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 THIRD FISCAL QUARTER 2004
New Orders Increase to $2.46 Billion; Net Sales Increase to $2.24 Billion
SANTA CLARA, Calif., August 17, 2004 -- Applied Materials, Inc., the
world's largest supplier of equipment and services to the global semiconductor
industry, reported results for its third fiscal quarter ended August 1, 2004.
Net sales were $2.24 billion, up 11 percent from $2.02 billion for the second
fiscal quarter of 2004, and up 104 percent from $1.09 billion for the third
fiscal quarter of 2003. Gross margin for the third fiscal quarter of 2004 was
47.4 percent, up from 46.5 percent for the second fiscal quarter of 2004, and up
from 31.7 percent for the third fiscal quarter of 2003. Net income for the third
fiscal quarter of 2004 was $441 million, or $0.26 per share, up from net income
of $373 million, or $0.22 per share, for the second fiscal quarter of 2004, and
up from a net loss of $37 million, or $0.02 per share, for the third fiscal
quarter of 2003.
The company's ongoing net income was $441 million, or $0.26 per share, for
the third fiscal quarter of 2004, up from $373 million, or $0.22 per share, for
the second fiscal quarter of 2004, and up from $78 million, or $0.05 per share,
for the third fiscal quarter of 2003. Ongoing results for the second and third
fiscal quarters of 2004 were the same as reported net income since there were no
special items.
New orders of $2.46 billion for the third fiscal quarter of 2004 increased
11 percent from $2.21 billion for the second fiscal quarter of 2004, and
increased 134 percent from $1.05 billion for the third fiscal quarter of 2003.
Regional distribution of new orders for the third fiscal quarter of 2004 was:
Taiwan 28 percent, North America 19 percent, Japan 17 percent, Southeast Asia
and China 15 percent, Korea 12 percent, and Europe 9 percent. Backlog at the end
of the third fiscal quarter of 2004 was $2.99 billion, compared to $2.80 billion
at the end of the second fiscal quarter of 2004.
"Our financial results demonstrate that Applied Materials is continuing to
grow while delivering excellent profitability and productivity," said Mike
Splinter, president and chief executive officer. "We are building on our
technology leadership, introducing leading-edge products and entering new
businesses to provide more capability to our customers."
Applied Materials continues to deliver breakthrough technologies with a
broad portfolio of transistor, interconnect, and inspection solutions for
manufacturing chips at 65 nanometers and beyond. During the quarter, the company
launched the Applied Quantum(TM) X, Applied Reflexion LK Ecmp(TM) and Applied
Producer(R) HARP(TM) products, and added the FlexStar(TM) system through the
acquisition of Torrex. Applied Materials also entered into agreements with
Brooks Automation, Praxair Electronics, and Phoenix Silicon to broaden its
service product offerings. In addition, Applied Materials announced yesterday a
definitive agreement to acquire the operating subsidiaries and businesses of
Metron Technology, which provides a wide range of oursource solutions to the
semiconductor industry.
"With our growth strategy in place, our focus is clearly on building a
stronger Applied Materials as we further expand our product offerings and
capabilities," concluded Splinter.
Applied Materials, Inc.
August 17, 2004
Page 2 of 6
Reconciliations of reported results of operations under U.S. Generally
Accepted Accounting Principles (GAAP) to ongoing results are included as a
supplement to this press release. Due to the amount of realignment charges
incurred in certain prior periods, Applied Materials believes that ongoing
results are useful to investors because they reflect baseline performance
exclusive of charges associated with realignment activities. Ongoing results are
the primary indicator used by Applied Materials' management to plan and forecast
future periods. These non-GAAP measures are neither in accordance with, nor an
alternative for, GAAP, and may be materially different from non-GAAP 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 and business
outlook, as well as the semiconductor and semiconductor equipment industries'
trends. Forward-looking statements may contain words such as "expect,"
"anticipate," "believe," "may," "should," "will," "estimate," "forecast," "see,"
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. Risks and uncertainties include, but
are not limited to: the sustainability, timing, rate and amount 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 uncertainties; customers' capacity
requirements, including capacity utilizing the latest technology (such as 300mm
and nanometer applications); the company's ability to timely develop, deliver
and support a broad range of products and services and successfully develop new
markets; the company's ability to timely satisfy manufacturing requirements; the
company's ability to timely align its cost structure with business conditions;
changes in management; the possible inability to complete acquisition(s) as
anticipated or at all and the possible inability to realize the potential
benefits of the integration and performance of acquired business(es);
effectiveness of strategic transactions and other risks described in Applied
Materials' Securities and Exchange Commission filings. All forward-looking
statements are based on management's estimates, projections and assumptions as
of the date hereof. The company assumes no obligation to update the information
in this press release.
Applied Materials will be discussing its third fiscal quarter results,
along with its outlook for the fourth 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, 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.
