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Applied Materials Announces Fourth Quarter and Fiscal Year 2012 Results(Thomson Reuters ONE Via Acquire Media NewsEdge) Expects Orders to Increase in the First Quarter of FY2013 * Fourth quarter net sales of $1.65 billion down 30 percent sequentially; Q4 non-GAAP EPS of 6 cents at high end of expectations; Q4 GAAP loss of 42 cents included a goodwill impairment and restructuring charges * FY2012 net sales of $8.72 billion down 17 percent; FY2012 non-GAAP EPS of 75 cents down 42 percent; FY2012 GAAP EPS of 9 cents included a goodwill impairment along with acquisition-related and restructuring charges * Returned $1.85 billion to stockholders in FY2012 including $1.42 billion in stock repurchases SANTA CLARA, Calif., November 15, 2012 - Applied Materials, Inc. (NASDAQ:AMAT), the global leader in manufacturing solutions for the semiconductor, display and solar industries, today reported results for its fourth quarter and fiscal year ended October 28, 2012. In the fourth quarter, Applied generated orders of $1.47 billion and net sales of $1.65 billion. The company recorded a goodwill impairment and restructuring charges totaling $545 million and reported an operating loss of $499 million, with a net loss of $515 million or 42 cents per diluted share. Non-GAAP operating income was $114 million, and non-GAAP net income was $70 million or 6 cents per share, at the high end of the company's expectations. In FY2012, the company reported orders of $8.04 billion, net sales of $8.72 billion, operating income of $411 million, and net income of $109 million or 9 cents per diluted share. Non-GAAP operating income for the year was $1.38 billion, and non-GAAP net income was $960 million or 75 cents per share. "In our fourth quarter, Applied delivered profit at the high end of our outlook despite challenging industry conditions in semiconductor, solar and display," said Mike Splinter, Chairman and CEO. "Our strong cash flow performance allowed us to increase our quarterly dividend and share buybacks, returning $1.85 billion to shtockholders in the year." "We see improving business conditions entering 2013, with orders projected to increase after bottoming in the fourth quarter," Splinter added. "Accelerated changes in device technology and the adoption of new materials in all of the industries we serve provide opportunities for Applied to build on our leadership and grow our market share." Quarterly Results Summary GAAP Results Q4 FY2012 Q3 FY2012 Q4 FY2011 ------------------------------- ---------------- --------------- -------------- Net sales $1.65 billion $2.34 billion $2.18 billion Operating income (loss) $(499) million $322 million $361 million Net income (loss) $(515) million $218 million $456 million Diluted earnings (loss) per share (EPS) $(0.42) $0.17 $0.34 Non-GAAP Results ------------------------------- Non-GAAP operating income $114 million $431 million $384 million Non-GAAP net income $70 million $300 million $271 million Non-GAAP diluted EPS $0.06 $0.24 $0.21 Fourth quarter results included a $421 million goodwill impairment charge associated with the Energy and Environmental Solutions (EES) segment. The goodwill impairment reflects the deterioration in solar equipment market conditions, our customers' financial condition and reduced market valuations, causing Applied to reassess the recoverability of the segment's goodwill. Applied also reported $124 million in charges related to previously announced restructuring plans and the integration of Varian. Fourth quarter orders for Varian products of $152 million and net sales of $195 million were reported within the Silicon Systems Group (SSG) and Applied Global Services (AGS) segments. The Varian business contributed approximately one cent to the company's non-GAAP EPS in the quarter, which excluded acquisition-related charges equivalent to approximately three cents per share. In FY2012, orders for Varian products totaled $1.03 billion, and net sales were $1.02 billion. The Varian business contributed approximately 11 cents to Applied's non-GAAP EPS, which excluded acquisition-related charges equivalent to approximately 20 cents per share. Applied's