North Coast Solar Stocks

November 11, 2009

Applied Materials Announces Solid Fourth Quarter Results

Filed under: AMAT — Tags: , , , , , — Jason @ 4:03 pm

* Returns to profitability in Q4 led by semiconductor equipment business
* New operating structure to strengthen leadership in global markets and deliver an anticipated $450 million in cost reductions
* Expects net sales to grow by more than 30 percent in fiscal 2010

4:03 pm EST, Wednesday November 11, 2009

SANTA CLARA, Calif.–(BUSINESS WIRE)–Applied Materials, Inc. (AMAT) today reported fiscal 2009 fourth quarter net sales of $1.53 billion and GAAP net income of $138 million or $0.10 per share. For its fiscal year ended Oct. 25, 2009, the company reported net sales of $5.01 billion and a GAAP net loss of $305 million or $0.23 per share.

The company also reported non-GAAP results, with fourth quarter net income of $177 million or $0.13 per share and fiscal year net income of $37 million or $0.03 per share.

“Applied delivered a solid fourth quarter led by increased net sales and profitability in our semiconductor equipment business, with improved demand and financial performance in all of our segments,” said Mike Splinter, chairman and CEO. “For the year, we invested in growth across all of our businesses, introducing new products and expanding into new markets while reducing our cost structure.”

Applied Materials was named the number one equipment supplier to the solar PV industry during 2009 and recently opened the world’s largest non-governmental solar energy research facility in Xi’an, China. Applied’s Energy and Environmental Solutions business has grown to over a billion dollars in annual net sales in less than three years and is expected to achieve breakeven or better results in fiscal 2010 on a non-GAAP basis.

“Since 2006, Applied has successfully extended our nanomanufacturing leadership from semiconductor and display to the solar industry, and during that time we have seen changes in customer and geographic concentration in all of these markets,” Splinter added. “We are adapting our operating structure to align with these changes and enhance the value we provide to our customers and stockholders.”

In fiscal 2010, Applied Materials expects to be taking the following actions to strengthen its leadership in its global markets and deliver higher operating efficiencies:

* Embedding its sales force into its business groups to increase visibility into customer and market opportunities.
* Consolidating its manufacturing and supply chain closer to more of its customers and suppliers.
* Implementing various cost reduction initiatives and a restructuring plan expected to achieve total annualized cost savings of approximately $450 million when completed.

Under the restructuring plan, Applied Materials expects to reduce its global workforce by approximately 1,300 to 1,500 positions, or 10 to 12 percent, over a period of 18 months. The company anticipates the pre-tax cost of the plan to be between $100 million and $125 million, most of which is expected to be recognized in the first quarter of fiscal 2010.

The anticipated savings of $450 million are in addition to the structural cost reductions of $460 million achieved in fiscal 2009.

Business Outlook

Applied Materials expects net sales to grow by more than 30 percent in fiscal 2010.

GAAP Results

Q4 FY ‘09 Q3 FY ‘09 Q4 FY ‘08
Net sales $1.53 billion $1.13 billion $2.04 billion
Net income (loss) $138 million ($55 million) $231 million
Earnings (loss) per share $0.10 ($0.04) $0.17
FY ‘09 FY ‘08
Net sales $5.01 billion $8.13 billion
Net income (loss) ($305 million) $961 million
Earnings (loss) per share ($0.23) $0.70

Non-GAAP Results

Q4 FY ‘09 Q3 FY ‘09 Q4 FY ‘08
Non-GAAP net income (loss) $177 million ($2 million) $264 million
Non-GAAP earnings (loss) per share $0.13 ($0.00) $0.20
FY ‘09 FY ‘08
Non-GAAP net income (loss) $37 million $1.20 billion
Non-GAAP earnings (loss) per share $0.03 $0.87

 

The non-GAAP results exclude the impact of the following where applicable: investment impairments, equity-based compensation, restructuring and asset impairments, acquisition-related costs, costs related to ceasing implant development, gains on sales of facilities, and amounts associated with the resolution of income tax audits. A reconciliation of the GAAP and non-GAAP results is provided in the financial statements included in this release.

Order and Backlog Summary

New orders for the quarter totaled $1.47 billion. Regional distribution was: Southeast Asia and China 38 percent, Korea 20 percent, Taiwan 15 percent, North America 14 percent, Japan 8 percent, and Europe 5 percent. Within the Silicon Systems Group (SSG), new order composition was: foundry 37 percent, logic and other 26 percent, DRAM 21 percent, and flash 16 percent. Backlog for the company as of the end of the quarter was $2.73 billion, down from $2.95 billion in the previous quarter.

