EXHIBIT 99.1
Release: Immediate
Contact: Paul Bowman (investment community) Jeff Lettes (editorial/media)
(408) 563-1698 (408) 563-5161
APPLIED MATERIALS ANNOUNCES RESULTS
FOR FIRST FISCAL QUARTER 2004
New Orders Increase to $1.68 Billion; Net Sales Increase to $1.56 Billion
SANTA CLARA, Calif., February 18, 2004 -- Applied Materials, Inc., the
world's largest supplier of wafer fabrication solutions to the semiconductor
industry, reported results for its first fiscal quarter ended February 1, 2004.
Net sales were $1.56 billion, up 27 percent from $1.22 billion for the fourth
fiscal quarter of 2003, and up 48 percent from $1.05 billion for the first
fiscal quarter of 2003. Gross margin for the first fiscal quarter of 2004 was
43.5 percent, up from 40.5 percent for the fourth fiscal quarter of 2003 and up
from 37.0 percent for the first fiscal quarter of 2003. Net income for the first
fiscal quarter of 2004 was $82 million, or $0.05 per share, compared to net
income of $15 million, or $0.01 per share, for the fourth fiscal quarter of
2003, and up from a net loss of $66 million, or $0.04 per share, for the first
fiscal quarter of 2003.
The company reported a pre-tax realignment charge of $167 million, or
$0.07 per share after tax, for the first fiscal quarter of 2004. Realignment
activities consisted primarily of consolidation of facilities. Excluding the
charges associated with realignment activities, the company would have reported
ongoing net income of $200 million, or $0.12 per share, for the first fiscal
quarter of 2004, an increase from $95 million, or $0.06 per share, for the
fourth fiscal quarter of 2003.
New orders of $1.68 billion for the first fiscal quarter of 2004
increased 32 percent from $1.28 billion for the fourth fiscal quarter of 2003,
and increased 66 percent from $1.02 billion for the first fiscal quarter of
2003. Regional distribution of new orders for the first fiscal quarter of 2004
was: Southeast Asia and China 25 percent, Taiwan 18 percent, North America 17
percent, Japan 17 percent, Europe 12 percent, and Korea 11 percent. Backlog at
the end of the first fiscal quarter of 2004 was $2.63 billion, compared to $2.50
billion at the end of the fourth fiscal quarter of 2003.
"We are pleased with our revenue and order growth trends," said Mike
Splinter, president and chief executive officer of Applied Materials.
"Semiconductor unit demand remained robust throughout the quarter, driven by
higher consumer electronics and business IT spending. Based on these industry
drivers, our customers have announced increased capital spending plans for 2004.
With our technological leadership, global customer support capabilities and
financial strength, Applied Materials is well positioned to support our
customers as they move into the nanometer era of chip manufacturing."
Applied Materials, Inc.
February 18, 2004
Page 2 of 7
Applied Materials continues to demonstrate its leadership by delivering
critical technologies that enable our customers to manufacture their most
advanced designs. The company's next-generation Endura2 system, a streamlined
platform for physical vapor deposition, achieves new levels of reliability,
serviceability and efficiency. Applied Materials, along with eight semiconductor
manufacturers, recently showcased the use of the Applied Black Diamond(R) low k
film in breakthrough products already being manufactured in high volume.
Additionally, the new AKT-40K PECVD (plasma enhanced chemical vapor deposition)
system processes the largest substrates available today, at the fastest speeds,
for LCD (liquid crystal display) TV screens.
"New 300mm fabs and expansions of existing facilities are driving an
increased demand for wafer fabrication equipment. We believe that Applied
Materials' outstanding products and services, combined with our customer focus
and leaner cost structure, position the company to grow," concluded Splinter.
Reconciliations of reported results of operations under U.S. Generally
Accepted Accounting Principles (GAAP) to the pro forma amounts have been
included as a supplement to this press release. Due to the amount of charges
incurred with realignment activities, Applied Materials believes that
reconciliation to ongoing operations facilitates meaningful comparison with
prior periods. To supplement the consolidated condensed financial statements
prepared under GAAP, the company uses a pro forma measure of net income that is
GAAP net income, adjusted to exclude costs associated with realignment
activities. The company believes that pro forma net income reports baseline
performance before charges associated with realignment activities. In addition,
pro forma net income is the primary indicator management uses to plan and
forecast future periods. These measures are neither in accordance with, nor an
alternative for, GAAP, and may be materially different from pro forma methods of
accounting and reporting used by other companies. The presentation of this
additional information should not be considered as a substitute for net income
prepared in accordance with GAAP.
This press release contains forward-looking statements, including, but
not limited to, those relating to the company's strategic position,
technological leadership, increased profitability and growth, and revenue and
order trends; customers' capital spending plans and investments in manufacturing
capacity and new technology; and the semiconductor and semiconductor equipment
industries' growth and positive outlook. These forward-looking statements are
based on management's estimates, projections and assumptions as of the date
hereof. Forward-looking statements may contain words such as "expects,"
"anticipates," "believes," "may," "should," "will," "estimates," "forecasts," or
similar expressions, and include the assumptions that underlie such statements.
