Applied Materials, Inc. (NASDAQ:AMAT) today reported record results
in its fourth quarter and fiscal year ended October 29, 2017.
Fourth Quarter Results
Compared to the fourth quarter of fiscal 2016, Applied grew net
sales by 20 percent to $3.97 billion. On a GAAP basis, the company
reported gross margin of 45.0 percent; operating income of $1.10
billion; and earnings per share (EPS) of $0.91. On a non-GAAP
adjusted basis, year over year, the company increased gross margin
by 2.5 points to 46.2 percent, grew operating income by 37 percent
to $1.14 billion or 28.7 percent of net sales, and increased EPS by
41 percent to $0.93.
The company paid cash dividends of $107 million and used $385
million to repurchase 8 million shares of common stock at an
average price of $48.65.
Full Year Results
In fiscal 2017, Applied grew net sales by 34 percent to $14.54
billion. On a GAAP basis, the company recorded gross margin of 44.9
percent, operating income of $3.87 billion, and EPS of $3.17. On a
non-GAAP adjusted basis, year over year, the company increased
gross margin by 2.9 points to 46.1 percent, grew operating income
by 73 percent to $4.05 billion or 27.9 percent of net sales, and
increased EPS by 86 percent to $3.25.
The company generated $3.61 billion in cash from operations,
paid dividends of $430 million and used $1.17 billion to repurchase
28 million shares of common stock at an average price of
$42.08.
“Fiscal 2017 was a record-breaking year for the company.
We have great momentum and we’re confident that in 2018 we can
deliver strong double-digit growth across our semiconductor,
display and service businesses,” said Gary Dickerson,
president and CEO. “This is the most exciting time in the
history of the electronics industry. AI will transform entire
industries over the coming years, creating trillions of dollars of
economic value, and Applied is uniquely positioned to deliver the
innovative materials needed to enable next-generation memory and
high-performance computing.”
Results Summary
|
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|
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|
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|
|
|
|
|
|
|
Change |
|
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
|
Q4 FY2017 vs. Q4 FY2016 |
|
FY2017 vs. FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts and
percentages) |
|
|
Net sales |
$ |
3,969 |
|
|
$ |
3,297 |
|
|
$ |
14,537 |
|
|
$ |
10,825 |
|
|
20 |
% |
|
34 |
% |
Gross margin |
45.0 |
% |
|
42.4 |
% |
|
44.9 |
% |
|
41.7 |
% |
|
2.6 |
points |
|
3.2 |
points |
Operating margin |
27.7 |
% |
|
23.6 |
% |
|
26.6 |
% |
|
19.9 |
% |
|
4.1 |
points |
|
6.7 |
points |
Net income |
$ |
982 |
|
|
$ |
610 |
|
|
$ |
3,434 |
|
|
$ |
1,721 |
|
|
61 |
% |
|
100 |
% |
Diluted earnings per
share |
$ |
0.91 |
|
|
$ |
0.56 |
|
|
$ |
3.17 |
|
|
$ |
1.54 |
|
|
63 |
% |
|
106 |
% |
Non-GAAP Adjusted Results |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted gross
margin |
46.2 |
% |
|
43.7 |
% |
|
46.1 |
% |
|
43.2 |
% |
|
2.5 |
points |
|
2.9 |
points |
Non-GAAP adjusted
operating margin |
28.7 |
% |
|
25.2 |
% |
|
27.9 |
% |
|
21.7 |
% |
|
3.5 |
points |
|
6.2 |
points |
Non-GAAP adjusted net
income |
$ |
1,005 |
|
|
$ |
722 |
|
|
$ |
3,525 |
|
|
$ |
1,950 |
|
|
39 |
% |
|
81 |
% |
Non-GAAP adjusted
diluted EPS |
$ |
0.93 |
|
|
$ |
0.66 |
|
|
$ |
3.25 |
|
|
$ |
1.75 |
|
|
41 |
% |
|
86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 first quarter of fiscal 2018, Applied expects net sales
to be in the range of $4.00 billion to $4.20 billion; the midpoint
of the range would be an increase of approximately 25 percent, year
over year. Non-GAAP adjusted diluted EPS is expected to be in the
range of $0.94 to $1.02; the midpoint of the range would be an
increase of approximately 46 percent, year over year.
This outlook for non-GAAP adjusted diluted EPS excludes known
charges related to completed acquisitions of $0.04 per share, but
does not reflect any items that are unknown at this time, such as
any additional charges related to acquisitions or other
non-operational or unusual items, as well as other tax related
items, which we are not able to predict without unreasonable
efforts due to their inherent uncertainty.
