Applied Materials, Inc. (NASDAQ:AMAT) today reported results
for its third quarter ended July 28, 2019.
Third Quarter Results
Applied generated revenue of $3.56 billion. On a GAAP basis, the
company recorded gross margin of 43.7 percent, operating income of
$802 million or 22.5 percent of net sales, and earnings per share
(EPS) of $0.61.
On a non-GAAP adjusted basis, the company reported gross margin
of 44.0 percent, operating income of $820 million or 23.0 percent
of net sales, and EPS of $0.74.
The company returned $724 million to shareholders including $528
million in share repurchases and dividends of $196 million.
“Applied Materials is delivering solid financial performance in
a market environment that remains challenging for the time being,”
said Gary Dickerson, president and CEO. “We are excited about
the company’s future opportunities and are fully funding our
R&D programs to develop new products and capabilities that will
accelerate customers’ roadmaps and underpin our growth in the years
ahead.”
Quarterly Results Summary
|
Q3 FY2019 |
|
|
Q3 FY2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts and percentages) |
Net sales |
|
|
|
|
|
|
|
|
$ |
3,562 |
|
|
$ |
|
|
4,162 |
|
|
(14)% |
Gross margin |
43.7 |
% |
|
44.8 |
% |
|
(1.1) points |
Operating margin |
22.5 |
% |
|
26.3 |
% |
|
(3.8) points |
Net income |
$ |
571 |
|
|
$ |
1,016 |
|
|
(44)% |
Diluted earnings per share |
$ |
0.61 |
|
|
$ |
1.01 |
|
|
(40)% |
Non-GAAP Adjusted Results |
|
|
|
|
|
Non-GAAP adjusted gross
margin |
44.0 |
% |
|
45.9 |
% |
|
(1.9) points |
Non-GAAP adjusted operating
margin |
23.0 |
% |
|
27.4 |
% |
|
(4.4) points |
Non-GAAP adjusted net income |
$ |
692 |
|
|
$ |
1,048 |
|
|
(34)% |
Non-GAAP adjusted diluted
EPS |
$ |
0.74 |
|
|
$ |
1.04 |
|
|
(29)% |
Applied adopted Accounting Standards Update 2014-09, Revenue
from Contracts with Customers (ASC 606), as of the first day of
fiscal 2019 using the full retrospective method. Applied also
adopted Accounting Standards Update 2017-07,
Compensation—Retirement Benefits, as of the first day of fiscal
2019 using the retrospective method. All prior periods included in
the unaudited consolidated condensed balance sheet as of Oct. 28,
2018, and the unaudited consolidated condensed statements of
operations and cash flows for the three and nine months ended July
29, 2018, were restated under the new standards.
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 fourth quarter of fiscal 2019, Applied expects net sales
to be approximately $3.685 billion, plus or minus $150 million.
Non-GAAP adjusted diluted EPS is expected to be in the range of
$0.72 to $0.80.
This outlook for non-GAAP adjusted diluted EPS excludes known
charges related to completed acquisitions of $0.01 per share and
includes net income tax benefit related to intra-entity intangible
asset transfers of $0.03 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.
