Applied Materials Announces Second Quarter 2016 Results
May 19 2016 - 4:02PM
Applied Materials, Inc. (NASDAQ:AMAT) today reported results for
its second quarter ended May 1, 2016.
Second quarter orders were $3.45 billion, up 52 percent
sequentially and up 37 percent year over year. Backlog increased to
$4.17 billion. Net sales of $2.45 billion were up 9 percent
sequentially, flat year over year, and near the high end of
guidance.
The company recorded gross margin of 41.0 percent, operating
margin of 17.3 percent, and net income of $320 million or $0.29 per
diluted share. On a non-GAAP adjusted basis, the company reported
second quarter gross margin of 42.7 percent, operating margin of
19.2 percent, and net income of $376 million or $0.34 per diluted
share.
The company generated $481 million in cash from operations
during the second quarter, paid dividends of $113 million and used
$900 million to repurchase 45 million shares of common stock.
“In our second quarter we booked our highest orders in 15 years
and we expect to deliver record earnings in fiscal 2016,” said Gary
Dickerson, president and CEO. “We are making significant progress
with our strategy in semiconductor, display and service, and have a
great pipeline of differentiated products that will fuel future
growth.”
Quarterly Results Summary
|
|
|
|
|
|
|
|
Change |
|
|
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
Q2 FY2016 vs. Q1 FY2016 |
|
Q2 FY2016 vs. Q2 FY2015 |
|
|
(In millions, except per share amounts and
percentages) |
New orders |
|
$ |
3,451 |
|
|
$ |
2,275 |
|
|
$ |
2,515 |
|
|
|
52 |
% |
|
|
37 |
% |
Net sales |
|
$ |
2,450 |
|
|
$ |
2,257 |
|
|
$ |
2,442 |
|
|
|
9 |
% |
|
|
— |
% |
Gross margin |
|
41.0 |
% |
|
40.6 |
% |
|
41.6 |
% |
|
|
0.4 |
points |
|
|
(0.6 |
)
points |
Operating margin |
|
17.3 |
% |
|
15.7 |
% |
|
17.0 |
% |
|
|
1.6 |
points |
|
|
0.3 |
points |
Net income |
|
$ |
320 |
|
|
$ |
286 |
|
|
$ |
364 |
|
|
|
12 |
% |
|
|
(12 |
)% |
Diluted earnings per share
(EPS) |
|
$ |
0.29 |
|
|
$ |
0.25 |
|
|
$ |
0.29 |
|
|
|
16 |
% |
|
|
— |
% |
|
|
|
|
|
|
|
|
Change |
Non-GAAP Adjusted Results |
|
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
Q2 FY2016 vs. Q1 FY2016 |
|
Q2 FY2016 vs. Q2 FY2015 |
|
|
(In millions, except per share amounts and
percentages) |
Non-GAAP adjusted gross
margin |
|
42.7 |
% |
|
42.4 |
% |
|
43.2 |
% |
|
|
0.3 |
points |
|
(0.5 |
)
points |
|
Non-GAAP adjusted
operating margin |
|
19.2 |
% |
|
17.8 |
% |
|
19.5 |
% |
|
|
1.4 |
points |
|
(0.3 |
)
points |
|
Non-GAAP adjusted net
income |
|
$ |
376 |
|
|
$ |
302 |
|
|
$ |
362 |
|
|
|
25 |
% |
|
4 |
% |
|
Non-GAAP adjusted diluted
EPS |
|
$ |
0.34 |
|
|
$ |
0.26 |
|
|
$ |
0.29 |
|
|
|
31 |
% |
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied's non-GAAP adjusted results exclude the impact of the
following, where applicable: certain items related to mergers and
acquisitions; restructuring charges and any associated adjustments;
impairments of assets, or investments; gain or loss on sale of
strategic investments; and certain discrete adjustments and tax
items. A reconciliation of the GAAP and non-GAAP adjusted results
is provided in the financial tables included in this release. See
also “Use of Non-GAAP Adjusted Financial Measures” section.
Business Outlook
In the third quarter of fiscal 2016, Applied expects net sales
to be up 14 percent to 18 percent sequentially. Non-GAAP adjusted
diluted EPS is expected to be in the range of $0.46 to $0.50.