Fourth Quarter and Fiscal Year Reportable Segment
Information
|
|
|
|
|
|
|
|
Semiconductor
Systems |
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
2,431 |
|
|
$ |
2,127 |
|
|
$ |
9,517 |
|
|
$ |
6,873 |
|
Foundry |
36 |
% |
|
52 |
% |
|
41 |
% |
|
40 |
% |
DRAM |
12 |
% |
|
10 |
% |
|
16 |
% |
|
16 |
% |
Flash |
38 |
% |
|
23 |
% |
|
34 |
% |
|
31 |
% |
Logic and
other |
14 |
% |
|
15 |
% |
|
9 |
% |
|
13 |
% |
Operating income |
801 |
|
|
667 |
|
|
3,173 |
|
|
1,807 |
|
Operating margin |
32.9 |
% |
|
31.4 |
% |
|
33.3 |
% |
|
26.3 |
% |
Non-GAAP Adjusted Results |
|
|
|
|
|
|
Non-GAAP adjusted
operating income |
$ |
847 |
|
|
$ |
713 |
|
|
$ |
3,357 |
|
|
$ |
1,991 |
|
Non-GAAP adjusted
operating margin |
34.8 |
% |
|
33.5 |
% |
|
35.3 |
% |
|
29.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Global
Services |
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
831 |
|
|
$ |
693 |
|
|
$ |
3,017 |
|
|
$ |
2,589 |
|
Operating income |
232 |
|
|
193 |
|
|
817 |
|
|
682 |
|
Operating margin |
27.9 |
% |
|
27.8 |
% |
|
27.1 |
% |
|
26.3 |
% |
Non-GAAP Adjusted Results |
|
|
|
|
|
|
Non-GAAP adjusted
operating income |
$ |
232 |
|
|
$ |
193 |
|
|
$ |
821 |
|
|
$ |
683 |
|
Non-GAAP adjusted
operating margin |
27.9 |
% |
|
27.8 |
% |
|
27.2 |
% |
|
26.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Display and
Adjacent Markets |
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
677 |
|
|
$ |
452 |
|
|
$ |
1,900 |
|
|
$ |
1,206 |
|
Operating income |
212 |
|
|
103 |
|
|
502 |
|
|
245 |
|
Operating margin |
31.3 |
% |
|
22.8 |
% |
|
26.4 |
% |
|
20.3 |
% |
Non-GAAP Adjusted Results |
|
|
|
|
|
|
Non-GAAP adjusted
operating income |
$ |
215 |
|
|
$ |
103 |
|
|
$ |
507 |
|
|
$ |
245 |
|
Non-GAAP adjusted
operating margin |
31.8 |
% |
|
22.8 |
% |
|
26.7 |
% |
|
20.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Backlog Information
Backlog by reportable segment as of October 29, 2017 and
October 30, 2016 was as follows:
|
|
|
|
|
FY2017 |
|
FY2016 |
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Semiconductor
Systems |
$ |
2,991 |
|
|
49 |
% |
|
$ |
2,098 |
|
|
45 |
% |
Applied Global
Services |
1,130 |
|
|
19 |
% |
|
866 |
|
|
19 |
% |
Display and Adjacent
Markets |
1,847 |
|
|
31 |
% |
|
1,539 |
|
|
34 |
% |
Corporate and
Other |
63 |
|
|
1 |
% |
|
75 |
|
|
2 |
% |
Total |
$ |
6,031 |
|
|
100 |
% |
|
$ |
4,578 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Adjusted Financial
Measures
Applied provides investors with certain non-GAAP
adjusted financial measures, which are adjusted to exclude the
impact of certain costs, expenses, gains and losses, including
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; income
tax items and certain other discrete adjustments. Reconciliations
of these non-GAAP measures to the most directly comparable
financial measures calculated and presented in accordance with GAAP
are provided in the financial tables included in this release.
