,690 - 11,690
Interest income 29,342 - 29,342
---------- ---------- ----------
Income before income taxes 21,916 113,504 135,420
Provision for income taxes 6,465 33,484(b) 39,949
---------- ---------- ----------
Net income $ 15,451 $ 80,020 $ 95,471
---------- ---------- ----------
Earnings per share:
Basic $ 0.01 $ 0.05 $ 0.06
Diluted $ 0.01 $ 0.05 $ 0.06
Weighted average number of
shares:
Basic 1,671,926 1,671,926 1,671,926
Diluted 1,715,763 1,715,763 1,715,763
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance with
U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the fourth fiscal quarter of 2003 consisted of
the following:
a) Restructuring, asset impairments and other charges resulting
from employee-related costs, the consolidation of facilities
and impairment of certain assets associated with realignment
activities.
b) The tax effect of special items.
Three Months Ended
----------------------------------------------------------------------
October 31, 2004
-------------------------------------
Special Ongoing
Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $2,203,348 $ - $2,203,348
Cost of products sold 1,176,145 - 1,176,145
---------- ---------- ----------
Gross margin 1,027,203 - 1,027,203
Operating expenses:
Research, development and
engineering 248,272 - 248,272
Marketing and selling 108,490 - 108,490
General and administrative 106,100 - 106,100
Restructuring, asset
impairments and
other charges - - -
Litigation settlements, net 26,627 - 26,627
---------- ---------- ----------
Income from operations 537,714 - 537,714
Interest expense 15,906 - 15,906
Interest income 36,100 - 36,100
---------- ---------- ----------
Income before income taxes 557,908 - 557,908
Provision for income taxes 102,900 - 102,900
---------- ---------- ----------
Net income $ 455,008 $ - $ 455,008
---------- ---------- ----------
Earnings per share:
Basic $ 0.27 $ - $ 0.27
Diluted $ 0.27 $ - $ 0.27
Weighted average number of
shares:
Basic 1,683,671 1,683,671 1,683,671
Diluted 1,703,331 1,703,331 1,703,331
----------------------------------------------------------------------
(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 fourth 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
Fiscal Year Ended
----------------------------------------------------------------------
October 26, 2003
-------------------------------------
(In thousands, except Special Ongoing
per share amounts) Reported(1) Items(2) Results
----------------------------------------------------------------------
Net sales $4,477,291 $ - $4,477,291
Cost of products sold 2,872,836 (142,404)(a) 2,730,432
---------- ---------- ----------
Gross margin 1,604,455 142,404 1,746,859
Operating expenses:
Research, development and
engineering 920,618 (13,916)(b) 906,702
Marketing and selling 325,189 - 325,189
General and administrative 300,676 - 300,676
Restructuring, asset
impairments and
other charges 371,754 (371,754)(c) -
Litigation settlements, net - - -
---------- ---------- ----------
Income/(loss) from operations (313,782) 528,074 214,292
Interest expense 46,875 - 46,875
Interest income 149,101 - 149,101
---------- ---------- ----------
Income/(loss) before income
taxes (211,556) 528,074 316,518
Provision for/(benefit from)
income taxes (62,409) 155,782(d) 93,373
---------- ---------- ----------
Net income/(loss) $ (149,147) $ 372,292 $ 223,145
---------- ---------- ----------
Earnings/(loss) per share:
Basic $ (0.09) $ 0.22 $ 0.13
Diluted $ (0.09) $ 0.22 $ 0.13
Weighted average number of
shares:
Basic 1,659,557 1,659,557 1,659,557
Diluted 1,659,557 1,691,644 1,691,644
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance with
U.S. Generally Accepted Accounting Principles (GAAP).
(2) Special items for the fiscal year ended October 26, 2003 consisted
of the following:
a) Charges to cost of products sold for inventory write-offs as a
result of the implementation of the global spares distribution
system and refocused product efforts, which included the Etec
mask pattern products.
b) Charges to research, development and engineering expense for
laboratory tool write-offs resulting from refocused product
efforts associated with realignment activities.
c) Restructuring, asset impairments and other charges resulting
from employee-related costs, the consolidation of facilities
and impairment of certain assets associated with realignment
activities.
d) The tax effect of special items.
Fiscal Year Ended
----------------------------------------------------------------------
October 31, 2004
-------------------------------------
(In thousands, except Special Ongoing
per share amounts) Reported(1) Items(3) Results
----------------------------------------------------------------------
Net sales $8,013,053 $ - $8,013,053
Cost of products sold 4,311,808 - 4,311,808
---------- ---------- ----------
Gross margin 3,701,245 - 3,701,245
Operating expenses:
Research, development and
engineering 991,873 - 991,873
Marketing and selling 394,376 - 394,376
General and administrative 357,245 - 357,245
Restructuring, asset
impairments and
other charges 167,459 (167,459)(e) -
Litigation settlements, net 26,627 - 26,627
---------- ---------- ----------
Income/(loss) from operations 1,763,665 167,459 1,931,124
Interest expense 52,877 - 52,877
Interest income 118,462 - 118,462
---------- ---------- ----------
Income/(loss) before income
taxes 1,829,250 167,459 1,996,709
Provision for/(benefit from)
income taxes 477,947 49,400(f) 527,347
---------- ---------- ----------
Net income/(loss) $1,351,303 $ 118,059 $1,469,362
Earnings/(loss) per share:
Basic $ 0.80 $ 0.07 $ 0.87
Diluted $ 0.78 $ 0.07 $ 0.85
Weighted average number of
shares:
Basic 1,688,121 1,688,121 1,688,121
Diluted 1,721,645 1,721,645 1,721,645
----------------------------------------------------------------------
(1) Reported results of operations are presented in accordance with
U.S. Generally Accepted Accounting Principles (GAAP).
(3) Special items for the fiscal year ended October 31, 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) The tax effect of special items.
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Source: Applied Materials, Inc. |