August 17, 2004
Page 3 of 6
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
July 27, August 1, July 27, August 1,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2004 2003 2004
----------- ----------- ----------- -----------
Net sales $ 1,094,907 $ 2,236,152 $ 3,256,293 $ 5,809,705
Cost of products sold 747,979 1,176,920 2,146,209 3,135,663
----------- ----------- ----------- -----------
Gross margin 346,928 1,059,232 1,110,084 2,674,042
Operating expenses:
Research, development and engineering 217,025 256,781 692,668 743,601
Marketing and selling 78,121 101,513 253,906 285,886
General and administrative 72,307 87,394 223,306 251,145
Restructuring, asset impairments and
other charges 66,181 -- 258,250 167,459
----------- ----------- ----------- -----------
Income/(loss) from operations (86,706) 613,544 (318,046) 1,225,951
Interest expense 11,626 13,489 35,185 36,971
Interest income 46,131 24,869 119,759 82,362
----------- ----------- ----------- -----------
Income/(loss) before income taxes (52,201) 624,924 (233,472) 1,271,342
Provision for/(benefit from) income taxes (15,399) 184,353 (68,874) 375,047
----------- ----------- ----------- -----------
Net income/(loss) $ (36,802) $ 440,571 $ (164,598) $ 896,295
----------- ----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.02) $ 0.26 $ (0.10) $ 0.53
Diluted $ (0.02) $ 0.26 $ (0.10) $ 0.52
Weighted average number of shares:
Basic 1,659,365 1,696,544 1,655,430 1,689,573
Diluted 1,659,365 1,721,690 1,655,430 1,727,626
Applied Materials, Inc.
August 17, 2004
Page 4 of 6
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
October 26, August 1,
(IN THOUSANDS) 2003 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,857 $ 2,047,442
Short-term investments 4,128,349 4,548,645
Accounts receivable, net 912,875 1,527,603
Inventories 950,692 1,152,774
Deferred income taxes 782,823 572,245
Other current assets 231,177 292,734
------------ ------------
Total current assets 8,370,773 10,141,443
Property, plant and equipment 3,094,427 2,922,091
Less: accumulated depreciation and amortization (1,534,597) (1,539,487)
------------ ------------
Net property, plant and equipment 1,559,830 1,382,604
Goodwill, net 223,521 249,157
Purchased technology and other intangible assets, net 92,512 62,416
Other assets 64,986 82,849
------------ ------------
Total assets $ 10,311,622 $ 11,918,469
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 105,292 $ 103,829
Accounts payable and accrued expenses 1,319,471 1,779,143
Income taxes payable 216,114 323,880
------------ ------------
Total current liabilities 1,640,877 2,206,852
Long-term debt 456,422 454,491
Deferred income taxes and other liabilities 146,289 153,713
------------ ------------
Total liabilities 2,243,588 2,815,056
------------ ------------
Stockholders' equity:
Common stock 16,774 16,982
Additional paid-in capital 2,223,553 2,364,609
Deferred stock compensation, net (1,543) (371)
Retained earnings 5,812,867 6,709,162
Accumulated other comprehensive income 16,383 13,031
------------ ------------
Total stockholders' equity 8,068,034 9,103,413
------------ ------------
Total liabilities and stockholders' equity $ 10,311,622 $ 11,918,469
------------ ------------
- ------------------
Amounts as of August 1, 2004 are unaudited. Amounts as of October 26, 2003 are
derived from the October 26, 2003 audited financial statements.
Applied Materials, Inc.
August 17, 2004
Page 5 of 6
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Three Months Ended
--------------------------------------------------------------------------------------
July 27, 2003 August 1, 2004
-------------------------------------------- ---------------------------------------
Special Ongoing Special Ongoing
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Reported(1) Items(2) Results Reported(1) Items(3) Results
----------- ----------- ----------- ----------- ----------- -----------
Net sales $ 1,094,907 $ -- $ 1,094,907 $ 2,236,152 $ -- $ 2,236,152
Cost of products sold 747,979 (93,404)(a) 654,575 1,176,920 -- 1,176,920
----------- ----------- ----------- ----------- ----------- -----------
Gross margin 346,928 93,404 440,332 1,059,232 -- 1,059,232
Operating expenses:
Research, development and engineering 217,025 (3,916)(b) 213,109 256,781 -- 256,781
Marketing and selling 78,121 -- 78,121 101,513 -- 101,513
General and administrative 72,307 -- 72,307 87,394 -- 87,394
Restructuring, asset impairments and
other charges 66,181 (66,181)(c) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Income/(loss) from operations (86,706) 163,501 76,795 613,544 -- 613,544
Interest expense 11,626 -- 11,626 13,489 -- 13,489
Interest income 46,131 -- 46,131 24,869 -- 24,869
----------- ----------- ----------- ----------- ----------- -----------
Income/(loss) before income taxes (52,201) 163,501 111,300 624,924 -- 624,924
Provision for/(benefit from) income taxes (15,399) 48,233(d) 32,834 184,353 -- 184,353
----------- ----------- ----------- ----------- ----------- -----------
Net income/(loss) $ (36,802) $ 115,268 $ 78,466 $ 440,571 $ -- $ 440,571
----------- ----------- ----------- ----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.02) $ 0.07 $ 0.05 $ 0.26 $ -- $ 0.26
Diluted $ (0.02) $ 0.07 $ 0.05 $ 0.26 $ -- $ 0.26
Weighted average number of shares:
Basic 1,659,365 1,659,365 1,659,365 1,696,544 1,696,544 1,696,544
Diluted 1,659,365 1,692,207 1,692,207 1,721,690 1,721,690 1,721,690
- ----------------
(1) Reported results of operations are presented in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
(2) Special items for the third fiscal quarter of 2003 consisted of the
following:
(a) Charges to cost of products sold for inventory write-offs as a result
of the implementation of the global spares distribution system and
refocused product efforts, which included the Etec mask pattern
products.
