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Applied Materials Inc. Reports Operating Results (10-Q)

August 24, 2012 | About:
10qk

10qk

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Applied Materials Inc. (AMAT) filed Quarterly Report for the period ended 2012-07-29.

Applied Materials, Inc. has a market cap of $15.41 billion; its shares were traded at around $11.755 with a P/E ratio of 13.3 and P/S ratio of 1.5. The dividend yield of Applied Materials, Inc. stocks is 3%.

Highlight of Business Operations:

Applied s backlog for the most recent three fiscal quarters was as follows: $1.8 billion at July 29, 2012, $2.4 billion at April 29, 2012, and $2.2 billion at January 29, 2012. Net backlog adjustments for the quarter ended July 29, 2012 were negative and totaled $20 million. Negative backlog adjustments of $50 million consisted of financial debookings, cancellations and foreign exchange effects primarily related to services and semiconductor equipment customers. Negative adjustments were partially offset by $30 million of rebookings primarily related to semiconductor equipment customers. Backlog consists of: (1) orders for which written authorizations have been accepted and assigned shipment dates are within the next 12 months, or shipment has occurred but revenue has not been recognized; and (2) contractual service revenue and maintenance fees to be earned within the next 12 months. Applied s backlog at any particular time is not necessarily indicative of actual sales for any future periods, due to the potential for customer changes in delivery schedules or cancellation of orders. In the third quarter of fiscal 2012, approximately 53 percent of the net sales in the Silicon Systems Group, Applied s largest business segment, were from orders received and shipped in the same quarter.

Net sales for the third quarter of fiscal 2012 decreased compared to the prior quarter primarily as a result of lower investments in semiconductor equipment by foundry customers. The decrease in net sales for the third quarter and first nine months of fiscal 2012 from the comparable periods in the prior year reflected decreased demand for c-Si solar products and LCD TV equipment, partially offset by sales attributable to Varian. Net sales attributable to Varian for the third quarter, second quarter and first nine months of fiscal 2012 were approximately $294 million, $333 million and $829 million, respectively.

The decrease in the gross margin for the third quarter of fiscal 2012 compared to the prior quarter was principally attributable to lower net sales and changes in segment mix. In addition, $13 million of inventory charges were recorded during the third quarter of fiscal 2012 in connection with the restructuring of the Energy and Environmental Solutions segment. Gross margin for the three and nine months ended July 29, 2012 decreased from the comparable periods in the prior year primarily due to changes in segment mix, inventory fair value adjustments and intangible asset amortization associated with purchase accounting, additional inventory charges, and lower net sales. Inventory fair value adjustments and intangible asset amortization associated with purchase accounting were $36 million and $164 million for the three and nine months ended July 29, 2012, respectively. Gross margin during the three month periods ended July 29, 2012, April 29, 2012, and July 31, 2011 included $13 million, $14 million and $13 million of share-based compensation expense, respectively. Gross margin during the first nine months of fiscal 2012 and 2011 included $40 million and $36 million of share-based compensation expense, respectively. Reconciliations of non-GAAP measures are presented under “Non-GAAP Results.”

New orders decreased for the third quarter of fiscal 2012 compared to the same period in the prior year, due to lower demand for semiconductor spares and services and 200mm systems, partially offset by the addition of orders attributable to Varian of $42 million. Net sales decreased due to lower sales of 200mm systems, offset in part by the addition of net sales attributable to Varian of $56 million. Operating income decreased for the third quarter of fiscal 2012, reflecting lower net sales and aggregate restructuring charges of $11 million associated with the restructuring plan and Varian integration. Details on restructuring charges and asset impairments are included in Note 11 of the Notes to the Consolidated Condensed Financial Statements.

Applied used $4.7 billion of cash for investing activities during the nine months ended July 29, 2012. In the first nine months of fiscal 2012, Applied acquired Varian for $4.2 billion, net of cash acquired. Purchases of investments, net of proceeds from sales and maturities of investments, totaled $387 million, and capital expenditures totaled $121 million for the first nine months of fiscal 2012.

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