Management uses these non-GAAP adjusted financial measures to
evaluate the company’s operating and financial performance and for
planning purposes, and as performance measures in its executive
compensation program. Applied believes these measures enhance an
overall understanding of our performance and 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 on a consistent basis by excluding items
that we do not believe are indicative of our ongoing operating
performance. There are limitations in using non-GAAP financial
measures because the non-GAAP financial measures are not prepared
in accordance with generally accepted accounting principles, may be
different from non-GAAP financial measures used by other companies,
and may exclude certain items that may have a material impact upon
our reported financial results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures 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 and demand drivers,
technology transitions, our business and financial performance and
market share positions, our capital allocation, our development of
new products and technologies, our business outlook for the first
quarter of fiscal 2018, 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:
Ricky Gradwohl (editorial/media) 408.235.4676Michael Sullivan
(financial community) 408.986.7977
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS |
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
per share amounts) |
October 29, 2017 |
|
October 30, 2016 |
|
October 29, 2017 |
|
October 30, 2016 |
Net sales |
$ |
3,969 |
|
|
$ |
3,297 |
|
|
$ |
14,537 |
|
|
$ |
10,825 |
|
Cost of products
sold |
2,182 |
|
|
1,898 |
|
|
8,005 |
|
|
6,314 |
|
Gross profit |
1,787 |
|
|
1,399 |
|
|
6,532 |
|
|
4,511 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research,
development and engineering |
466 |
|
|
394 |
|
|
1,774 |
|
|
1,540 |
|
Marketing
and selling |
105 |
|
|
114 |
|
|
456 |
|
|
429 |
|
General
and administrative |
118 |
|
|
114 |
|
|
434 |
|
|
390 |
|
Total operating
expenses |
689 |
|
|
622 |
|
|
2,664 |
|
|
2,359 |
|
Income from
operations |
1,098 |
|
|
777 |
|
|
3,868 |
|
|
2,152 |
|
Interest expense |
57 |
|
|
38 |
|
|
198 |
|
|
155 |
|
Interest and other
income, net |
33 |
|
|
1 |
|
|
61 |
|
|
16 |
|
Income before income
taxes |
1,074 |
|
|
740 |
|
|
3,731 |
|
|
2,013 |
|
Provision for income
taxes |
92 |
|
|
130 |
|
|
297 |
|
|
292 |
|
Net income |
$ |
982 |
|
|
$ |
610 |
|
|
$ |
3,434 |
|
|
$ |
1,721 |
|
Earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.92 |
|
|
$ |
0.56 |
|
|
$ |
3.20 |
|
|
$ |
1.56 |
|
Diluted |
$ |
0.91 |
|
|
$ |
0.56 |
|
|
$ |
3.17 |
|
|
$ |
1.54 |
|
Weighted average number
of shares: |
|
|
|
|
|
|
|
Basic |
1,064 |
|
|
1,081 |
|
|
1,073 |
|
|
1,107 |
|
Diluted |
1,076 |
|
|
1,093 |
|
|
1,084 |
|
|
1,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED
BALANCE SHEETS |
|
|
|
|
(In millions) |
October 29, 2017 |
|
October 30, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
5,010 |
|
|
$ |
3,406 |
|
Short-term investments |
2,266 |
|
|
343 |
|
Accounts
receivable, net |
2,338 |
|
|
2,279 |
|
Inventories |
2,930 |
|
|
2,050 |
|
Other
current assets |
374 |
|
|
275 |
|
Total current
assets |
12,918 |
|
|
8,353 |
|
Long-term
investments |
1,143 |
|
|
929 |
|
Property, plant and
equipment, net |
1,066 |
|
|
937 |
|
Goodwill |
3,368 |
|
|
3,316 |
|
Purchased technology
and other intangible assets, net |
412 |
|
|
575 |
|
Deferred income taxes
and other assets1 |
512 |
|
|
460 |
|
Total assets |
$ |
19,419 |
|
|
$ |