non-GAAP results exclude the impact of the following, where applicable: certain discrete tax items; restructuring charges and any associated adjustments; certain acquisition-related costs; impairments of assets, goodwill, or investments; and/or gain or loss on sale of facilities. A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release. See also "Use of Non-GAAP Financial Measures" below. Fourth Quarter Reportable Segment Results and Comparisons to the Third Quarter Silicon Systems Group (SSG) orders were $741 million, down 36 percent, primarily due to lower orders in foundry and memory, partially offset by increased orders in logic. Net sales were $870 million, down 44 percent. Non-GAAP operating income decreased to $95 million or 10.9 percent of net sales. GAAP operating income decreased to $41 million or 4.7 percent of net sales. New order composition was: foundry 47 percent, flash 8 percent, logic and other 40 percent, and DRAM 5 percent. Applied Global Services (AGS) orders were $576 million, up 8 percent driven by service contract renewals. Net sales were $621 million, up 7 percent, which included $85 million in sales of a thin film production line. Non-GAAP operating income increased to $171 million or 27.5 percent of net sales. GAAP operating income increased to $164 million or 26.4 percent of net sales. Display orders were $83 million, up 24 percent from low levels. Net sales were $93 million, down 35 percent. Non-GAAP operating income decreased to $4 million or 4.3 percent of net sales. GAAP operating income decreased to $3 million or 3.2 percent of net sales. Energy and Environmental Solutions (EES) orders were $65 million, up 86 percent from low levels driven by demand for roll-to-roll deposition equipment. Net sales were $62 million, down 19 percent. EES had a non-GAAP operating loss of $46 million and a GAAP operating loss of $480 million. Additional Quarterly Financial Information and Comparisons to the Third Quarter * Backlog decreased by $215 million to $1.6 billion and included negative adjustments of $42 million. * Gross margin was 38.4 percent on a non-GAAP basis, down from 41.6 percent, reflecting the decrease in net sales. GAAP gross margin was 35.6 percent. * Operating expenses were $518 million on a non-GAAP basis, down from $543 million, with the decrease primarily reflecting an adjustment in compensation accruals. GAAP operating expenses were $1.09 billion. * The effective tax rate was 26.3 percent on a non-GAAP basis. The GAAP effective tax rate was 3.2 percent. * Cash, cash equivalents and investments ended the quarter at $3.0 billion. Full-Year Reportable Segment Results and Comparisons to the Prior Year SSG orders decreased by 4 percent to $5.29 billion, net sales increased by 2 percent to $5.54 billion, non-GAAP operating income decreased to $1.54 billion or 27.8 percent of net sales, and operating income decreased to $1.24 billion or 22.5 percent of net sales. AGS orders decreased by 3 percent to $2.27 billion, net sales decreased by 5 percent to $2.29 billion, non-GAAP operating income increased to $530 million or 23.2 percent of net sales, and operating income increased to $502 million or 22.0 percent of net sales. Display orders decreased by 57 percent to $274 million, net sales decreased by 32 percent to $473 million, non-GAAP operating income decreased to $32 million or 6.8 percent of net sales, and operating income decreased to $25 million or 5.3 percent of net sales. EES orders decreased by 88 percent to $195 million and net sales decreased by 79 percent to $425 million. The business generated a non-GAAP operating loss of $184 million and a GAAP operating loss of $668 million. Business Outlook For the first quarter of fiscal 2013, Applied expects net sales to be flat to down 15 percent sequentially. The company expects non-GAAP EPS to be in the range of $0.00 to $0.06. The non-GAAP EPS outlook excludes known charges related to completed acquisitions of approximately $0.05 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release. 