Applied Materials Announces Results for Second Fiscal Quarter
1998; New Orders of $1.03 Billion, Net Sales of $1.18 Billion
Business Wire - May 12, 1998 16:02
SANTA CLARA, Calif.--(BUSINESS WIRE)--May 12, 1998--Applied Materials,
Inc., the world's largest supplier of wafer fabrication systems and services to the global
semiconductor industry, reported results for its second fiscal quarter ended April 26, 1998,
with net sales of $1.18 billion, an increase of 31 percent from $900.9 million for the second
fiscal quarter of 1997, and a decrease of 10 percent from $1.31 billion for the first fiscal
quarter of 1998. Ongoing net income (net income, excluding one-time items, as applicable)
for the second fiscal quarter of 1998 was $141.2 million, or $0.37 per diluted share, up from
$102.1 million, or $0.27 per diluted share, for the second fiscal quarter of 1997, and down
from $197.8 million, or $0.52 per diluted share, for the first fiscal quarter of 1998.
New orders of $1.03 billion for the second fiscal quarter of 1998 increased slightly from
$1.01 billion for the second fiscal quarter of 1997, and decreased 20 percent from $1.29
billion for the first fiscal quarter of 1998. Geographically, North America new orders for the
second fiscal quarter of 1998 were 42 percent of the Company's total new orders, Europe
16 percent, Japan 15 percent, Korea 4 percent, Taiwan 11 percent and Asia-Pacific 12
percent. New orders for the second fiscal quarter of 1998 included $70 million from China,
the strongest quarter to date for orders from this developing market.
"We are pleased with our second quarter results, especially considering the difficult
business environment for the semiconductor equipment industry," said James C. Morgan,
chairman and chief executive officer. "Nearly 50 percent of this quarter's new systems
orders were for 0.25 micron and below technology, more than twice the amount from just
one year ago, demonstrating the rapid industry transition to smaller line-widths."
Gross margin for the second fiscal quarter of 1998 was 47.1 percent, up from 46 percent for
the second fiscal quarter of 1997, and down from 48.1 percent for the first fiscal quarter of
1998. Ongoing net income as a percentage of net sales was 12 percent for the second fiscal
quarter of 1998, compared to 11.3 percent for the second fiscal quarter of 1997 and 15.1
percent for the first fiscal quarter of 1998. Backlog at the end of the second fiscal quarter of
1998 decreased to $1.41 billion, from $1.64 billion at the end of the first fiscal quarter of
1998.
"Semiconductor manufacturers continue to delay capital equipment investment while they
assess DRAM overcapacity, the Asian financial crisis and demand shifts in the PC market
resulting from lower priced products," continued Morgan. "Recent cutbacks in capital
spending by most major North American chip manufacturers further limit our ability to
determine the length and severity of the current downturn. Consequently, we are cautious
about the near term and will manage the business based on expected revenue levels."
One of Applied Materials' strengths is its ability to invest aggressively in new technology
and to grow its leadership position during industry downturns. The Company's Ultima
HDP-CVDTM (high density plasma-chemical vapor deposition) Centura(R) system,
introduced during the last downturn, is now considered the system of choice for production
of advanced logic and memory devices at 0.25 micron and below. In March 1998,
SGS-Thomson selected this system as its production tool of record for their most critical
dielectric film applications. Orders for the Company's Ultima HDP-CVD system for the
second fiscal quarter more than doubled from the first fiscal quarter, and included multiple
repeat orders.
Second quarter orders for CMP (chemical mechanical polishing) systems were up 60
percent from the prior quarter and exceeded total orders for fiscal 1997. CMP is one of the
fastest growing market segments of the semiconductor capital equipment industry, and the
Mirra(R) CMP is rapidly gaining customer acceptance for oxide planarization. The
Company recently introduced a tungsten process capability for the Mirra CMP system to
capitalize on additional market opportunities. "The successful CMP and HDP-CVD
product introductions, coupled with continued acceptance of leading-edge etch and
metallization products, demonstrate our ability to meet advanced technology
requirements," said Morgan.
"Our customers' continued investment in strategic technology indicates that the long-term
outlook for the semiconductor capital equipment industry remains positive. Historically,
Applied Materials has successfully managed through difficult business cycles to deliver
strong operational and financial performance. We are confident that, despite this current
business challenge, we will strengthen our industry-leading position," Morgan concluded.
