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Applied Materials Announces First Quarter 2020 Results

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Forward-Looking Statements

This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation, our investment and growth strategies, our development of new products and technologies, our business outlook for the second quarter of fiscal 2020 and beyond, the impact of the coronavirus outbreak on our operations and financial results; 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; the effects of regional or global health epidemics; global trade issues and changes in trade policies; 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;  changes in income tax laws; 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 recent Forms 10-K 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 .

Contact:

 (editorial/media) 408.235.4676
 (financial community) 408.986.7977

 

 

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

 Three Months Ended
(In millions, except per share amounts)January 26,
2020
 January 27,
2019
Net sales$4,162  $3,753 
Cost of products sold2,304  2,088 
Gross profit1,858  1,665 
Operating expenses:   
Research, development and engineering552  516 
Marketing and selling135  131 
General and administrative129  110 
Total operating expenses816  757 
Income from operations1,042  908 
Interest expense59  60 
Interest and other income, net22  40 
Income before income taxes1,005  888 
Provision for income taxes113  117 
Net income$892  $771 
Earnings per share:   
Basic$0.97  $0.81 
Diluted$0.96  $0.80 
Weighted average number of shares:   
Basic916  957 
Diluted927  965 

 

 

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions)January 26,
2020
 October 27,
2019
ASSETS   
Current assets:   
Cash and cash equivalents$3,424  $3,129 
Short-term investments536  489 
Accounts receivable, net2,679  2,533 
Inventories3,472  3,474 
Other current assets658  581 
Total current assets10,769  10,206 
Long-term investments1,713  1,703 
Property, plant and equipment, net1,555  1,529 
Goodwill3,399  3,399 
Purchased technology and other intangible assets, net142  156 
Deferred income taxes and other assets2,189  2,031 
Total assets$19,767  $19,024 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Current portion of long-term debt$600  $600 
Accounts payable and accrued expenses2,569  2,511 
Contract liabilities1,400  1,336 
Total current liabilities4,569  4,447 
Long-term debt4,714  4,713 
Income taxes payable1,298  1,275 
Other liabilities526  375 
Total liabilities11,107  10,810 
Total stockholders’ equity8,660  8,214 
Total liabilities and stockholders’ equity$19,767  $19,024 

 

 

APPLIED MATERIALS, INC.
体育投注正规网址UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)Three Months Ended
January 26,
2020
 January 27,
2019
Cash flows from operating activities:   
Net income$892  $771 
Adjustments required to reconcile net income to cash provided by operating activities:   
Depreciation and amortization94  88 
Share-based compensation93  65 
Deferred income taxes30  41 
Other15  1 
Net change in operating assets and liabilities(137)  (132) 
Cash provided by operating activities987  834 
Cash flows from investing activities:   
Capital expenditures(102)  (133) 
Proceeds from sales and maturities of investments368  464 
Purchases of investments(428)  (397) 
Cash used in investing activities(162)  (66) 
Cash flows from financing activities:   
Proceeds from common stock issuances15   
Common stock repurchases(200)  (750) 
Tax withholding payments for vested equity awards(153)  (74) 
Payments of dividends to stockholders(192)  (192) 
Cash used in financing activities(530)  (1,016) 
Increase (decrease) in cash and cash equivalents295  (248) 
Cash and cash equivalents — beginning of period3,129  3,440 
Cash and cash equivalents — end of period$3,424  $3,192 
Supplemental cash flow information:   
Cash payments for income taxes$82  $34 
Cash refunds from income taxes$1  $8 
Cash payments for interest$34  $34 

 

 

APPLIED MATERIALS, INC.
体育投注正规网址UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other   
(In millions)Q1 FY2020  Q1 FY2019
Unallocated net sales$19   $16  
Unallocated cost of products sold and expenses(115)  (74) 
Share-based compensation(93)  (65) 
Total$(189)  $(123) 

 

Additional Information   
 Q1 FY2020  Q1 FY2019
Net Sales by Geography (In millions) 
United States441  450 
% of Total10%  12% 
Europe153  296 
% of Total4%  8% 
Japan351  651 
% of Total8%  17% 
Korea508  572 
% of Total12%  15% 
Taiwan1,365  656 
% of Total33%  18% 
Southeast Asia72  160 
% of Total2%  4% 
China1,272  968 
% of Total31%  26% 
    