These forward-looking 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. Such risks and uncertainties include,
but are not limited to: the sustainability of increased demand in the
semiconductor and semiconductor equipment industries, which is subject to many
factors, including global economic conditions, business spending, consumer
confidence, demand for electronic products and semiconductors, and geopolitical
Applied Materials, Inc.
February 18, 2004
Page 3 of 7
uncertainties; customers' capacity requirements, including capacity utilizing
the latest technology; the timing, rate, amount and sustainability of increases
in capital spending for new technology, such as 300mm and nanometer
applications; the company's ability to develop, deliver and support a broad
range of products and services on a timely basis; the company's successful and
timely development of new markets, products, processes and services; the
company's ability to timely satisfy manufacturing requirements; the company's
ability to maintain effective cost controls and to timely align its cost
structure with business conditions; changes in management; and other risks
described in Applied Materials' Forms 10-K, 10-Q and other filings with the
Securities and Exchange Commission. The company assumes no obligation to update
the information in this press release.
Applied Materials will be discussing its first fiscal quarter results,
along with its outlook for the second fiscal quarter of 2004, on a conference
call today beginning at 1:30 p.m. Pacific Time. A webcast of the conference call
will be available on Applied Materials' web site under the "Investors" section.
Applied Materials offers its shareholders who have email accounts the
opportunity to receive future annual reports and proxy statements
electronically. On-line access improves the speed at which you can receive
shareholder information and vote, while reducing company expenses. To select
this option, visit www.appliedmaterials.com.
Applied Materials, Inc. (Nasdaq: AMAT) is the largest supplier of
equipment and services to the global semiconductor industry. Applied Materials'
web site is http://www.appliedmaterials.com.
###
Applied Materials, Inc.
February 18, 2004
Page 4 of 7
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
January 26, February 1,
(In thousands, except per share amounts) 2003 2004
---- ----
Net sales $ 1,054,209 $ 1,555,448
Cost of products sold 663,827 879,279
------------ ------------
Gross margin 390,382 676,169
Operating expenses:
Research, development and engineering 243,205 242,645
Marketing and selling 92,217 88,398
General and administrative 72,801 80,294
Restructuring, asset impairments and other charges 99,338 167,459
------------ ------------
Income/(loss) from operations (117,179) 97,373
Interest expense 11,342 11,800
Interest income 35,372 31,273
------------ ------------
Income/(loss) before income taxes (93,149) 116,846
Provision for/(benefit from) income taxes (27,479) 34,470
------------ ------------
Net income/(loss) $ (65,670) $ 82,376
------------ ------------
Earning/(loss) per share:
Basic $ (0.04) $ 0.05
Diluted $ (0.04) $ 0.05
Weighted average number of shares:
Basic 1,650,612 1,682,025
Diluted 1,650,612 1,735,268
Applied Materials, Inc.
February 18, 2004
Page 5 of 7
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
October 26, February 1,
(In thousands) 2003 2004
---- ----
(AUDITED) (UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,857 $ 1,470,471
Short-term investments 4,128,349 4,226,823
Accounts receivable, net 912,875 1,081,142
Inventories 950,692 999,740
Deferred income taxes 782,823 788,981
Other current assets 231,177 212,679
------------ ------------
Total current assets 8,370,773 8,779,836
Property, plant and equipment 3,094,427 2,888,871
Less: accumulated depreciation and amortization (1,534,597) (1,415,297)
------------ ------------
Net property, plant and equipment 1,559,830 1,473,574
Goodwill, net 223,521 223,521
Purchased technology and other intangible assets, net 92,512 80,271
Other assets 64,986 73,777
------------ ------------
Total assets $ 10,311,622 $ 10,630,979
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 105,292 $ 105,292
Accounts payable and accrued expenses 1,319,471 1,466,303
Income taxes payable 216,114 237,425
------------ ------------
Total current liabilities 1,640,877 1,809,020
Long-term debt 456,422 455,815
Deferred income taxes and other liabilities 146,289 147,230
------------ ------------
Total liabilities 2,243,588 2,412,065
------------ ------------
Stockholders' equity:
Common stock 16,774 16,858
Additional paid-in capital 2,223,553 2,275,110
Deferred stock compensation, net (1,543) (1,151)
Retained earnings 5,812,867 5,895,243
Accumulated other comprehensive income 16,383 32,854
------------ ------------
Total stockholders' equity 8,068,034 8,218,914
------------ ------------
Total liabilities and stockholders' equity $ 10,311,622 $ 10,630,979
============ ============
Applied Materials, Inc.