This outlook excludes known charges related to completed
acquisitions of $0.04 per share and does not exclude other non-GAAP
adjustments that may arise subsequent to this release.
Second Quarter Reportable Segment
Information
|
|
|
|
|
|
|
|
|
Silicon
Systems |
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
New orders |
$ |
1,966 |
|
|
$ |
1,275 |
|
|
$ |
1,704 |
|
Foundry |
|
23 |
% |
|
|
38 |
% |
|
|
36 |
% |
DRAM |
|
17 |
% |
|
|
29 |
% |
|
|
31 |
% |
Flash |
|
49 |
% |
|
|
22 |
% |
|
|
21 |
% |
Logic and other |
|
11 |
% |
|
|
11 |
% |
|
|
12 |
% |
Net sales |
|
1,587 |
|
|
|
1,373 |
|
|
|
1,560 |
|
Operating income |
|
364 |
|
|
|
265 |
|
|
|
374 |
|
Operating margin |
|
22.9 |
% |
|
|
19.3 |
% |
|
|
24.0 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
|
|
|
Non-GAAP adjusted
operating income |
$ |
410 |
|
|
$ |
312 |
|
|
$ |
418 |
|
Non-GAAP adjusted
operating margin |
|
25.8 |
% |
|
|
22.7 |
% |
|
|
26.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Global
Services |
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
New orders |
$ |
677 |
|
|
$ |
773 |
|
|
$ |
641 |
|
Net sales |
|
648 |
|
|
|
626 |
|
|
|
646 |
|
Operating income |
|
171 |
|
|
|
156 |
|
|
|
170 |
|
Operating margin |
|
26.4 |
% |
|
|
24.9 |
% |
|
|
26.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Display |
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
New orders |
$ |
700 |
|
|
$ |
183 |
|
|
$ |
120 |
|
Net sales |
|
167 |
|
|
|
213 |
|
|
|
163 |
|
Operating income |
|
29 |
|
|
|
38 |
|
|
|
40 |
|
Operating margin |
|
17.4 |
% |
|
|
17.8 |
% |
|
|
24.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy and
Environmental Solutions |
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
New orders |
$ |
108 |
|
|
$ |
44 |
|
|
$ |
50 |
|
Net sales |
|
48 |
|
|
|
45 |
|
|
|
73 |
|
Operating income
(loss) |
|
— |
|
|
|
6 |
|
|
|
(5 |
) |
Operating margin |
|
— |
% |
|
|
13.3 |
% |
|
|
(6.8 |
)% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
|
|
|
Non-GAAP adjusted
operating income (loss) |
$ |
(1 |
) |
|
$ |
4 |
|
|
$ |
(4 |
) |
Non-GAAP adjusted
operating margin |
|
(2.1 |
)% |
|
|
8.9 |
% |
|
|
(5.5 |
)% |
|
|
|
Backlog Information
Applied's backlog increased 34 percent to $4.17
billion and included positive adjustments of $58 million, primarily
consisting of favorable foreign currency impact. Backlog
composition by reportable segment was as follows:
Silicon Systems |
49 |
% |
Applied Global
Services |
23 |
% |
Display |
25 |
% |
Energy and Environmental
Solutions |
3 |
% |
|
|
|
Use of Non-GAAP Adjusted Financial
Measures
Management uses non-GAAP adjusted 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. A replay will be
available on the website beginning at 5:00 p.m. Pacific Time
today.
Forward-Looking Statements
This press release contains forward-looking statements,
including those regarding anticipated growth and trends in our
businesses and markets, industry outlooks, technology transitions,
our financial performance and market share positions, our earnings
expectations, our business outlook for the third quarter of fiscal
2016, and other statements that are not historical facts. These
statements and their underlying assumptions are subject to risks
and uncertainties and are not guarantees of future performance.