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 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 www.appliedmaterials.com. Forward-Looking Statements This press release contains forward-looking statements, including statements regarding Applied's performance, industry conditions, technology changes, opportunities, strategic position, and business outlooks for the first quarter of fiscal 2013. Forward-looking statements may contain words such as "expect," "believe," "may," "can," "should," "will," "anticipate" 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, including but not limited to: the level of demand for Applied's products, which is subject to many factors, including uncertain global economic and industry conditions, end-demand for electronic products and semiconductors, government renewable energy policies and incentives, and customers' new technology and capacity requirements; variability of operating expenses and results among the company's segments caused by differing conditions in the served markets; the concentrated nature of Applied's customer base; Applied's ability to (i) develop, deliver and support a broad range of products, expand its markets and develop new markets, (ii) timely align its cost structure with business conditions and achieve the intended objectives of cost-reduction activities, (iii) plan and manage its resources and production capability, (iv) integrate Varian and realize synergies, (v) obtain and protect intellectual property rights in key technologies, (vi) attract, motivate and retain key employees, and (vii) accurately forecast future results, which depends on multiple assumptions related to, without limitation, market conditions, customer requirements and business needs; and other risks described in Applied's most recent current and periodic SEC reports. 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 any forward-looking statements. About Applied Materials Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in providing innovative equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products. Our technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world. At Applied Materials, we turn today's innovations into the industries of tomorrow. Learn more at www.appliedmaterials.com. Contact: Matt Ceniceros (editorial/media) 408.768.8169 Michael Sullivan (financial community) 408.986.7977 APPLIED MATERIALS, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Three Months Ended Twelve Months Ended --------------------------------------- -------------------------- (In millions, except per share October 28, July 29, October 30, October 28, October 30, amounts) 2012 2012 2011 2012 2011 ------------- ----------- ------------- ------------- ------------ Net sales $ 1,646 $ 2,343 $ 2,182 $ 8,719 $ 10,517 Cost of products sold 1,060 1,413 1,330 5,406 6,157 ------------- ----------- ------------- ------------- ------------ Gross margin 586 930 852 3,313 4,360 Operating expenses: Research, development and engineering 303 309 269 1,237 1,118 Selling, general and administrative 237 255 222 1,076 901 Impairment of goodwill 421 - - 421 - Restructuring charges and 124 44 - 168 (30 ) asset impairments Gain on sale of facilities, net - - - - (27 ) ------------- ----------- ------------- ------------- ------------ Total operating expenses 1,085 608 491 2,902 1,962 Income (loss) from operations (499 ) 322 361 411 2,398 Impairment of strategic investments 14 - 3 17 3 Interest and other expenses 24 24 24 95 59 Interest and other income, net 5 4 10 17 42 ------------- ----------- ------------- ------------- ------------ Income (loss) before income taxes (532 ) 302 344 316 2,378 Provision (benefit) for income taxes (17 ) 84 (112 ) 207 452 ------------- ----------- ------------- ------------- ------------ Net income (loss) $ (515 ) $ 218 $ 456 $ 109 $ 1,926 ------------- ----------- ------------- ------------- ------------ Earnings (loss) per share: Basic $ (0.42 ) $ 0.17 $ 0.35 $ 0.09 $ 1.46 Diluted $ (0.42 ) $ 0.17 $ 0.34 $ 0.09 $ 1.45 Weighted average number of shares: Basic 1,220 1,257 1,312 1,266 1,319 Diluted 1,220 1,268 1,321 1,277 1,330 APPLIED MATERIALS, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS October 28, October 30, (In millions) 2012 2011 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 1,392 $ 5,960 Short-term investments 545 283 