This press release contains certain forward-looking statements that 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 length and severity of the Asian financial crisis; the continued
instability in DRAM prices; continued demand shifts in the PC market; the Company's
ability to timely align its cost structure with prevailing market conditions; slowing growth in
the demand for the Company's systems and services; the successful and timely
development of new markets, products, processes and services (including fabrication
equipment for new materials, 300mm wafers and 0.25 micron and below devices); and
challenges from the Company's competition. The Company assumes no obligation to
update the information in this press release.
Applied Materials, Inc. is a Fortune 500 global growth company and the world's largest
supplier of wafer fabrication systems and services to the global semiconductor industry.
Applied Materials is traded on the Nasdaq National Market under the symbol, "AMAT".
Applied Materials' website is appliedmaterials.com.
APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
-------------------------------------------------------------------
April 26, April 27, April 26, April 27,
1998 1997 1998 1997
(In thousands, except per share amounts)
-------------------------------------------------------------------
Net sales $1,176,316 $900,862 $2,484,001 $1,736,638
Cost of products sold 622,027 486,845 1,300,271 950,965
---------- --------- --------- ----------
Gross margin 554,289 414,017 1,183,730 785,673
Operating expenses:
Research, development
and engineering 181,937 131,973 364,266 248,465
Marketing and selling 84,689 74,965 171,078 141,236
General and
administrative 76,745 59,617 142,513 119,225
Acquired in-process
research and
development -- -- 32,227 59,500
---------- --------- --------- ----------
Income from operations 210,918 147,462 473,646 217,247
Income from
litigation settlement -- -- 80,000 --
Interest expense 11,885 4,935 23,749 10,735
Interest income 18,230 14,598 39,509 28,155
---------- --------- ---------- ----------
Income from
consolidated companies
before taxes 217,263 157,125 569,406 234,667
Provision for
income taxes 76,042 54,994 199,292 102,959
---------- --------- ---------- ----------
Income from
consolidated companies 141,221 102,131 370,114 131,708
Equity in net income/
(loss) of joint venture -- -- -- --
---------- --------- ---------- ----------
Net income $ 141,221 $ 102,131 $ 370,114 $ 131,708
---------- --------- ---------- ----------
Earnings per share: (1)
Basic $ 0.39 $ 0.28 $ 1.01 $ 0.36
Diluted $ 0.37 $ 0.27 $ 0.98 $ 0.35
Weighted average
number of shares: (1)
Basic 365,936 362,846 366,555 362,134
Diluted 379,247 375,798 379,320 373,524
(1) Amounts for the three and six months ended April 27, 1997 have
been retroactively restated to reflect a two-for-one stock split
in the form of a 100 percent stock dividend, effective October
13, 1997.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS(1)
------------------------------------------------------------------
Apr. 26, Oct. 26,
(In thousands) 1998 1997
------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 309,364 $ 448,043
Short-term investments 906,801 1,094,912
Accounts receivable, net 1,225,788 1,110,885
Inventories 714,126 686,451
Deferred income taxes 324,685 324,568
Other current assets 206,112 105,498
---------- ----------
Total current assets 3,686,876 3,770,357
Property, plant
and equipment, net 1,229,711 1,066,053
Other assets 223,512 234,356
---------- ----------
Total assets $5,140,099 $5,070,766
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 31,387 $ 55,943
Current portion of long-term debt 9,600 10,563
Accounts payable and accrued expenses 1,050,097 1,157,808
Income taxes payable 131,698 177,774
---------- ----------
Total current liabilities 1,222,782 1,402,088
Long-term debt 616,495 623,090
Deferred income taxes
and other liabilities 110,263 103,417
---------- ----------
Total liabilities 1,949,540 2,128,595
---------- ----------
Stockholders' equity:
Common stock 3,656 3,672
Additional paid-in capital 735,944 850,902
Retained earnings 2,468,152 2,098,038
Cumulative translation adjustments (17,193) (10,441)
---------- ----------
Total stockholders' equity 3,190,559 2,942,171
---------- ----------
Total liabilities and
stockholders' equity $5,140,099 $5,070,766
---------- ----------
(1) Amounts as of April 26, 1998 are unaudited. Amounts as of October
26, 1997 are from the October 26, 1997 audited financial
statements. |