Factors that could cause actual results to differ materially from
those expressed or implied by such statements include, without
limitation: the level of demand for our products; global economic
and industry conditions; consumer demand for electronic products;
the demand for semiconductors; customers’ technology and capacity
requirements; the introduction of new and innovative technologies,
and the timing of technology transitions; our ability to develop,
deliver and support new products and technologies; the concentrated
nature of our customer base; our ability to expand our
current markets, increase market share and develop new markets;
market acceptance of existing and newly developed products; our
ability to obtain and protect intellectual property rights in key
technologies; our ability to achieve the objectives of operational
and strategic initiatives, align our resources and cost structure
with business conditions, and attract, motivate and retain key
employees; the variability of operating expenses and results among
products and segments, and our ability to accurately forecast
future results, market conditions, customer requirements and
business needs; and other risks and uncertainties described in our
SEC filings, including our most recent Forms 10-Q and 8-K. All
forward-looking statements are based on management’s current
estimates, projections and assumptions, and we assume no obligation
to update them.
About Applied Materials
Applied Materials, Inc. (Nasdaq:AMAT) is the leader in materials
engineering solutions used to produce virtually every new chip and
advanced display in the world. Our expertise in modifying materials
at atomic levels and on an industrial scale enables customers to
transform possibilities into reality. At Applied Materials, our
innovations make possible the technology shaping the future. Learn
more at www.appliedmaterials.com.
Contact:
Kevin Winston (editorial/media) 408.235.4498Michael
Sullivan (financial community) 408.986.7977
|
APPLIED MATERIALS, INC. |
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS |
|
|
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
per share amounts) |
|
May 1, 2016 |
|
January 31, 2016 |
|
April 26, 2015 |
|
May 1, 2016 |
|
April 26, 2015 |
Net sales |
|
$ |
2,450 |
|
|
$ |
2,257 |
|
|
$ |
2,442 |
|
|
$ |
4,707 |
|
|
$ |
4,801 |
|
Cost of products sold |
|
1,446 |
|
|
1,341 |
|
|
1,426 |
|
|
2,787 |
|
|
2,826 |
|
Gross profit |
|
1,004 |
|
|
916 |
|
|
1,016 |
|
|
1,920 |
|
|
1,975 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research, development and
engineering |
|
386 |
|
|
374 |
|
|
365 |
|
|
760 |
|
|
716 |
|
Marketing and selling |
|
102 |
|
|
106 |
|
|
109 |
|
|
208 |
|
|
220 |
|
General and administrative |
|
91 |
|
|
82 |
|
|
140 |
|
|
173 |
|
|
257 |
|
Gain on derivatives associated with
terminated business combination |
|
— |
|
|
— |
|
|
(14 |
) |
|
— |
|
|
(92 |
) |
Total operating
expenses |
|
579 |
|
|
562 |
|
|
600 |
|
|
1,141 |
|
|
1,101 |
|
Income from
operations |
|
425 |
|
|
354 |
|
|
416 |
|
|
779 |
|
|
874 |
|
Interest expense |
|
37 |
|
|
42 |
|
|
24 |
|
|
79 |
|
|
47 |
|
Interest income and other
income (loss), net |
|
7 |
|
|
2 |
|
|
(3 |
) |
|
9 |
|
|
(1 |
) |
Income before income
taxes |
|
395 |
|
|
314 |
|
|
389 |
|
|
709 |
|
|
826 |
|
Provision for income
taxes |
|
75 |
|
|
28 |
|
|
25 |
|
|
103 |
|
|
114 |
|
Net income |
|
$ |
320 |
|
|
$ |
286 |
|
|
$ |
364 |
|
|
$ |
606 |
|
|
$ |
712 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
|
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
0.54 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.29 |