February 18, 2004
Page 6 of 7
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
------------------
October 26, 2003 February 1, 2004
---------------------------------------- -----------------------------------------
Special Ongoing Special Ongoing
(In thousands, except per share amounts) Reported(1) Items(2) Results Reported(1) Items(3) Results
----------- ---------- ---------- ----------- ---------- -----------
Net sales $ 1,220,998 $ - $1,220,998 $ 1,555,448 $ - $ 1,555,448
Cost of products sold 726,627 - 726,627 879,279 - 879,279
----------- ---------- ---------- ----------- ---------- -----------
Gross margin 494,371 - 494,371 676,169 - 676,169
Operating expenses:
Research, development and engineering 227,950 - 227,950 242,645 - 242,645
Marketing and selling 71,283 - 71,283 88,398 - 88,398
General and administrative 77,370 - 77,370 80,294 - 80,294
Restructuring, asset impairments and
other charges 113,504 (113,504)(a) - 167,459 (167,459)(c) -
----------- ---------- ---------- ----------- ---------- -----------
Income from operations 4,264 113,504 117,768 97,373 167,459 264,832
Interest expense 11,690 - 11,690 11,800 - 11,800
Interest income 29,342 - 29,342 31,273 - 31,273
----------- ---------- ---------- ----------- ---------- -----------
Income before income taxes 21,916 113,504 135,420 116,846 167,459 284,305
Provision for income taxes 6,465 33,484 (b) 39,949 34,470 49,400 (d) 83,870
----------- ---------- ---------- ----------- ---------- -----------
Net income $ 15,451 $ 80,020 $ 95,471 $ 82,376 $ 118,059 $ 200,435
----------- ---------- ---------- ----------- ---------- -----------
Earnings per share:
Basic $ 0.01 $ 0.05 $ 0.06 $ 0.05 $ 0.07 $ 0.12
Diluted $ 0.01 $ 0.05 $ 0.06 $ 0.05 $ 0.07 $ 0.12
Weighted average number of shares:
Basic 1,671,926 1,671,926 1,671,926 1,682,025 1,682,025 1,682,025
Diluted 1,715,763 1,715,763 1,715,763 1,735,268 1,735,268 1,735,268
(1) Reported results of operations are presented in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
(2) Special items for the fourth fiscal quarter of 2003 consisted of the
following:
a) Restructuring, asset impairments and other charges resulting
from employee-related costs, the consolidation of facilities
and impairment of certain assets associated with realignment
activities.
b) Pro forma tax provision for the tax effect of special items.
(3) Special items for the first fiscal quarter of 2004 consisted of the
following:
c) Restructuring, asset impairments and other charges resulting
primarily from the consolidation of facilities associated with
realignment activities.
d) Pro forma tax provision for the tax effect of special items.
Applied Materials, Inc.
February 18, 2004
Page 7 of 7
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
------------------
January 26, 2003 February 1, 2004
---------------------------------------- ----------------------------------------
Special Ongoing Special Ongoing
(In thousands, except per share amounts) Reported(1) Items(2) Results Reported(1) Items(3) Results
----------- ---------- ---------- ----------- ---------- -----------
Net sales $ 1,054,209 $ - $1,054,209 $ 1,555,448 $ - $ 1,555,448
Cost of products sold 663,827 - 663,827 879,279 - 879,279
----------- ---------- ---------- ----------- ---------- -----------
Gross margin 390,382 - 390,382 676,169 - 676,169
Operating expenses:
Research, development and engineering 243,205 - 243,205 242,645 - 242,645
Marketing and selling 92,217 - 92,217 88,398 - 88,398
General and administrative 72,801 - 72,801 80,294 - 80,294
Restructuring, asset impairments and
other charges 99,338 (99,338)(a) - 167,459 (167,459)(c) -
----------- ---------- ---------- ----------- ---------- -----------
Income/(loss) from operations (117,179) 99,338 (17,841) 97,373 167,459 264,832
Interest expense 11,342 - 11,342 11,800 - 11,800
Interest income 35,372 - 35,372 31,273 - 31,273
----------- ---------- ---------- ----------- ---------- -----------
Income/(loss) before income taxes (93,149) 99,338 6,189 116,846 167,459 284,305
Provision for/(benefit from) income taxes (27,479) 29,305 (b) 1,826 34,470 49,400 (d) 83,870
----------- ---------- ---------- ----------- ---------- -----------
Net income/(loss) $ (65,670) $ 70,033 $ 4,363 $ 82,376 $ 118,059 $ 200,435
----------- ---------- ---------- ----------- ---------- -----------
Earnings/(loss) per share:
Basic $ (0.04) $ 0.04 $ - $ 0.05 $ 0.07 $ 0.12
Diluted $ (0.04) $ 0.04 $ - $ 0.05 $ 0.07 $ 0.12
Weighted average number of shares:
Basic 1,650,612 1,650,612 1,650,612 1,682,025 1,682,025 1,682,025
Diluted 1,650,612 1,682,213 1,682,213 1,735,268 1,735,268 1,735,268
(1) Reported results of operations are presented in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
(2) Special items for the first fiscal quarter of 2003 consisted of the
following:
a) Restructuring, asset impairments and other charges resulting
from employee-related costs, the consolidation of facilities
and impairment of certain assets associated with realignment
activities.
b) Pro forma tax provision for the tax effect of special items.
(3) Special items for the first fiscal quarter of 2004 consisted of the
following:
c) Restructuring, asset impairments and other charges resulting
primarily from the consolidation of facilities associated with
realignment activities.
d) Pro forma tax provision for the tax effect of special items.