Reportable Segment Results

Q4 FY ‘09 Q3 FY ‘09 Q4 FY ‘08
Operating Operating
New Net Income New Net Income New Net Operating
(In millions) Orders Sales (Loss) Orders Sales (Loss) Orders Sales Income
SSG $629 $656 $158 $542 $498 $56 $1,162 $744 $177
Applied Global Services $335 $390 $64 $298 $343 $24 $496 $528 $123
Display $151 $200 $43 $96 $69 ($5) $65 $334 $113
Energy and Environmental Solutions $357 $280 ($30) $136 $224 ($53) $490 $438 $21
FY ‘09 FY ’08
Operating Operating
New Net Income New Net Income
(In millions) Orders Sales (Loss) Orders Sales (Loss)
SSG $1,677 $1,960 $152 $4,092 $4,005 $1,242
Applied Global Services $1,179 $1,397 $113 $2,249 $2,329 $575
Display $287 $502 $65 $1,486 $976 $310
Energy and Environmental Solutions $955 $1,155 ($242) $1,329 $819 ($183)

 

Use of Non-GAAP Financial Measures

Management uses non-GAAP results to evaluate the company’s operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Applied Materials believes these measures enhance investors’ ability to review the company’s business from the same perspective as the company’s management and facilitate comparisons of this period’s results with prior periods. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.

Webcast Information

Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast will be available at http://www.appliedmaterials.com.