|
|
$ |
0.25 |
|
|
$ |
0.29 |
|
|
$ |
0.53 |
|
|
$ |
0.57 |
|
Weighted average number of
shares: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
1,113 |
|
|
1,146 |
|
|
1,230 |
|
|
1,130 |
|
|
1,227 |
|
Diluted |
|
1,119 |
|
|
1,154 |
|
|
1,241 |
|
|
1,137 |
|
|
1,241 |
|
APPLIED MATERIALS, INC. |
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS |
|
(In
millions) |
|
May 1, 2016 |
|
January 31, 2016 |
|
October 25, 2015 |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,470 |
|
|
$ |
2,962 |
|
|
$ |
4,797 |
|
Short-term investments |
|
170 |
|
|
154 |
|
|
168 |
|
Accounts receivable, net |
|
1,913 |
|
|
1,625 |
|
|
1,739 |
|
Inventories |
|
1,924 |
|
|
1,835 |
|
|
1,833 |
|
Other current assets |
|
251 |
|
|
334 |
|
|
724 |
|
Total current assets |
|
6,728 |
|
|
6,910 |
|
|
9,261 |
|
Long-term investments |
|
934 |
|
|
996 |
|
|
946 |
|
Property, plant and
equipment, net |
|
904 |
|
|
908 |
|
|
892 |
|
Goodwill |
|
3,304 |
|
|
3,302 |
|
|
3,302 |
|
Purchased technology and
other intangible assets, net |
|
668 |
|
|
714 |
|
|
762 |
|
Deferred income taxes and
other assets |
|
537 |
|
|
496 |
|
|
145 |
|
Total assets |
|
$ |
13,075 |
|
|
$ |
13,326 |
|
|
$ |
15,308 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Short-term debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,200 |
|
Accounts payable and accrued
expenses |
|
1,630 |
|
|
1,457 |
|
|
1,833 |
|
Customer deposits and deferred
revenue |
|
981 |
|
|
850 |
|
|
765 |
|
Total current
liabilities |
|
2,611 |
|
|
2,307 |
|
|
3,798 |
|
Long-term debt |
|
3,343 |
|
|
3,343 |
|
|
3,342 |
|
Other liabilities |
|
556 |
|
|
508 |
|
|
555 |
|
Total liabilities |
|
6,510 |
|
|
6,158 |
|
|
7,695 |
|
Total stockholders’
equity |
|
6,565 |
|
|
7,168 |
|
|
7,613 |
|
Total liabilities and
stockholders’ equity |
|
$ |
13,075 |
|
|
$ |
13,326 |
|
|
$ |
15,308 |
|
APPLIED MATERIALS, INC. |
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS |
|
(In millions) |
Three Months Ended |
|
Six Months Ended |
May 1, 2016 |
|
January 31, 2016 |
|
April 26, 2015 |
May 1, 2016 |
|
April 26, 2015 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
|
Net income |
$ |
320 |
|
|
$ |
286 |
|
|
$ |
364 |
|
|
$ |
606 |
|
|
$ |
712 |
|
Adjustments required to reconcile
net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
96 |
|
|
96 |
|
|
90 |
|
|
192 |
|
|
182 |
|
Share-based compensation |
48 |
|
|
54 |
|
|
47 |
|
|
102 |
|
|
95 |
|
Excess tax benefits from
share-based compensation |
(3 |
) |
|
(10 |
) |
|
(12 |
) |
|
(13 |
) |
|
(51 |
) |
Deferred income taxes |
(22 |
) |
|
15 |
|
|
(21 |
) |
|
(7 |
) |
|
7 |
|
Other |
5 |
|
|
10 |
|
|
13 |
|
|
15 |
|
|
21 |
|
Net change in operating assets and
liabilities |
37 |
|
|
(244 |
) |
|
(183 |
) |
|
(207 |
) |
|
(608 |
) |
Cash provided by operating
activities |
481 |
|
|
207 |
|
|
298 |
|
|
688 |
|
|
358 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
(47 |
) |
|
(68 |
) |
|
(64 |
) |
|
(115 |
) |
|
(113 |
) |
Cash paid for acquisitions, net of
cash acquired |
(8 |
) |
|
— |
|
|
— |
|
|
(8 |
) |
|
— |
|
Proceeds from sales and maturities
of investments |
232 |
|
|
241 |
|
|
177 |
|
|
473 |
|
|
317 |
|
Purchases of investments |
(182 |
) |
|
(282 |
) |
|
(203 |
) |
|
(464 |
) |
|
(344 |
) |
Cash used in investing
activities |
(5 |
) |
|
(109 |
) |
|
(90 |
) |
|
(114 |
) |
|
(140 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt repayments |
— |
|
|
(1,205 |
) |
|
— |
|
|
(1,205 |
) |
|
— |
|
Proceeds from common stock
issuances and others |
42 |
|
|
2 |
|
|
42 |
|
|
44 |
|
|
42 |
|
Common stock repurchases |
(900 |
) |
|
(625 |
) |
|
— |