14,570 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable, notes payable and accrued expenses |
2,450 |
|
|
2,256 |
|
Customer
deposits and deferred revenue |
1,665 |
|
|
1,376 |
|
Total current
liabilities |
4,115 |
|
|
3,632 |
|
Long-term debt1 |
5,304 |
|
|
3,125 |
|
Other liabilities |
651 |
|
|
596 |
|
Total liabilities |
10,070 |
|
|
7,353 |
|
Total stockholders’
equity |
9,349 |
|
|
7,217 |
|
Total liabilities and
stockholders’ equity |
$ |
19,419 |
|
|
$ |
14,570 |
|
|
|
|
|
|
|
|
|
1 Balances
reflect the effects of the retrospective adoption of the
authoritative guidance in the first quarter of fiscal 2017, which
required debt issuance costs to be presented as a direct reduction
from the carrying amount of the related debt liability. These
amounts were originally recorded under Other Assets. |
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS |
|
(In
millions) |
Three Months Ended |
|
Twelve Months Ended |
October 29, 2017 |
|
October 30, 2016 |
October 29, 2017 |
|
October 30, 2016 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
982 |
|
|
$ |
610 |
|
|
$ |
3,434 |
|
|
$ |
1,721 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
105 |
|
|
100 |
|
|
407 |
|
|
389 |
|
Share-based compensation |
58 |
|
|
51 |
|
|
220 |
|
|
201 |
|
Excess
tax benefits from share-based compensation |
(4 |
) |
|
(5 |
) |
|
(55 |
) |
|
(23 |
) |
Deferred
income taxes |
(17 |
) |
|
7 |
|
|
(11 |
) |
|
21 |
|
Other |
(24 |
) |
|
18 |
|
|
(9 |
) |
|
38 |
|
Net
change in operating assets and liabilities |
(401 |
) |
|
16 |
|
|
(377 |
) |
|
119 |
|
Cash provided by
operating activities |
699 |
|
|
797 |
|
|
3,609 |
|
|
2,466 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Capital
expenditures |
(124 |
) |
|
(88 |
) |
|
(345 |
) |
|
(253 |
) |
Cash paid
for acquisitions, net of cash acquired |
(12 |
) |
|
(11 |
) |
|
(68 |
) |
|
(16 |
) |
Proceeds
from sales and maturities of investments |
921 |
|
|
553 |
|
|
2,743 |
|
|
1,234 |
|
Purchases
of investments |
(1,314 |
) |
|
(443 |
) |
|
(4,856 |
) |
|
(1,390 |
) |
Cash provided by (used
in) investing activities |
(529 |
) |
|
11 |
|
|
(2,526 |
) |
|
(425 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Debt
borrowings, net of issuance costs |
— |
|
|
— |
|
|
2,176 |
|
|
— |
|
Debt
repayments |
— |
|
|
— |
|
|
(205 |
) |
|
(1,207 |
) |
Proceeds
from common stock issuances and others |
50 |
|
|
44 |
|
|
97 |
|
|
88 |
|
Common
stock repurchases |
(385 |
) |
|
(171 |
) |
|
(1,172 |
) |
|
(1,892 |
) |
Excess
tax benefits from share-based compensation |
4 |
|
|
5 |
|
|
55 |
|
|
23 |
|
Payments
of dividends to stockholders |
(107 |
) |
|
(108 |
) |
|
(430 |
) |
|
(444 |
) |
Cash provided by (used
in) financing activities |
(438 |
) |
|
(230 |
) |
|
521 |
|
|
(3,432 |
) |
Increase (decrease) in
cash and cash equivalents |
(268 |
) |
|
578 |
|
|
1,604 |
|
|
(1,391 |
) |
Cash and cash
equivalents — beginning of period |
5,278 |
|
|
2,828 |
|
|
3,406 |
|
|
4,797 |
|
Cash and cash
equivalents — end of period |
$ |
5,010 |
|
|
$ |
3,406 |
|
|
$ |
5,010 |
|
|
$ |
3,406 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Cash
payments for income taxes |
$ |
26 |
|
|
$ |
13 |
|
|
$ |
194 |
|
|
$ |
157 |
|
Cash
refunds from income taxes |
$ |
44 |
|
|
$ |
9 |
|
|
$ |
61 |
|
|
$ |
113 |
|
Cash
payments for interest |
$ |
76 |
|
|
$ |
41 |
|
|
$ |
186 |
|
|
$ |
151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION |
|
|
|
|
|
|
|
|
Corporate and
Other |
|
|
|
|
|
|
|
(In millions) |
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
Unallocated net
sales |