Third Quarter Reportable Segment
Information
Semiconductor
Systems |
Q3 FY2019 |
|
Q3 FY2018 |
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
2,273 |
|
|
$ |
2,578 |
|
Foundry, logic and other |
49 |
% |
|
36 |
% |
DRAM |
27 |
% |
|
25 |
% |
Flash |
24 |
% |
|
39 |
% |
Operating income |
613 |
|
|
831 |
|
Operating margin |
27.0 |
% |
|
32.2 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted operating
income |
$ |
624 |
|
|
$ |
876 |
|
Non-GAAP adjusted operating
margin |
27.5 |
% |
|
34.0 |
% |
Applied Global
Services |
Q3 FY2019 |
|
Q3 FY2018 |
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
931 |
|
|
$ |
952 |
|
Operating income |
259 |
|
|
280 |
|
Operating margin |
27.8 |
% |
|
29.4 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted operating
income |
$ |
259 |
|
|
$ |
280 |
|
Non-GAAP adjusted operating
margin |
27.8 |
% |
|
29.4 |
% |
Display and Adjacent
Markets |
Q3 FY2019 |
|
Q3 FY2018 |
|
|
|
|
|
|
|
|
|
(In millions, except percentages) |
Net sales |
$ |
339 |
|
|
$ |
616 |
|
Operating income |
41 |
|
|
156 |
|
Operating margin |
12.1 |
% |
|
25.3 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted operating
income |
$ |
44 |
|
|
$ |
160 |
|
Non-GAAP adjusted operating
margin |
13.0 |
% |
|
26.0 |
% |
Use of Non-GAAP Adjusted Financial
Measures
Applied provides investors with certain non-GAAP
adjusted financial measures, which are adjusted for 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; tax effect of share-based
compensation; certain income tax items and other discrete
adjustments. Additionally, non-GAAP results exclude estimated
discrete income tax expense items associated with changes to recent
U.S. tax legislation. 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 its 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 management does not believe are indicative of Applied's
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 investment and
growth strategies, our development of new products and
technologies, our business outlook for the fourth quarter of fiscal
2019 and beyond, 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; 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 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 |
|
Nine Months Ended |
|
|
|
|
|
|
|
|
(In millions, except per share
amounts) |
July 28, 2019 |
|
July 29, 2018 |
|
July 28, 2019 |
|
July 29, 2018 |
Net sales |
$ |
3,562 |
|
|
$ |
4,162 |
|
|
$ |
10,854 |
|
|
$ |
12,946 |
|
Cost of products sold |
2,005 |
|
|
2,298 |
|
|
6,102 |
|
|
7,086 |
|
Gross profit |
1,557 |
|
|
1,864 |
|
|
4,752 |
|
|
5,860 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research, development and engineering |
515 |
|
|
505 |
|
|
1,539 |
|
|
1,503 |
|
Marketing and selling |
128 |
|
|
138 |
|
|
392 |
|
|
394 |
|
General and administrative |
112 |
|
|
128 |
|
|
335 |
|
|
363 |
|
Total operating expenses |
755 |
|
|
771 |
|
|
2,266 |
|
|
2,260 |
|
Income from operations |
802 |
|
|
1,093 |
|
|
2,486 |
|
|
3,600 |
|
Interest expense |
58 |
|
|
59 |
|
|
178 |
|
|
174 |
|
Interest and other income,
net |
38 |
|
|
43 |
|
|
121 |
|
|
95 |
|
Income before income taxes |
782 |
|
|
1,077 |
|
|
2,429 |
|
|
3,521 |
|
Provision for income taxes |
211 |
|
|
61 |
|
|
421 |
|
|
1,240 |
|
Net income |
$ |
571 |
|
|
$ |
1,016 |
|
|
$ |
2,008 |
|
|
$ |
2,281 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.61 |
|
|
$ |
1.02 |
|
|
$ |
2.13 |
|
|
$ |
2.22 |
|
Diluted |
$ |
0.61 |
|
|
$ |
1.01 |
|
|
$ |
2.11 |
|
|
$ |
2.20 |
|
Weighted average number of
shares: |
|
|
|
|
|
|
|
Basic |
929 |
|
|
994 |
|
|
943 |
|
|
1,026 |
|
Diluted |
937 |
|
|
1,005 |
|
|
950 |
|
|
1,039 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED BALANCE SHEETS
(In millions) |
July 28, 2019 |
|
October 28, 2018 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
3,014 |
|
|
$ |
3,440 |
|
Short-term investments |
547 |
|
|
590 |
|
Accounts receivable, net |
2,373 |
|
|
2,323 |
|