|
|
(1,525 |
) |
|
— |
|
Excess tax benefits from
share-based compensation |
3 |
|
|
10 |
|
|
12 |
|
|
13 |
|
|
51 |
|
Payments of dividends to
stockholders |
(113 |
) |
|
(115 |
) |
|
(123 |
) |
|
(228 |
) |
|
(245 |
) |
Cash used in financing
activities |
(968 |
) |
|
(1,933 |
) |
|
(69 |
) |
|
(2,901 |
) |
|
(152 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
Increase (decrease) in
cash and cash equivalents |
(492 |
) |
|
(1,835 |
) |
|
138 |
|
|
(2,327 |
) |
|
65 |
|
Cash and cash
equivalents — beginning of period |
2,962 |
|
|
4,797 |
|
|
2,929 |
|
|
4,797 |
|
|
3,002 |
|
Cash and cash
equivalents — end of period |
$ |
2,470 |
|
|
$ |
2,962 |
|
|
$ |
3,067 |
|
|
$ |
2,470 |
|
|
$ |
3,067 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
|
|
Cash payments for income taxes |
$ |
51 |
|
|
$ |
44 |
|
|
$ |
118 |
|
|
$ |
95 |
|
|
$ |
207 |
|
Cash refunds from income taxes |
$ |
98 |
|
|
$ |
5 |
|
|
$ |
2 |
|
|
$ |
103 |
|
|
$ |
5 |
|
Cash payments for interest |
$ |
42 |
|
|
$ |
34 |
|
|
$ |
7 |
|
|
$ |
76 |
|
|
$ |
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC. |
UNAUDITED SUPPLEMENTAL INFORMATION |
|
Corporate Unallocated Expenses |
|
|
|
|
|
|
|
(In millions) |
|
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
Share-based
compensation |
|
$ |
48 |
|
|
$ |
54 |
|
|
$ |
47 |
|
Certain items
associated with terminated business combination |
|
— |
|
|
— |
|
|
29 |
|
Gain on derivatives
associated with terminated business combination, net |
|
— |
|
|
— |
|
|
(14 |
) |
Other unallocated
expenses |
|
91 |
|
|
57 |
|
|
101 |
|
Total corporate |
|
$ |
139 |
|
|
$ |
111 |
|
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Information |
|
|
|
Q2 FY2016 |
|
Q1 FY2016 |
|
Q2 FY2015 |
New Orders and Net Sales
by Geography |
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions) |
|
NewOrders |
|
NetSales |
|
NewOrders |
|
NetSales |
|
NewOrders |
|
NetSales |
United States |
|
386 |
|
|
272 |
|
|
369 |
|
|
293 |
|
|
368 |
|
|
472 |
|
% of Total |
|
11 |
% |
|
11 |
% |
|
16 |
% |
|
13 |
% |
|
15 |
% |
|
19 |
% |
Europe |
|
194 |
|
|
97 |
|
|
156 |
|
|
138 |
|
|
131 |
|
|
169 |
|
% of Total |
|
6 |
% |
|
4 |
% |
|
7 |
% |
|
6 |
% |
|
5 |
% |
|
7 |
% |
Japan |
|
339 |
|
|
260 |
|
|
109 |
|
|
334 |
|
|
365 |
|
|
274 |
|
% of Total |
|
10 |
% |
|
10 |
% |
|
5 |
% |
|
15 |
% |
|
15 |
% |
|
11 |
% |
Korea |
|
792 |
|
|
506 |
|
|
373 |
|
|
273 |
|
|
607 |
|
|
536 |
|
% of Total |
|
23 |
% |
|
21 |
% |
|
17 |
% |
|
12 |
% |
|
24 |
% |
|
22 |
% |
Taiwan |
|
445 |
|
|
311 |
|
|
534 |
|
|
637 |
|
|
589 |
|
|
461 |
|
% of Total |
|
13 |
% |
|
13 |
% |
|
23 |
% |
|
28 |
% |
|
23 |
% |
|
19 |
% |
Southeast Asia |
|
392 |
|
|
252 |
|
|
232 |
|
|
87 |
|
|
103 |
|
|
96 |
|
% of Total |
|
11 |
% |
|
10 |
% |
|
10 |
% |
|
4 |
% |
|
4 |
% |
|
4 |
% |
China |
|
903 |
|
|
752 |
|
|
502 |
|
|
495 |
|
|
352 |
|
|
434 |
|
% of Total |
|
26 |
% |
|
31 |
% |
|
22 |
% |
|
22 |
% |
|
14 |
% |
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees (In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Regular Full Time |
|
14.8 |
|
|
14.6 |
|
|
14.3 |
|
APPLIED MATERIALS, INC. |
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED
RESULTS |
|
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions, except percentages) |
|
May 1, 2016 |
|
January 31, 2016 |
|
April 26, 2015 |
|
May 1, 2016 |
|
April 26, 2015 |
Non-GAAP Adjusted Gross
Profit |
|
|
|
|
|
|
|
|
|
|
Reported gross profit -
GAAP basis |
|
$ |
1,004 |
|
|
$ |
916 |
|
|
$ |
1,016 |
|
|
$ |
1,920 |
|
|
$ |
1,975 |
|
Certain items associated
with acquisitions1 |
|
41 |
|
|
42 |
|
|
39 |
|
|
83 |
|
|
