APPLIED MATERIALS ANNOUNCES RESULTS
FOR THIRD FISCAL QUARTER 1998
New Orders of $608 Million, Net Sales of $884
Million
SANTA CLARA, Calif., August 11, 1998 -- Applied
Materials, Inc., the world's largest supplier of wafer
fabrication systems and services to the global semiconductor
industry, reported results for its third fiscal quarter ended
July 26, 1998, with net sales of $884 million, down 16
percent from $1.06 billion for the third fiscal quarter of 1997
and down 25 percent from $1.18 billion for the second fiscal
quarter of 1998. Ongoing net income (net income, excluding
one-time items, as applicable) for the third fiscal quarter of
1998 was $70.6 million, or $0.19 per diluted share, down
from $145.2 million, or $0.38 per diluted share, for the third
fiscal quarter of 1997, and down from $141.2 million, or
$0.37 per diluted share, for the second fiscal quarter of
1998. Strong asset management performance resulted in a
record $1.6 billion of cash and short-term investments as of
the end of the third fiscal quarter.
New orders of $608 million for the third fiscal quarter of
1998 decreased significantly from $1.24 billion for the third
fiscal quarter of 1997 and from $1.03 billion for the second
fiscal quarter of 1998. Geographically, North America new
orders for the third fiscal quarter of 1998 were 45 percent
of the Company's total new orders, Europe 11 percent,
Japan 18 percent, Korea 5 percent, Taiwan 20 percent and
Southeast Asia and China 1 percent. Backlog at the end of
the third fiscal quarter of 1998 decreased to $1 billion, from
$1.41 billion at the end of the second fiscal quarter of 1998.
"The semiconductor industry downturn continued to deepen
during our third fiscal quarter because of poor economic
conditions in Asia, industry overcapacity, and weaker than
expected PC sales, compounded by a movement to lower
priced PCs," said James C. Morgan, chairman and chief
executive officer. "The sharp decline in new orders and net
sales was broad-based, as customers in all regions reacted
to further business difficulties by delaying equipment
deliveries and investments in capacity and strategic
programs. At this time, we are unable to predict how long
this cycle will last, and are therefore assessing the
appropriate level of infrastructure necessary to support a
lower business volume, while assuring our industry
leadership position."
Gross margin for the third fiscal quarter of 1998 was 44.6
percent, down from 47.2 percent for the third fiscal quarter
of 1997 and down from 47.1 percent for the second fiscal
quarter of 1998. Ongoing net income as a percentage of net
sales was 8 percent for the third fiscal quarter of 1998,
compared to 13.7 percent for the third fiscal quarter of
1997 and 12 percent for the second fiscal quarter of 1998.
The Company's results of operations for the third fiscal
quarter of 1998 include a pre-tax restructuring charge of
$35 million, or $0.06 per diluted share after tax, associated
with a voluntary separation plan that was announced on May
26, 1998, together with a consolidation of certain facilities.
In addition, the Company changed its effective income tax
rate for fiscal 1998 from 35 percent to 34 percent. The
effect on ongoing net income of recording this change in the
third fiscal quarter of 1998 was a favorable $5.7 million, or
$0.02 per diluted share. Results of operations for the third
fiscal quarter of 1997 included $80 million of pre-tax
non-operating income, or $0.14 per diluted share after tax,
from a litigation settlement and a pre-tax bad debt expense
of $16.3 million, or $0.03 per diluted share after tax.
"Industry downturns provide an excellent opportunity to
work closely with our customers to develop and
commercialize leading-edge technologies that position the
Company for significant growth," continued Morgan. For
example, during the 1996 downturn, the Company
developed its Ultima HDP-CVDT (high density plasma -
chemical vapor deposition) Centurar and Mirrar CMP
(chemical mechanical polishing) products, which are now
market leaders. Today, the Company is continuing its
strategy by developing and qualifying a broad range of Total
SolutionsT for the industry's most challenging device
structure requirements.
Applied Materials most recently demonstrated its technology
leadership with the introduction of the ProducerT, a
high-throughput system for depositing blanket dielectric
films, including low dielectric constant (low k) films for
copper interconnects. The Producer has a unique new
architecture that supports both 200mm and 300mm wafer
production. In addition, the Endurar Electra CuT system
has established market leadership in depositing critical
barrier and seed layers for copper interconnects. These
products further extend the Company's range of
technologies and processes that will enable chipmakers to
build next-generation interconnect structures for all types of
semiconductors.
"Despite the current challenges facing the industry, we
remain confident about our long-term growth opportunities.
Based on established relationships with our customers, a
broad portfolio of advanced products and a strong balance
sheet, we believe Applied Materials is well-positioned to
emerge from this downturn with greater capabilities to
enable our customers' success," concluded Morgan.
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. In addition to the possible exacerbation of the
factors discussed above, such risks and uncertainties
include, but are not limited to, the ability of the Company to
timely align its cost structure with prevailing market
conditions and the successful and timely development of new
markets, products, processes and services. 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. |