Accounts receivable, net 1,220 1,532 Inventories 1,272 1,701 Deferred income taxes, net 369 580 Other current assets 304 299 ------------- ------------ Total current assets 5,102 10,355 Long-term investments 1,055 931 Property, plant and equipment, net 910 866 Goodwill 3,518 1,335 Purchased technology and other intangible assets, net 1,355 211 Deferred income taxes and other assets 162 163 ------------- ------------ Total assets $ 12,102 $ 13,861 ------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,436 $ 1,520 Customer deposits and deferred revenue 755 1,116 Income taxes payable 74 158 ------------- ------------ Total current liabilities 2,265 2,794 Long-term debt 1,946 1,947 Deferred income taxes and income taxes payable 341 104 Employee benefits and other liabilities 315 216 ------------- ------------ Total liabilities 4,867 5,061 ------------- ------------ Total stockholders' equity 7,235 8,800 ------------- ------------ Total liabilities and stockholders' equity $ 12,102 $ 13,861 ------------- ------------ APPLIED MATERIALS, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Three Months Ended Twelve Months Ended --------------------------- -------------------------- October 28, October 30, October 28, October 30, (In millions) 2012 2011 2012 2011 ------------- ------------- ------------- ------------ Cash flows from operating activities: Net income (loss) $ (515 ) $ 456 $ 109 $ 1,926 Adjustments required to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 97 59 422 246 Net loss (gain) on dispositions and (4 ) 10 7 (13 ) fixed asset retirements Provision for bad debts 5 5 14 5 Impairment of goodwill 421 - 421 - Restructuring charges and asset impairments 124 - 168 (30 ) Deferred income taxes 56 222 161 122 Net loss on investments and 7 6 23 19 amortization on debt securities Impairment of strategic investments 14 - 17 - Share-based compensation 44 37 182 146 Net change in operating assets and liabilities, 162 (96 ) 327 5 net of amounts acquired ------------- ------------- ------------- ------------ Cash provided by operating activities 411 699 1,851 2,426 ------------- ------------- ------------- ------------ Cash flows from investing activities: Capital expenditures (41 ) (73 ) (162 ) (209 ) Cash paid for acquisition, net of cash acquired (1 ) - (4,190 ) - Proceeds from sale of facilities and dispositions - 4 - 130 Proceeds from sales and maturities of investments 254 754 1,019 1,926 Purchases of investments (175 ) (192 ) (1,327 ) (1,137 ) ------------- ------------- ------------- ------------ Cash provided by (used 37 493 in) investing activities (4,660 ) 710 ------------- ------------- ------------- ------------ Cash flows from financing activities: Debt borrowings (repayments), net - - (1 ) 1,744 Payments of debt issuance costs - - - (14 ) Proceeds from common stock issuances 45 31 97 95 Common stock repurchases (516 ) (175 ) (1,416 ) (468 ) Payments of dividends to stockholders (111 ) (106 ) (434 ) (397 ) ------------- ------------- ------------- ------------ Cash provided by (used (582 ) (250 ) in) financing activities (1,754 ) 960 ------------- ------------- ------------- ------------ Effect of exchange rate changes (3 ) - (5 ) 6 on cash and cash equivalents ------------- ------------- ------------- ------------ Increase (decrease) in (137 ) 942 cash and cash equivalents (4,568 ) 4,102 Cash and cash equivalents - beginning of period 1,529 5,018 5,960 1,858 ------------- ------------- ------------- ------------ Cash and cash $ 1,392 $ 5,960 equivalents - end of period $ 1,392 $ 5,960 ------------- ------------- ------------- ------------ Supplemental cash flow information: Cash payments for income taxes $ 10 $ 100 $ 243 $ 761 Cash refunds from income taxes $ 74 $ 285 $ 79 $ 289 Cash payments for interest $ 7 $ 7 $ 94 $ 14 APPLIED MATERIALS, INC. UNAUDITED SUPPLEMENTAL INFORMATION Reportable Segment Results Q4 FY2012 Q3 FY2012 Q4 FY2011 ----------------------------------- ----------------------------------- ---------------------------------- Operating Operating Operating (In New Net Income New Net Income New Net Income millions) Orders Sales (Loss) Orders Sales (Loss) Orders Sales (Loss) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- SSG $ 741 $ 870 $ 41 $ 1,166 $ 1,545 $ 427 $ 925 $ 1,067 $ 278 AGS 576 621 164 531 579 122 564 629 160 Display 83 93 3 67 142 10 20 171 31 EES 65 62 (480 ) 35 77 (102 ) 86 315 17 Corporate - - (227 ) - - (135 ) - - (125 ) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- Consolidated $ 1,465 $ 1,646 $ (499 ) $ 1,799 $ 2,343 $ 322 $ 1,595 $ 2,182 $ 361 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ---------- FY 2012 FY 2011 ----------------------------------- ------------------------------------ Operating Operating (In New Net Income New Net Income millions) Orders Sales (Loss) Orders Sales (Loss) ----------- ----------- ----------- ------------ ------------ ---------- SSG $ 5,294 $ 5,536 $ 1,243 $ 5,489 $ 5,415 $ 1,764 AGS 2,274 2,285 502 2,333 2,413 482 Display 274 473 25 636 699 147 EES 195 425 (668 ) 1,684 1,990 453 Corporate - - (691 ) - - (448 ) ----------- ----------- ----------- ------------ ------------ ---------- Consolidated $ 8,037 $ 8,719 $ 411 $ 10,142 $ 10,517 $ 2,398 ----------- ----------- ----------- ------------ ------------ ---------- Corporate Unallocated Expenses Q4 Q3 Q4 (In millions) FY2012 FY2012 FY2011 FY 2012 FY 2011 --------- --------- --------- --------- -------- Restructuring charges and asset impairments, net $ 111 $ - $ - $ 111 $ (21 ) Share-based compensation 44 42 36 182 146 Gain on sale of facilities - - - - (27 ) Other unallocated expenses 72 93 89 398 350 --------- --------- --------- --------- -------- Corporate $ 227 $ 135 $ 125 $ 691 $ 448 --------- --------- --------- --------- -------- APPLIED MATERIALS, INC. UNAUDITED SUPPLEMENTAL INFORMATION Additional Information Q4 FY2012 Q3 FY2012 Q4 FY2011 ---------------- ---------------- --------------- New Orders and Net Sales by Geography New Net New Net New Net (In $ millions) Orders Sales Orders Sales Orders Sales -------- ------- -------- ------- -------- ------ North America 435 373 420 441 324 434 % of Total 30 % 23 % 23 % 19 % 20 % 20 % Europe 165 271 172 184 176 271 % of Total 11 % 16 % 9 % 8 % 11 % 12 % Japan 184 129 128 189 173 255 % of Total 12 % 8 % 7 % 8 % 11 % 12 % Korea 115 127 299 392 330 363 % of Total 8 % 8 % 17 % 17 % 21 % 17 % Taiwan 390 457 588 811 283 353 % of Total 27 % 28 % 33 % 34 % 18 % 16 % Southeast Asia 74 97 91 72 98 98 % of Total 5 % 6 % 5 % 3 % 6 % 4 % China 102 192 101 254 211 408 % of Total 7 % 11 % 6 % 11 % 13 % 19 % Employees (In thousands) Regular Full Time 14.5 14.6 12.9 FY 2012 FY 2011 ------------------- ------------------ New Orders and Net Sales by Geography New Net New Net (In $ millions) Orders Sales Orders Sales --------- --------- --------- -------- North America 1,995 1,749 2,069 1,963 % of Total 25 % 20 % 20 % 19 % Europe 817 863 1,022 1,120 % of Total 10 % 10 % 10 % 11 % Japan 600 704 1,001 912 % of Total 7 % 8 % 10 % 9 % Korea 1,784 1,897 1,286 1,263 % of Total 22 % 22 % 13 % 12 % Taiwan 2,155 2,411 2,235 2,093 % of Total 27 % 28 % 22 % 20 % Southeast Asia 283 312 463 592 % of Total 4 % 3 % 5 % 5 % China 403 783 2,066 2,574 % of Total 9 % 24 % 5 % 20 % APPLIED MATERIALS, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Twelve Months Ended -------------------------------------- -------------------------- (In millions, except October 28, July 29, October 30, October 28, October 30, percentages) 2012 2012 2011 2012 2011 ------------- ---------- ------------- ------------- ------------ Non-GAAP Gross Margin Reported gross margin (GAAP basis) $ 586 $ 930 $ 852 $ 3,313 $ 4,360 Certain items associated with acquisitions(1) 46 44 10 253 37 ------------- ---------- ------------- ------------- ------------ Non-GAAP gross margin $ 632 $ 974 $ 862 $ 3,566 $ 4,397 ------------- ---------- ------------- ------------- ------------ Non-GAAP gross margin percent (% of net sales) 38.4 % 41.6 % 39.5 % 40.9 % 41.8 % Non-GAAP Operating Income Reported operating income (loss) (GAAP basis) $ (499 ) $ 322 $ 361 $ 411 $ 2,398 Certain items associated with acquisitions(1) 55 57 13 298 51 Acquisition integration and deal costs 13 8 10 81 19 Impairment of goodwill 421 - - 421 - Restructuring charges and asset impairments(2, 3, 4, 5) 124 44 - 168 (30 ) Gain on sale of facilities, net - - - - (27 ) ------------- ---------- ------------- ------------- ------------ Non-GAAP operating income $ 114 $ 431 $ 384 $ 1,379 $ 2,411 ------------- ---------- ------------- ------------- ------------ Non-GAAP operating margin percent (% of net sales) 6.9 % 18.4 % 17.6 % 15.8 % 22.9 % Non-GAAP Net Income Reported net income (loss) (GAAP basis) $ (515 ) $ 218 $ 456 $ 109 $ 1,926 Certain items associated with acquisitions(1) 55 57 13 298 51 Acquisition integration and deal costs 13 8 10 81 19 Impairment of goodwill 421 - - 421 - Restructuring charges and asset impairments(2, 3, 4, 5) 124 44 - 168 (30 ) Impairment of strategic investments 14 - 3 17 3 Gain on sale of facilities, net - - - - (27 ) Reinstatement of federal R&D tax credit - - - - (13 ) Resolution of audits of prior years' income tax filings (5 ) (10 ) (203 ) (22 ) (203 ) Income tax effect of non- GAAP adjustments (37 ) (17 ) (8 ) (112 ) (3 ) ------------- ---------- ------------- ------------- ------------ Non-GAAP net income $ 70 $ 300 $ 271 $ 960 $ 1,723 ------------- ---------- ------------- ------------- ------------ 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 July 29, 2012 included severance charges of $24 million and asset impairment charges of $11 million related to the restructuring program announced on May 10, 2012 and severance charges of $9 million related to the integration of Varian. 3 Results for the three months ended October 28, 2012 included severance and other charges of $106 million related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of $12 million related to the restructuring program announced on May 10, 2012, and severance charges of $6 million related to the integration of Varian. 4 Results for the twelve months ended October 28, 2012 included severance and other charges of $106 million related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of $48 million related to the restructuring program announced on May 10, 2012, and severance charges of $14 million related to the integration of Varian. 5 Results for the twelve months ended October 30, 2011 included favorable adjustments of $36 million related to a restructuring program announced on July 21, 2010, $19 million related to a restructuring program announced on November 11, 2009, and $5 million related to a restructuring program announced on November 12, 2008, partially offset by asset impairment charges of $30 million primarily related to certain fixed and intangible assets. APPLIED MATERIALS, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Twelve Months Ended -------------------------------------- -------------------------- (In millions except per share October 28, July 29, October 30, October 28, October 30, amounts) 2012 2012 2011 2012 2011 ------------- ---------- ------------- ------------- ------------ Non-GAAP Earnings Per Diluted Share Reported earnings (loss) per diluted share (GAAP basis) $ (0.42 ) $ 0.17 $ 0.34 $ 0.09 $ 1.45 Certain items associated with acquisitions 0.04 0.04 0.01 0.19 0.03 Acquisition integration and deal costs 0.01 0.01 0.01 0.05 0.01 Impairment of goodwill 0.34 - - 0.33 - Restructuring charges and asset impairments 0.08 0.03 - 0.10 (0.01 ) Impairment of strategic investments 0.01 - - 0.01 - Gain on sale of facilities, net - - - - (0.02 ) Reinstatement of federal R&D tax credit and resolution of audits of prior years' income tax filings - (0.01 ) (0.15 ) (0.02 ) (0.16 ) ------------- ---------- ------------- ------------- ------------ Non-GAAP earnings per diluted share $ 0.06 $ 0.24 $ 0.21 $ 0.75 $ 1.30 ------------- ---------- ------------- ------------- ------------ Weighted average number of diluted shares 1,234 1,268 1,321 1,277 1,330 APPLIED MATERIALS, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Twelve Months Ended --------------------------------------- -------------------------- (In millions, except October 28, July 29, October 30, October 28, October 30, percentages) 2012 2012 2011 2012 2011 ------------- ----------- ------------- ------------- ------------ Non-GAAP SSG Operating Income Reported operating income (GAAP basis) $ 41 $ 427 $ 278 $ 1,243 $ 1,764 Certain items associated with acquisitions(1) 45 47 4 253 12 Acquisition integration and deal