- Investor Relations
Record Full -Year Revenue and Earnings Per Share
SANTA CLARA, Calif., Nov. 16, 2011 -- Applied Materials, Inc. (NASDAQ:AMAT), the world's leading supplier of manufacturing solutions for the semiconductor, display and solar industries, today reported results for its fourth quarter and fiscal year ended Oct. 30, 2011.
In the fourth quarter, Applied generated orders of $1.60 billion, net sales of $2.18 billion and operating income of $361 million. Fourth-quarter net income was $456 million or 34 cents per share, including a tax benefit equivalent to 13 cents per share that was disclosed previously in a Form 8-K filed on Sept. 8, 2011. Non-GAAP operating income was $384 million, and non-GAAP net income was $271 million or 21 cents per share.
For fiscal year 2011, the company reported orders of $10.14 billion, record net sales of $10.52 billion, operating income of $2.40 billion, and net income of $1.93 billion or $1.45 per share. Non-GAAP operating income was $2.41 billion, and non-GAAP net income was $1.72 billion or $1.30 per share.
"Applied's record year was driven by strength in our silicon business and our highest-ever revenue in solar and services, as well as strategic programs that improved the efficiency of our operations," said Mike Splinter, chairman and chief executive officer. "While we expect the first half of fiscal 2012 to be impacted by the challenging economic environment, we anticipate that our overall business will strengthen during the second half of the year."
After the end of the quarter, Applied completed the acquisition of Varian Semiconductor Equipment. "The combination of Applied and Varian creates theindustry leader in transistor technologies," Splinter added. "Together, we willpartner with our customers to accelerate the development of new generations ofchips enabling smaller, faster and more power-efficient mobile devices."
During the quarter, Applied generated operating cash flow of $698 million or32 percent of net sales, including a $276 million tax refund. The company paidcash dividends of $106 million and used $175 million to repurchase 16 millionshares of its common stock at an average price of $11.04 per share.
"In 2011, Applied invested $1.1 billion in research, development andengineering and generated $2.4 billion in operating cash flow, the most incompany history," said George Davis, chief financial officer. "During the year,we increased our quarterly dividend payment by 14 percent and returned $865million to our stockholders through dividends and stock buybacks."
Quarterly Financial Results Summary
|GAAP Results||Q4 FY2011||Q3 FY2011||Q4 FY2010|
|Net sales||$2.18 billion||$2.79 billion||$2.89 billion|
|Operating income||$361 million||$687 million||$699 million|
|Net income||$456 million||$476 million||$468 million|
|Earnings per share (EPS)||$0.34||$0.36||$0.35|
|Non-GAAP operating income||$384 million||$683 million||$711 million|
|Non-GAAP net income||$271 million||$467 million||$476 million|
Non-GAAP results for the above periods exclude the impact of the following,where applicable: certain discrete tax items, restructuring and assetimpairment charges and any associated adjustment related to restructuringactions, certain acquisition-related costs, investment impairments, and gain orloss on sale of facilities. A reconciliation of the GAAP and non-GAAP resultsis provided in the financial statements included in this release. See also "Useof Non-GAAP Financial Measures" below.
Fourth Quarter Reportable Segment Results and Comparisons to thePrior Quarter
Silicon Systems Group (SSG) orders were $925 million, down 25 percentprimarily due to weaker demand in flash and DRAM. Net sales were $1.07 billion,down 24 percent. Operating income decreased to $278 million or 26 percent ofnet sales, reflecting the decrease in net sales. New order composition was:foundry 46 percent, logic and other 32 percent, flash 15 percent, and DRAM 7percent.
Applied Global Services (AGS) orders were $564 million, down 8 percent. Netsales were $629 million, up 4 percent and included $71 million in net sales fortwo thin film solar production lines. Operating income increased to $160million or 26 percent of net sales, reflecting the increase in net sales.
Display orders were $20 million, down 91percent, due to lower demand for TVand mobile device display equipment. Net sales were $171 million, down 23percent, and operating income decreased to $31 million or 18 percent of netsales, driven by lower net sales and a higher proportion of lower-marginproducts.
