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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (33794)	1/14/2000 4:40:00 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Moody's affirms Applied Materials (Press release provided by Moody's Investors Service) Approximately $500 Million of Debt Securities Affected. NEW YORK, Jan 14 - Moody's Investors Service confirmed the A3 senior unsecured rating of Applied Materials, Inc., following the company's announcement that it plans to acquire leading mask patterning solutions provider, Etec Systems, Inc., in a $1.8 billion stock merger, subject to shareholder and regulatory approvals. The confirmation reflects Applied's strong market positions in a variety of equipment segments, its excellent liquidity and lowly leveraged balance sheet, management's track record of operating through industry cycles and in integrating acquisitions, as well as Moody's expectation that the company will be able to defend and perhaps expand its market positions during this still nascent upturn in the semiconductor wafer fabrication equipment sector. The rating outlook is stable. Moody's said that the pending Etec acquisition would give Applied another leading market position in an important process technology, allowing it to extend its offerings to the mask making community. The rating agency noted while Etec has nearly 80% market share for mask pattern generation, a critical enabling technology for semiconductor manufacturing, its profitability has suffered losses in the last several quarters, with latest twelve month revenues of approximately $225 million and an operating loss of $13 million. However, Moody's expects that the incipient market upturn, along with Applied's financial and operational strengths, as well as its complementary technologies in metrology and etch will enhance its overall operations. Ratings confirmed include: senior unsecured notes at A3. The rating agency went on to say that the industry remains highly competitive, volatile and, as has been demonstrated in the recent past, exposed to the macro economic welfare of several geographies, notably Asia. Over the intermediate term however, the industry's outlook is solid. According to Moody's, capital spending on semiconductor equipment is expected to grow by about 20% in 2000, after only a slight increase in 1999, which followed a decline in 1998. The outlook is based on growing tightness in production capacity among many semiconductor segments, especially at wafer foundries, where Applied has solid relationships. This capacity tightness derives from restrained capital expenditures in the semiconductor industry over the last several quarters, strong demand from the communications and personal computer and related end markets. Consequently, longer lead times or periodic shortages of select semiconductor components, combined with generally improving average selling prices, has many semiconductor manufacturers adding capacity to take advantage of the industry upturn. As a result, Moodys anticipates that Applied Materials' market position, operating performance, and financial condition will remain solid over the intermediate term. Applied Materials, Inc., headquartered in Santa Clara, California, is the world's largest manufacturer of semiconductor wafer fabrication equipment. Etec Systems, Inc., headquartered in Hayward, California, is a leader in mask patterning solutions for the semiconductor and electronics industries.