79 |
|
Reversals related to
restructuring, net4 |
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
|
— |
|
Non-GAAP adjusted gross
profit |
|
$ |
1,045 |
|
|
$ |
957 |
|
|
$ |
1,055 |
|
|
$ |
2,002 |
|
|
$ |
2,054 |
|
Non-GAAP adjusted gross
margin |
|
42.7 |
% |
|
42.4 |
% |
|
43.2 |
% |
|
42.5 |
% |
|
42.8 |
% |
Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income
- GAAP basis |
|
$ |
425 |
|
|
$ |
354 |
|
|
$ |
416 |
|
|
$ |
779 |
|
|
$ |
874 |
|
Certain items associated
with acquisitions1 |
|
46 |
|
|
48 |
|
|
45 |
|
|
94 |
|
|
91 |
|
Acquisition integration
costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Gain on derivatives
associated with terminated business combination, net |
|
— |
|
|
— |
|
|
(14 |
) |
|
— |
|
|
(92 |
) |
Certain items associated
with terminated business combination2 |
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
49 |
|
Reversals related to
restructuring, net3,4 |
|
(1 |
) |
|
(1 |
) |
|
— |
|
|
(2 |
) |
|
— |
|
Non-GAAP adjusted
operating income |
|
$ |
470 |
|
|
$ |
401 |
|
|
$ |
476 |
|
|
$ |
871 |
|
|
$ |
923 |
|
Non-GAAP adjusted
operating margin |
|
19.2 |
% |
|
17.8 |
% |
|
19.5 |
% |
|
18.5 |
% |
|
19.2 |
% |
Non-GAAP Adjusted Net
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income - GAAP
basis5 |
|
$ |
320 |
|
|
$ |
286 |
|
|
$ |
364 |
|
|
$ |
606 |
|
|
$ |
712 |
|
Certain items associated
with acquisitions1 |
|
46 |
|
|
48 |
|
|
45 |
|
|
94 |
|
|
91 |
|
Acquisition integration
costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Gain on derivatives
associated with terminated business combination, net |
|
— |
|
|
— |
|
|
(14 |
) |
|
— |
|
|
(92 |
) |
Certain items associated
with terminated business combination2 |
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
49 |
|
Reversals related to
restructuring, net3,4 |
|
(1 |
) |
|
(1 |
) |
|
— |
|
|
(2 |
) |
|
— |
|
Impairment (gain on sale)
of strategic investments, net |
|
(1 |
) |
|
(2 |
) |
|
6 |
|
|
(3 |
) |
|
7 |
|
Loss on early
extinguishment of debt |
|
— |
|
|
5 |
|
|
— |
|
|
5 |
|
|
— |
|
Reinstatement of federal
R&D tax credit, resolution of prior years’ income tax filings
and other tax items5 |
|
16 |
|
|
(29 |
) |
|
(54 |
) |
|
(13 |
) |
|
(71 |
) |
Income tax effect of
non-GAAP adjustments |
|
(4 |
) |
|
(5 |
) |
|
(14 |
) |
|
(9 |
) |
|
3 |
|
Non-GAAP adjusted net
income |
|
$ |
376 |
|
|
$ |
302 |
|
|
$ |
362 |
|
|
$ |
678 |
|
|
$ |
700 |
|
1 |
These
items are incremental charges attributable to completed
acquisitions, consisting of amortization of purchased intangible
assets. |
|
|
2 |
These
items are incremental charges related to the terminated business
combination agreement with Tokyo Electron Limited, consisting of
acquisition-related and integration planning costs. |
|
|
3 |
Results for the three
months ended May 1, 2016 included a $1 million favorable adjustment
of employee-related costs associated with the cost reductions in
the solar business. |
|
|
4 |
Results
for the three months ended January 31, 2016 included a $1 million
benefit from sales of solar equipment tools for which inventory had
been previously reserved related to the cost reductions in the
solar business. |
|
|
5 |
Amounts
for three and six months ended April 26, 2015 included an
adjustment to decrease the provision for income taxes by $39
million and $35 million, respectively, with a corresponding
increase in net income, resulting in an increase in diluted
earnings per share of $0.03. The adjustment was excluded in
Applied's non-GAAP adjusted results and was made primarily to
correct an error in the recognition of cost of sales in the U.S.