Energy and Environmental Solutions (EES) orders were $86 million, down 73percent, as customers continued to absorb recent capital additions. Net saleswere $315 million, down 44 percent. Operating income decreased to $17 millionor 5 percent of net sales, reflecting the net sales decline.
Full-Year Reportable Segment Results and Comparisons to the PriorYear
SSG orders decreased by 5 percent to $5.49 billion, net sales increased by 2percent to $5.41 billion, and operating income decreased to $1.76 billion or 33percent of net sales.
AGS orders increased by 7 percent to $2.33 billion, net sales increased by29 percent to a record $2.41 billion, and operating income rose to $482 millionor 20 percent of net sales.
Display orders decreased by 20 percent to $636 million, net sales decreasedby 22 percent to $699 million, and operating income decreased to $147 millionor 21 percent of net sales.
EES orders increased by 12 percent to $1.68 billion, net sales increased by34 percent to a record $1.99 billion, and operating income increased to arecord $453 million or 23 percent of net sales.
Additional Quarterly Financial Information
For the first quarter of fiscal 2012, and including the impact of the recentacquisition of Varian Semiconductor Equipment, Applied expects net sales to bedown 5 percent to 15 percent sequentially. The company expects non-GAAP EPS tobe in the range of $0.08 to $0.16. The non-GAAP EPS outlook excludes knowncharges related to completed acquisitions of approximately $0.10 per share butdoes not exclude other non-GAAP adjustments that may arise subsequent to thisrelease.
Use of Non-GAAP Financial Measures
Management uses non-GAAP results to evaluate the company's operating andfinancial performance in light of business objectives and for planningpurposes. These measures are not in accordance with GAAP and may differ fromnon-GAAP methods of accounting and reporting used by other companies. Appliedbelieves these measures enhance investors' ability to review the company'sbusiness from the same perspective as the company's management and facilitatecomparisons of this period's results with prior periods. The presentation ofthis additional information should not be considered a substitute for resultsprepared in accordance with GAAP.
Applied Materials will discuss these results during an earnings call thatbegins at 1:30 p.m. Pacific Time today. A live webcast will be available atwww.appliedmaterials.com.
This press release contains forward-looking statements, including statementsregarding Applied's performance, operational efficiencies, economic outlook,business expectation for fiscal 2012, expected benefits of the Varianacquisition, and business outlook for the first quarter of fiscal 2012.Forward-looking statements may contain words such as "expect," "believe,""may," "can," "should," "will," "anticipate" or similar expressions, andinclude the assumptions that underlie such statements.
These statements are subject to known and unknown risks and uncertaintiesthat could cause actual results to differ materially from those expressed orimplied by such statements, including but not limited to: the level of demandfor Applied's products, which is subject to many factors, including uncertainglobal economic and industry conditions, business and consumer spending, demandfor electronic products and semiconductors, government renewable energypolicies and incentives, and customers' utilization rates and new technologyand capacity requirements; variability of operating expenses and results amongthe company's segments caused by differing conditions in the served markets;Applied's ability to (i) develop, deliver and support a broad range ofproducts, expand its markets and develop new markets, (ii) timely align itscost structure with business conditions, (iii) plan and manage its resourcesand production capability, including its supply chain, (iv) implementinitiatives that enhance global operations and efficiencies, (v) integrateVarian's Semiconductor Equipment's operations, product lines, technology andemployees and realize synergies, (vi) obtain and protect intellectual propertyrights in key technologies, (vii) attract, motivate and retain key employees,and (viii) accurately forecast future operating and financial results, whichdepends on multiple assumptions related to, without limitation, marketconditions, customer requirements and business needs; and other risks describedin Applied Materials' SEC filings. All forward-looking statements are based onmanagement's estimates, projections and assumptions as of the date hereof. Thecompany undertakes no obligation to update any forward-looking statements.
About Applied Materials
Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in providinginnovative equipment, services and software to enable the manufacture ofadvanced semiconductor, flat panel display and solar photovoltaic products. Ourtechnologies help make innovations like smartphones, flat screen TVs and solarpanels more affordable and accessible to consumers and businesses around theworld. At Applied Materials, we turn today's innovations into the industries oftomorrow. Learn more at www.appliedmaterials.com.
Howard Clabo (editorial/media) 408.748.5775
Michael Sullivan (financial community) 408.986.7977