$ |
30 |
|
|
$ |
25 |
|
|
$ |
103 |
|
|
$ |
157 |
|
Unallocated cost of
products sold and expenses |
(119 |
) |
|
(160 |
) |
|
(507 |
) |
|
(538 |
) |
Share-based
compensation |
(58 |
) |
|
(51 |
) |
|
(220 |
) |
|
(201 |
) |
Total |
$ |
(147 |
) |
|
$ |
(186 |
) |
|
$ |
(624 |
) |
|
$ |
(582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Information
|
|
|
|
|
|
|
|
|
Q4 FY2017 |
|
Q4 FY2016 |
|
FY2017 |
|
FY2016 |
Net Sales by Geography
(In millions) |
|
|
|
|
|
United States |
415 |
|
|
289 |
|
|
1,474 |
|
|
1,143 |
|
% of
Total |
10 |
% |
|
9 |
% |
|
10 |
% |
|
11 |
% |
Europe |
227 |
|
|
256 |
|
|
816 |
|
|
615 |
|
% of
Total |
6 |
% |
|
8 |
% |
|
6 |
% |
|
6 |
% |
Japan |
507 |
|
|
364 |
|
|
1,518 |
|
|
1,279 |
|
% of
Total |
13 |
% |
|
11 |
% |
|
10 |
% |
|
12 |
% |
Korea |
1,175 |
|
|
632 |
|
|
4,052 |
|
|
1,883 |
|
% of
Total |
30 |
% |
|
19 |
% |
|
28 |
% |
|
17 |
% |
Taiwan |
718 |
|
|
1,154 |
|
|
3,291 |
|
|
2,843 |
|
% of
Total |
18 |
% |
|
35 |
% |
|
23 |
% |
|
26 |
% |
Southeast Asia |
330 |
|
|
161 |
|
|
640 |
|
|
803 |
|
% of
Total |
8 |
% |
|
5 |
% |
|
4 |
% |
|
7 |
% |
China |
597 |
|
|
441 |
|
|
2,746 |
|
|
2,259 |
|
% of
Total |
15 |
% |
|
13 |
% |
|
19 |
% |
|
21 |
% |
|
|
|
|
|
|
|
|
Employees (In
thousands) |
|
|
|
|
|
|
|
Regular Full Time |
18.4 |
|
|
15.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ADJUSTED RESULTS |
|
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
percentages) |
October 29, 2017 |
|
October 30, 2016 |
|
October 29, 2017 |
|
October 30, 2016 |
Non-GAAP Adjusted Gross
Profit |
|
|
|
|
|
|
|
Reported gross profit -
GAAP basis |
$ |
1,787 |
|
|
$ |
1,399 |
|
|
$ |
6,532 |
|
|
$ |
4,511 |
|
Certain items
associated with acquisitions1 |
45 |
|
|
42 |
|
|
172 |
|
|
167 |
|
Inventory reversals
related to restructuring2 |
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
Non-GAAP adjusted gross
profit |
$ |
1,832 |
|
|
$ |
1,441 |
|
|
$ |
6,704 |
|
|
$ |
4,676 |
|
Non-GAAP adjusted gross
margin |
46.2 |
% |
|
43.7 |
% |
|
46.1 |
% |
|
43.2 |
% |
Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
1,098 |
|
|
$ |
777 |
|
|
$ |
3,868 |
|
|
$ |
2,152 |
|
Certain items
associated with acquisitions1 |
49 |
|
|
47 |
|
|
191 |
|
|
188 |
|
Acquisition integration
costs |
— |
|
|
— |
|
|
3 |
|
|
2 |
|
Reversals related to
restructuring, net2 |
— |
|
|
— |
|
|
— |
|
|
(3 |
) |
Other gains, losses or
charges, net3,4 |
(9 |
) |
|
8 |
|
|
(12 |
) |
|
8 |
|
Non-GAAP adjusted
operating income |
$ |
1,138 |
|
|
$ |
832 |
|
|
$ |
4,050 |
|
|
$ |
2,347 |
|
Non-GAAP adjusted
operating margin |
28.7 |
% |
|
25.2 |
% |
|
27.9 |
% |
|
21.7 |
% |
Non-GAAP Adjusted Net
Income |
|
|
|
|
|
|
|
Reported net income -
GAAP basis |
$ |
982 |
|
|
$ |
610 |
|
|
$ |
3,434 |
|
|
$ |
1,721 |
|
Certain items
associated with acquisitions1 |
49 |
|
|
47 |
|
|
191 |
|
|
188 |
|
Acquisition integration
costs |
— |
|
|
— |
|
|
3 |
|
|
2 |
|
Reversals related to
restructuring, net2 |
— |
|
|
— |
|
|
— |
|
|
(3 |
) |
Impairment (gain on
sale) of strategic investments, net |
(7 |
) |
|
6 |
|
|
(3 |
) |
|
3 |
|
Loss on early
extinguishment of debt |
— |
|
|
— |
|
|
5 |
|
|
5 |
|
Other gains, losses or
charges, net3, 4 |
(9 |
) |
|
8 |
|
|
(12 |
) |
|
8 |
|
Resolution of prior
years’ income tax filings, reinstatement of federal R&D tax
credit and other tax items5 |
(11 |
) |
|
57 |
|
|
(79 |
) |
|
45 |
|
Income tax effect of
non-GAAP adjustments6 |
1 |
|
|
(6 |
) |
|
(14 |
) |
|
(19 |
) |
Non-GAAP adjusted net
income |
$ |
1,005 |
|
|
$ |
722 |
|
|
$ |
3,525 |
|
|
$ |
1,950 |
|