related to intercompany sales, which resulted in overstating
profitability in the U.S. and the provision for income taxes in
immaterial amounts in each year since fiscal 2010. |
|
APPLIED MATERIALS, INC. |
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED
RESULTS |
|
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions, except per share amounts) |
|
May 1, 2016 |
|
January 31, 2016 |
|
April 26, 2015 |
|
May 1, 2016 |
|
April 26, 2015 |
Non-GAAP Adjusted Earnings
Per Diluted Share |
|
|
|
|
|
|
|
|
|
|
Reported earnings per
diluted share - GAAP basis1 |
|
$ |
0.29 |
|
|
$ |
0.25 |
|
|
$ |
0.29 |
|
|
$ |
0.53 |
|
|
$ |
0.57 |
|
Certain items associated
with acquisitions |
|
0.04 |
|
|
0.04 |
|
|
0.03 |
|
|
0.08 |
|
|
0.07 |
|
Certain items associated
with terminated business combination |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
0.03 |
|
Gain on derivatives
associated with terminated business combination, net |
|
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.05 |
) |
Reinstatement of federal
R&D tax credit, resolution of prior years’ income tax filings
and other tax items1 |
|
0.01 |
|
|
(0.03 |
) |
|
(0.04 |
) |
|
(0.01 |
) |
|
(0.06 |
) |
Non-GAAP adjusted earnings
per diluted share |
|
$ |
0.34 |
|
|
$ |
0.26 |
|
|
$ |
0.29 |
|
|
$ |
0.60 |
|
|
$ |
0.56 |
|
Weighted average number of
diluted shares |
|
1,119 |
|
|
1,154 |
|
|
1,241 |
|
|
1,137 |
|
|
1,241 |
|
1 |
Amounts
for three and six months ended April 26, 2015 included an
adjustment to decrease the provision for income taxes by $39
million and $35 million, respectively, with a corresponding
increase in net income, resulting in an increase in diluted
earnings per share of $0.03. The adjustment was excluded in
Applied's non-GAAP adjusted results and was made primarily to
correct an error in the recognition of cost of sales in the U.S.