(b) Charges to research, development and engineering expense for
laboratory tool write-offs as a result of refocused product efforts
associated with realignment activities.
(c) Restructuring, asset impairments and other charges consisted of a
reduction in the workforce, the consolidation of facilities and
impairment of certain assets associated with realignment activities.
(d) Provision for the tax effect of special items.
(3) There were no special items for the third fiscal quarter of 2004.
Therefore, ongoing results are the same as reported results of operations.
Applied Materials, Inc.
August 17, 2004
Page 6 of 6
APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)
Nine Months Ended
-------------------------------------------------------------------------------------
July 27, 2003 August 1, 2004
------------------------------------------ -----------------------------------------
Special Ongoing Special Ongoing
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Reported(1) Items(2) Results Reported(1) Items(3) Results
----------- ----------- ----------- ----------- ----------- -----------
Net sales $ 3,256,293 $ -- $ 3,256,293 $ 5,809,705 $ -- $ 5,809,705
Cost of products sold 2,146,209 (142,404)(a) 2,003,805 3,135,663 -- 3,135,663
----------- ----------- ----------- ----------- ----------- -----------
Gross margin 1,110,084 142,404 1,252,488 2,674,042 -- 2,674,042
Operating expenses:
Research, development and engineering 692,668 (13,916)(b) 678,752 743,601 -- 743,601
Marketing and selling 253,906 -- 253,906 285,886 -- 285,886
General and administrative 223,306 -- 223,306 251,145 -- 251,145
Restructuring, asset impairments and
other charges 258,250 (258,250)(c) -- 167,459 (167,459)(e) --
----------- ----------- ----------- ----------- ----------- -----------
Income/(loss) from operations (318,046) 414,570 96,524 1,225,951 167,459 1,393,410
Interest expense 35,185 -- 35,185 36,971 -- 36,971
Interest income 119,759 -- 119,759 82,362 -- 82,362
----------- ----------- ----------- ----------- ----------- -----------
Income/(loss) before income taxes (233,472) 414,570 181,098 1,271,342 167,459 1,438,801
Provision for/(benefit from) income taxes (68,874) 122,298(d) 53,424 375,047 49,400(f) 424,447
----------- ----------- ----------- ----------- ----------- -----------
Net income/(loss) $ (164,598) $ 292,272 $ 127,674 $ 896,295 $ 118,059 $ 1,014,354
----------- ----------- ----------- ----------- ----------- -----------
Earnings/(loss) per share:
Basic $ (0.10) $ 0.18 $ 0.08 $ 0.53 $ 0.07 $ 0.60
Diluted $ (0.10) $ 0.17 $ 0.08 $ 0.52 $ 0.07 $ 0.59
Weighted average number of shares:
Basic 1,655,430 1,655,430 1,655,430 1,689,573 1,689,573 1,689,573
Diluted 1,655,430 1,685,001 1,685,001 1,727,626 1,727,626 1,727,626
----------- ----------- ----------- ----------- ----------- -----------
- ----------------
(1) Reported results of operations are presented in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
(2) Special items for the nine months ended July 27, 2003 consisted of the
following:
(a) Charges to cost of products sold for inventory write-offs as a result
of the implementation of the global spares distribution system and
refocused product efforts, which included the Etec mask pattern
products.
(b) Charges to research, development and engineering expense for
laboratory tool write-offs as a result of refocused product efforts
associated with realignment activities.
(c) Restructuring, asset impairments and other charges consisted of
reduction in the workforce, the consolidation of facilities and
impairment of certain assets associated with realignment activities.
(d) Provision for the tax effect of special items.
(3) Special items for the nine months ended August 1, 2004, all of which
occurred in the first fiscal quarter of 2004, consisted of the following:
(e) Restructuring, asset impairments and other charges resulting primarily
from the consolidation of facilities associated with realignment
activities.
(f) Provision for the tax effect of special items.