costs 6 7 3 37 3 Restructuring charges and asset impairments(2,3,4) 3 1 - 4 - ------------- ----------- ------------- ------------- ------------ Non-GAAP operating income $ 95 $ 482 $ 285 $ 1,537 $ 1,779 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating margin percent (% of net sales) 10.9 % 31.2 % 26.7 % 27.8 % 32.9 % Non-GAAP AGS Operating Income Reported operating income (GAAP basis) $ 164 $ 122 $ 160 $ 502 $ 482 Certain items associated with acquisitions(1) 3 2 2 13 7 Restructuring charges and asset impairments(2, 3, 4, 5) 4 11 - 15 24 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating income $ 171 $ 135 $ 162 $ 530 $ 513 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating margin percent (% of net sales) 27.5 % 23.3 % 25.8 % 23.2 % 21.3 % Non-GAAP Display Operating Income Reported operating income (GAAP basis) $ 3 $ 10 $ 31 $ 25 $ 147 Certain items associated with acquisitions(1) 1 2 2 7 7 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating income $ 4 $ 12 $ 33 $ 32 $ 154 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating margin percent (% of net sales) 4.3 % 8.5 % 19.3 % 6.8 % 22.0 % Non-GAAP EES Operating Income Reported operating income (loss) (GAAP basis) $ (480 ) $ (102 ) $ 17 $ (668 ) $ 453 Certain items associated with acquisitions(1) 7 6 6 25 25 Impairment of goodwill 421 - - 421 - Restructuring charges and asset impairments(2, 3, 4, 5) 6 32 - 38 (34 ) ------------- ----------- ------------- ------------- ------------ Non-GAAP operating income (loss) $ (46 ) $ (64 ) $ 23 $ (184 ) $ 444 ------------- ----------- ------------- ------------- ------------ Non-GAAP operating margin percent (% of net sales) (74.2 )% (83.1 )% 7.3 % (43.3 )% 22.3 % 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 July 29, 2012 included severance charges of $24 million and asset impairment charges of $11 million related to the restructuring program announced on May 10, 2012 and severance charges of $9 million related to the integration of Varian. 3 Results for the three months ended October 28, 2012 included restructuring and asset impairment charges of $7 million related to the restructuring program announced on May 10, 2012, and severance charges of $6 million related to the integration of Varian. 4 Results for the twelve months ended October 28, 2012 included restructuring and asset impairment charges of $43 million related to the restructuring program announced on May 10, 2012 and severance charges of $14 million related to the integration of Varian. 5 Results for the twelve months ended October 30, 2011 included favorable adjustments of $36 million related to a restructuring program announced on July 21, 2010, partially offset by asset impairment charges of $26 million primarily related to certain fixed and intangible assets. APPLIED MATERIALS, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES Three Months Ended (In millions) October 28, 2012 --------------------- Operating expenses (GAAP basis) $ 1,085 Certain items associated with acquisitions (9 ) Acquisition integration and deal costs (13 ) Impairment of goodwill (421 ) Restructuring charges and asset impairments (124 ) --------------------- Non-GAAP operating expenses $ 518 --------------------- UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE Three Months Ended October 28, (In millions, except percentages) 2012 --------------- Provision (benefit) for income taxes (GAAP basis) (a) $ (17 ) Income tax effect of non-GAAP adjustments 37 Resolutions from audits of prior years' income tax filings 5 --------------- Non-GAAP provision for income taxes (b) $ 25 --------------- Income (loss) before income taxes (GAAP basis) (c) $ (532 ) Certain items associated with acquisitions 55 Acquisition integration and deal costs 13 Impairment of goodwill 421 Restructuring charges and asset impairments 124 Impairment of strategic investments 14 --------------- Non-GAAP income before income taxes (d) $ 95 --------------- Effective income tax rate (GAAP basis) (a/c) 3.2 % --------------- Non-GAAP effective income tax rate (b/d) 26.3 % --------------- This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Applied Materials via Thomson Reuters ONE [HUG#1657722] |