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
October 25, October 26, October 25, October 26,
(In thousands, except per share amounts) 2009 2008 2009 2008
Net sales $ 1,526,394 $ 2,043,677 $ 5,013,607 $ 8,129,240
Cost of products sold 967,558 1,244,972 3,582,802 4,686,412
Gross margin 558,836 798,705 1,430,805 3,442,828
Operating expenses:
Research, development and engineering 234,188 275,222 934,115 1,104,122
General and administrative 76,138 138,410 406,946 505,762
Marketing and selling 79,261 100,131 327,572 459,402
Restructuring and asset impairments (3,693 ) (9,686 ) 155,788 39,948
Gain on sale of facility 21,837 21,837
Income (loss) from operations 172,942 316,465 (393,616 ) 1,355,431
Pre-tax loss of equity method investment 9,867 34,983 35,527
Impairment of equity method investment and strategic investments 5,058 84,480
Interest expense 5,359 4,846 21,304 20,506
Interest income 11,323 20,937 48,580 109,320
Income (loss) before income taxes 173,848 322,689 (485,803 ) 1,408,718
Provision (benefit) for income taxes 35,986 91,594 (180,476 ) 447,972
Net income (loss) $ 137,862 $ 231,095 $ (305,327 ) $ 960,746
Earnings (loss) per share:
Basic $ 0.10 $ 0.17 $ (0.23 ) $ 0.71
Diluted $ 0.10 $ 0.17 $ (0.23 ) $ 0.70
Weighted average number of shares:
Basic 1,338,134 1,338,227 1,333,091 1,354,176
Diluted 1,347,691 1,350,092 1,333,091 1,374,507
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
October 25, October 26,
(In thousands) 2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 1,576,381 $ 1,411,624
Short-term investments 638,349 689,044
Accounts receivable, less allowance for doubtful accounts of $67,313 and $5,275 at 2009 and 2008, respectively 1,041,495 1,691,027
Inventories 1,627,457 1,987,017
Deferred income taxes, net 356,336 388,807
Income taxes receivable 184,760 125,605
Other current assets 264,169 371,033
Total current assets 5,688,947 6,664,157
Long-term investments 1,052,165 1,367,056
Property, plant and equipment 2,906,957 2,831,952
Less: accumulated depreciation and amortization (1,816,524 ) (1,737,752 )
Net property, plant and equipment 1,090,433 1,094,200
Goodwill, net 1,170,932 1,174,673
Purchased technology and other intangible assets, net 306,416 388,429
Equity method investment 79,533
Deferred income taxes and other assets 265,350 238,270
Total assets $ 9,574,243 $ 11,006,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt $ 1,240 $ 1,068
Accounts payable and accrued expenses 1,058,015 1,545,355
Customer deposits and deferred revenue 864,280 1,225,735
Income taxes payable 15,922 173,394
Total current liabilities 1,939,457 2,945,552
Long-term debt 200,654 201,576
Other liabilities 339,524 310,232
Total liabilities 2,479,635 3,457,360
Stockholders’ equity:
Common stock 13,409 13,308
Additional paid-in capital 5,195,437 5,095,894
Retained earnings 10,934,004 11,601,288
Treasury stock (9,046,562 ) (9,134,962 )
Accumulated other comprehensive loss (1,680 ) (26,570 )
Total stockholders’ equity 7,094,608 7,548,958
Total liabilities and stockholders’ equity $ 9,574,243 $ 11,006,318
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Twelve Months Ended
October 25, October 26,
(In thousands) 2009 2008
Cash flows from operating activities:
Net income (loss) $ (305,327 ) $ 960,746
Adjustments required to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization 291,203 320,051
Loss on fixed asset retirements 24,017 6,826
Provision for bad debts 62,539
Restructuring and asset impairments 155,788 39,948
Deferred income taxes 18,863 (58,259 )
Excess tax benefits from equity-based compensation plans (7,491 )
Net recognized loss on investments 10,231 4,392
Pretax loss of equity-method investment 34,983 35,527
Impairment of equity-method investment and strategic investments 84,480
Equity-based compensation 147,160 178,943
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable 586,993 424,290
Inventories 359,560 (638,256 )
Other current assets 94,740 94,247
Other assets (6,530 ) (394 )
Accounts payable and accrued expenses (659,293 ) (260,041 )
Customer deposits and deferred revenue (361,455 ) 622,645
Income taxes (288,283 ) 8,126
Other liabilities 83,709 (20,832 )
Cash provided by operating activities 333,378 1,710,468
Cash flows from investing activities:
Capital expenditures (248,427 ) (287,906 )
Cash paid for acquisition, net of cash acquired (235,324 )
Proceed from sale of facility 42,210
Proceeds from sales and maturities of investments 1,317,365 5,939,509
Purchases of investments (956,249 ) (5,534,475 )
Cash provided by (used in) investing activities 112,689 (75,986 )
Cash flows from financing activities:
Debt repayments (750 ) (2,117 )
Proceeds from common stock issuances 61,824 393,978
Common stock repurchases (22,906 ) (1,499,984 )
Excess tax benefits from equity-based compensation plans 7,491
Payment of dividends to stockholders (320,220 ) (325,405 )
Cash used in financing activities (282,052 ) (1,426,037 )
Effect of exchange rate changes on cash and cash equivalents 742 457
Increase in cash and cash equivalents 164,757 208,902
Cash and cash equivalents — beginning of period 1,411,624 1,202,722
Cash and cash equivalents — end of period $ 1,576,381 $ 1,411,624
Supplemental cash flow information:
Cash payments for income taxes $ 134,240 $ 368,459
Cash payments for interest $ 14,372 $ 14,580
APPLIED MATERIALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
Three Months Ended Twelve Months Ended
October 25, July 26, October 26, October 25, October 26,
(In thousands, except per share amounts) 2009 2009 2008 2009 2008
Non-GAAP Net Income (Loss)
Reported net income (loss) (GAAP basis) $ 137,862 $ (54,865 ) $ 231,095 $ (305,327 ) $ 960,746
Equity-based compensation expense 31,046 43,334 43,778 147,160 178,943
Certain items associated with acquisitions 1 22,425 22,425 35,320 95,699 138,611
Gain on sale of facility (21,837 ) (21,837 )
Restructuring and asset impairments 2,3,4 (3,693 ) (9,686 ) 155,788 39,948
Costs associated with ceasing development of beamline implant products 5 1,436
Impairment of equity method investment and strategic investments 5,058 2,341 84,480
Income tax effect of non-GAAP adjustments and resolution of audits of prior years’ income tax filings (15,490 ) (14,791 ) (14,765 ) (141,260 ) (99,834 )
Non-GAAP net income (loss) $ 177,208 $ (1,556 ) $ 263,905 $ 36,540 $ 1,198,013
Non-GAAP Net Income (Loss) Per Diluted Share
Reported net income (loss) per diluted share (GAAP basis) $ 0.10 $ (0.04 ) $ 0.17 $ (0.23 ) $ 0.70
Equity-based compensation expense 0.02 0.02 0.02 0.08 0.09
Certain items associated with acquisitions 0.01 0.01 0.02 0.05 0.07
Gain on sale of facility (0.01 ) (0.01 )
Restructuring and asset impairments 0.08 0.02
Costs associated with ceasing development of beamline implant products
Impairment of equity method investment and strategic investments 0.05
Non-GAAP net income (loss) – per diluted share $ 0.13 $ (0.00 ) $ 0.20 $ 0.03 $ 0.87
Shares used in diluted shares calculation 1,347,691 1,333,278 1,350,092 1,339,675 1,374,507
1 These items are incremental charges attributable to acquisitions consisting of inventory fair value adjustments on products sold and amortization of purchased intangible assets.
2 Results for the three months ended October 25, 2009 included adjustment of restructuring reserves of $4 million. Results for the twelve months ended October 25, 2009 included asset impairment charges of $15 million related to wafer cleaning equipment and restructuring charges of $141 million associated with a restructuring program announced on November 12, 2008.
3 Results for the three months ended October 26, 2008 included adjustment of restructuring reserves of $10 million. Results for the twelve months ended October 26, 2008 included restructuring charges of $29 million associated with a global cost reduction plan.
4 Results for the twelve months ended October 26, 2008 included restructuring and asset impairment charges of $11 million associated with ceasing development of beamline implant products.
5 Results for the twelve months ended October 26, 2008 included other operating charges of $1 million associated with ceasing development of beamline implant products.

Prospective Non-GAAP Information

Applied’s statement that it expects its Energy and Environmental Solutions business to achieve profitability on a non-GAAP basis in fiscal 2010 assumes that the EES business will generate at least $1 billion in net sales in fiscal 2010, includes revenue mix assumptions and excludes an estimated $50 million in acquisition-related charges.

Contact:

Applied Materials, Inc.
Howard Clabo (editorial/media), 408-748-5775
Michael Sullivan (financial community), 408-986-7977
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