|
1 These items are incremental charges attributable to
completed acquisitions, consisting of amortization of purchased
intangible assets. |
|
2 Results for fiscal 2016 included favorable adjustments
associated with the cost reductions in the solar business. |
|
3 Results for the three and twelve months ended October 29,
2017 included immaterial correction of errors related to prior
periods. |
|
4 Results for the three and twelve months ended October 30,
2016 included a loss of $8 million due to discontinuance of cash
flow hedges that were probable not to occur by the end of the
originally specified time period. |
|
5 Results
for the three and twelve months ended October 29, 2017 included the
recognition of previously unrecognized foreign tax credits. |
|
6 These amounts represent non-GAAP adjustments above
multiplied by the effective tax rate within the jurisdictions that
the adjustments affect. |
|
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ADJUSTED RESULTS |
|
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
per share amounts) |
October 29, 2017 |
|
October 30, 2016 |
|
October 29, 2017 |
|
October 30, 2016 |
Non-GAAP Adjusted
Earnings Per Diluted Share |
|
|
|
|
|
|
|
Reported earnings per
diluted share - GAAP basis |
$ |
0.91 |
|
|
$ |
0.56 |
|
|
$ |
3.17 |
|
|
$ |
1.54 |
|
Certain items
associated with acquisitions |
0.04 |
|
|
0.04 |
|
|
0.16 |
|
|
0.16 |
|
Resolution of prior
years’ income tax filings, reinstatement of federal R&D tax
credit and other tax items |
(0.01 |
) |
|
0.05 |
|
|
(0.07 |
) |
|
0.04 |
|
Other gains, losses or
charges, net |
(0.01 |
) |
|
0.01 |
|
|
(0.01 |
) |
|
0.01 |
|
Non-GAAP adjusted
earnings per diluted share |
$ |
0.93 |
|
|
$ |
0.66 |
|
|
$ |
3.25 |
|
|
$ |
1.75 |
|
Weighted average number
of diluted shares |
1,076 |
|
|
1,093 |
|
|
1,084 |
|
|
1,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP ADJUSTED RESULTS |
|
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
percentages) |
October 29, 2017 |
|
October 30, 2016 |
|
October 29, 2017 |
|
October 30, 2016 |
Semiconductor Systems
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
801 |
|
|
$ |
667 |
|
|
$ |
3,173 |
|
|
$ |
1,807 |
|
Certain items
associated with acquisitions1 |
46 |
|
|
46 |
|
|
184 |
|
|
184 |
|
Non-GAAP adjusted
operating income |
$ |
847 |
|
|
$ |
713 |
|
|
$ |
3,357 |
|
|
$ |
1,991 |
|
Non-GAAP adjusted
operating margin |
34.8 |
% |
|
33.5 |
% |
|
35.3 |
% |
|
29.0 |
% |
AGS Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
232 |
|
|
$ |
193 |
|
|
$ |
817 |
|
|
$ |
682 |
|
Certain items
associated with acquisitions1 |
— |
|
|
— |
|
|
1 |
|
|
1 |
|
Acquisition integration
costs |
— |
|
|
— |
|
|
3 |
|
|
— |
|
Non-GAAP adjusted
operating income |
$ |
232 |
|
|
$ |
193 |
|
|
$ |
821 |
|
|
$ |
683 |
|
Non-GAAP adjusted
operating margin |
27.9 |
% |
|
27.8 |
% |
|
27.2 |
% |
|
26.4 |
% |
Display and Adjacent
Markets Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
212 |
|
|
$ |
103 |
|
|
$ |
502 |
|
|
$ |
245 |
|
Certain items
associated with acquisitions1 |
3 |
|
|
— |
|
|
5 |
|
|
— |
|
Non-GAAP adjusted
operating income |
$ |
215 |
|
|
$ |
103 |
|
|
$ |
507 |
|
|
$ |
245 |
|
Non-GAAP adjusted
operating margin |
31.8 |
% |
|
22.8 |
% |
|
26.7 |
% |
|
20.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
1 These items are incremental charges attributable to
completed acquisitions, consisting of amortization of purchased
intangible assets. |
|
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.
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