related to intercompany sales, which resulted in overstating
profitability in the U.S. and the provision for income taxes in
immaterial amounts in each year since fiscal 2010. |
|
|
APPLIED MATERIALS, INC. |
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED
RESULTS |
|
|
|
Three Months Ended |
|
Six Months Ended |
(In
millions, except percentages) |
|
May 1, 2016 |
|
January 31, 2016 |
|
April 26, 2015 |
|
May 1, 2016 |
|
April 26, 2015 |
Silicon Systems Non-GAAP
Adjusted Operating Income |
|
|
|
|
|
|
|
|
|
|
Reported operating income
- GAAP basis |
|
$ |
364 |
|
|
$ |
265 |
|
|
$ |
374 |
|
|
$ |
629 |
|
|
$ |
681 |
|
Certain items associated
with acquisitions1 |
|
46 |
|
|
47 |
|
|
44 |
|
|
93 |
|
|
87 |
|
Non-GAAP adjusted
operating income |
|
$ |
410 |
|
|
$ |
312 |
|
|
$ |
418 |
|
|
$ |
722 |
|
|
$ |
768 |
|
Non-GAAP adjusted
operating margin |
|
25.8 |
% |
|
22.7 |
% |
|
26.8 |
% |
|
24.4 |
% |
|
25.5 |
% |
AGS Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income
- GAAP basis |
|
$ |
171 |
|
|
$ |
156 |
|
|
$ |
170 |
|
|
$ |
327 |
|
|
$ |
323 |
|
Certain items associated
with acquisitions1 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Non-GAAP adjusted
operating income |
|
$ |
171 |
|
|
$ |
156 |
|
|
$ |
170 |
|
|
$ |
327 |
|
|
$ |
324 |
|
Non-GAAP adjusted
operating margin |
|
26.4 |
% |
|
24.9 |
% |
|
26.3 |
% |
|
25.7 |
% |
|
26.4 |
% |
Display Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income
- GAAP basis |
|
$ |
29 |
|
|
$ |
38 |
|
|
$ |
40 |
|
|
$ |
67 |
|
|
$ |
112 |
|
Certain items
associated with acquisitions1 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Non-GAAP adjusted
operating income |
|
$ |
29 |
|
|
$ |
38 |
|
|
$ |
40 |
|
|
$ |
67 |
|
|
$ |
113 |
|
Non-GAAP adjusted
operating margin |
|
17.4 |
% |
|
17.8 |
% |
|
24.5 |
% |
|
17.6 |
% |
|
25.8 |
% |
EES Non-GAAP Adjusted
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income
(loss) - GAAP basis |
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
(5 |
) |
|
$ |
6 |
|
|
$ |
(9 |
) |
Certain items associated
with acquisitions1 |
|
— |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
2 |
|
Reversals related to
restructuring, net2 |
|
(1 |
) |
|
(3 |
) |
|
— |
|
|
(4 |
) |
|
— |
|
Non-GAAP adjusted
operating income (loss) |
|
$ |
(1 |
) |
|
$ |
4 |
|
|
$ |
(4 |
) |
|
$ |
3 |
|
|
$ |
(7 |
) |
Non-GAAP adjusted
operating margin |
|
(2.1 |
)% |
|
8.9 |
% |
|
(5.5 |
)% |
|
3.2 |
% |
|
(5.5 |
)% |
1 |
These
items are incremental charges attributable to completed
acquisitions, consisting of amortization of purchased intangible
assets. |
|
|
2 |
Results for the three months ended May 1, 2016 and January 31, 2016
and six months ended May 1, 2016 primarily included favorable
adjustments of employee-related costs associated with the cost
reductions in the solar business. |
|
|
APPLIED MATERIALS, INC. |
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED
OPERATING EXPENSES |
|
|
Three Months Ended |
(In
millions) |
May 1, 2016 |
|
January 31, 2016 |
|
|
|
|
Operating expenses - GAAP
basis |
$ |
579 |
|
|
$ |
562 |
|
Reversals related to
restructuring, net |
1 |
|
|
— |
|
Certain items associated
with acquisitions |
(5 |
) |
|
(6 |
) |
Non-GAAP adjusted
operating expenses |
$ |
575 |
|
|
$ |
556 |
|
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED
EFFECTIVE INCOME TAX RATE |
|
|
Three Months Ended |
(In millions, except
percentages) |
May 1, 2016 |
|
|
Provision for income taxes
- GAAP basis (a) |
$ |
75 |
|
Reinstatement of federal
R&D tax credit, resolutions of prior years’ income tax filings
and other tax items |
(16 |
) |
Income tax effect of
non-GAAP adjustments |
4 |
|
Non-GAAP adjusted
provision for income taxes (b) |
$ |
63 |
|
|
|
|
|
Income before income taxes
- GAAP basis (c) |
$ |
395 |
|
Certain items associated
with acquisitions |
46 |
|
Reversals related to
restructuring, net |
(1 |
) |
Gain on sale of strategic
investments, net |
(1 |
) |
Non-GAAP adjusted income
before income taxes (d) |
$ |
439 |
|
|
|
|
|
Effective income tax rate
- GAAP basis (a/c) |
19.0 |
% |
|
|
|
|
Non-GAAP adjusted
effective income tax rate (b/d) |
14.4 |
% |
Applied Materials (NASDAQ:AMAT)
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