Employees (In thousands)   
Regular Full Time22.3  21.2 


 

 

 APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 Three Months Ended
(In millions, except percentages)January 26,
2020
 January 27,
2019
Non-GAAP Adjusted Gross Profit   
Reported gross profit - GAAP basis$1,858  $1,665 
Certain items associated with acquisitions19  10 
Non-GAAP adjusted gross profit$1,867  $1,675 
Non-GAAP adjusted gross margin44.9%  44.6% 
Non-GAAP Adjusted Operating Income   
Reported operating income - GAAP basis$1,042  $908 
Certain items associated with acquisitions113  14 
Acquisition integration and deal costs13  3 
Non-GAAP adjusted operating income$1,068  $925 
Non-GAAP adjusted operating margin25.7% 24.6% 
Non-GAAP Adjusted Net Income   
Reported net income - GAAP basis$892  $771 
Certain items associated with acquisitions113  14 
Acquisition integration and deal costs13  3 
Impairment (gain on sale) of strategic investments, net2  (2) 
Loss (gain) on strategic investments, net2  (10) 
Income tax effect of share-based compensation2(33)  (5) 
Income tax effect of changes in applicable U.S. tax laws3  (24) 
Income tax effects related to amortization of intra-entity intangible asset transfers21  (28) 
Resolution of prior years’ income tax filings and other tax items(1)  59 
Income tax effect of non-GAAP adjustments4(5)  1 
Non-GAAP adjusted net income$904  $779 

 

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
  
2GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
  
3Charges to income tax provision related to a one-time transition tax as a result of U.S. tax legislation.
  
4Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.

 

 

APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 Three Months Ended
(In millions, except per share amounts)January 26,
2020
 January 27,
2019
Non-GAAP Adjusted Earnings Per Diluted Share   
Reported earnings per diluted share - GAAP basis$0.96   $0.80  
Certain items associated with acquisitions0.01   0.01  
Acquisition integration and deal costs0.01   —  
Loss (gain) on strategic investments, net—   (0.01) 
Income tax effect of share-based compensation(0.03)  —  
Income tax effect of changes in applicable U.S. tax laws—   (0.02) 
Income tax effects related to amortization of intra-entity intangible asset transfers0.03   (0.03) 
Resolution of prior years’ income tax filings and other tax items—   0.06  
Non-GAAP adjusted earnings per diluted share$0.98   $0.81  
Weighted average number of diluted shares927   965  

 

 

APPLIED MATERIALS, INC.
体育投注正规网址UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 Three Months Ended
(In millions, except percentages)January 26,
2020
 January 27,
2019
Semiconductor Systems Non-GAAP Adjusted Operating Income   
Reported operating income - GAAP basis$915  $631 
Certain items associated with acquisitions110  11 
Non-GAAP adjusted operating income$925  $642 
Non-GAAP adjusted operating margin32.9%  28.3% 
AGS Non-GAAP Adjusted Operating Income   
Reported operating income - GAAP basis$278  $285 
Non-GAAP adjusted operating income$278  $285 
Non-GAAP adjusted operating margin27.9%  29.6% 
Display and Adjacent Markets Non-GAAP Adjusted Operating Income   
Reported operating income - GAAP basis$38  $115 
Certain items associated with acquisitions13  3 
Non-GAAP adjusted operating income$41  $118 
Non-GAAP adjusted operating margin12.3%  23.3% 

 

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

体育投注正规网址Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.

 

 

体育投注正规网址UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

 Three Months Ended
(In millions, except percentages)January 26, 2020
  
Provision for income taxes - GAAP basis (a)$113 
Income tax effect of share-based compensation33 
Income tax effects related to amortization of intra-entity intangible asset transfers(21) 
Resolutions of prior years’ income tax filings and other tax items1 
Income tax effect of non-GAAP adjustments5 
Non-GAAP adjusted provision for income taxes (b)$131 
  
Income before income taxes - GAAP basis (c)$1,005 
Certain items associated with acquisitions13 
Acquisition integration and deal costs13 
Impairment (gain on sale) of strategic investments, net2 
Loss (gain) on strategic investments, net2 
Non-GAAP adjusted income before income taxes (d)$1,035 
  
Effective income tax rate - GAAP basis (a/c)11.2% 
  
Non-GAAP adjusted effective income tax rate (b/d)12.7% 

 

Source: Applied Materials, Inc.

February 12, 2020