Inventories |
3,539 |
|
|
3,721 |
|
Other current assets |
569 |
|
|
530 |
|
Total current assets |
10,042 |
|
|
10,604 |
|
Long-term investments |
1,650 |
|
|
1,568 |
|
Property, plant and equipment,
net |
1,513 |
|
|
1,407 |
|
Goodwill |
3,399 |
|
|
3,368 |
|
Purchased technology and other
intangible assets, net |
170 |
|
|
213 |
|
Deferred income taxes and other
assets |
2,031 |
|
|
473 |
|
Total assets |
$ |
18,805 |
|
|
$ |
17,633 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
2,355 |
|
|
$ |
2,721 |
|
Contract liabilities |
1,430 |
|
|
1,201 |
|
Total current liabilities |
3,785 |
|
|
3,922 |
|
Income taxes payable |
1,253 |
|
|
1,254 |
|
Long-term debt |
5,312 |
|
|
5,309 |
|
Other liabilities |
339 |
|
|
303 |
|
Total liabilities |
10,689 |
|
|
10,788 |
|
Total stockholders’ equity |
8,116 |
|
|
6,845 |
|
Total liabilities and
stockholders’ equity |
$ |
18,805 |
|
|
$ |
17,633 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(In millions) |
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
July 28, 2019 |
|
July 29, 2018 |
July 28, 2019 |
|
July 29, 2018 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
Net income |
$ |
571 |
|
|
$ |
1,016 |
|
|
$ |
2,008 |
|
|
$ |
2,281 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
89 |
|
|
110 |
|
|
271 |
|
|
337 |
|
Share-based compensation |
67 |
|
|
64 |
|
|
197 |
|
|
193 |
|
Deferred income taxes |
8 |
|
|
22 |
|
|
57 |
|
|
94 |
|
Other |
(10 |
) |
|
(7 |
) |
|
(19 |
) |
|
4 |
|
Net change in operating assets and liabilities |
62 |
|
|
(572 |
) |
|
(93 |
) |
|
(199 |
) |
Cash provided by operating
activities |
787 |
|
|
633 |
|
|
2,421 |
|
|
2,710 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Capital expenditures |
(93 |
) |
|
(133 |
) |
|
(344 |
) |
|
(457 |
) |
Cash paid for acquisitions, net of cash acquired |
(5 |
) |
|
— |
|
|
(28 |
) |
|
(5 |
) |
Proceeds from sales and maturities of investments |
479 |
|
|
391 |
|
|
1,385 |
|
|
2,823 |
|
Purchases of investments |
(543 |
) |
|
(932 |
) |
|
(1,370 |
) |
|
(1,661 |
) |
Cash provided by (used in)
investing activities |
(162 |
) |
|
(674 |
) |
|
(357 |
) |
|
700 |
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Proceeds from common stock issuances |
— |
|
|
— |
|
|
73 |
|
|
56 |
|
Common stock repurchases |
(528 |
) |
|
(1,250 |
) |
|
(1,903 |
) |
|
(4,532 |
) |
Tax withholding payments for vested equity awards |
(3 |
) |
|
(6 |
) |
|
(83 |
) |
|
(160 |
) |
Payments of dividends to stockholders |
(196 |
) |
|
(199 |
) |
|
(577 |
) |
|
(410 |
) |
Cash used in financing
activities |
(727 |
) |
|
(1,455 |
) |
|
(2,490 |
) |
|
(5,046 |
) |
Decrease in cash and cash
equivalents |
(102 |
) |
|
(1,496 |
) |
|
(426 |
) |
|
(1,636 |
) |
Cash and cash equivalents —
beginning of period |
3,116 |
|
|
4,870 |
|
|
3,440 |
|
|
5,010 |
|
Cash and cash equivalents —
end of period |
$ |
3,014 |
|
|
$ |
3,374 |
|
|
$ |
3,014 |
|
|
$ |
3,374 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Cash payments for income taxes |
$ |
221 |
|
|
$ |
64 |
|
|
$ |
453 |
|
|
$ |
281 |
|
Cash refunds from income taxes |
$ |
2 |
|
|
$ |
10 |
|
|
$ |
20 |
|
|
$ |
51 |
|
Cash payments for interest |
$ |
33 |
|
|
$ |
33 |
|
|
$ |
143 |
|
|
$ |
143 |
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION
Corporate and Other
(In millions) |
Q3 FY2019 |
|
Q3 FY2018 |
|
|
|
|
|
|
|
|
Unallocated net sales |
$ |
19 |
|
|
$ |
16 |
|
Unallocated cost of products sold
and expenses |
(63 |
) |
|
(126 |
) |
Share-based compensation |
(67 |
) |
|
(64 |
) |
Total |
$ |
(111 |
) |
|
$ |
(174 |
) |
Additional Information
|
Q3 FY2019 |
|
Q3 FY2018 |
Net Sales by Geography (In
millions) |
|
|
|
|
|
United States |
552 |
|
|
348 |
|
% of Total |
15 |
% |
|
9 |
% |
Europe |
162 |
|
|
224 |
|
% of Total |
5 |
% |
|
5 |
% |
Japan |
556 |
|
|
700 |
|
% of Total |
16 |
% |
|
17 |
% |
Korea |
445 |
|
|
572 |
|
% of Total |
12 |
% |
|
14 |
% |
Taiwan |
596 |
|
|
506 |
|
% of Total |
17 |
% |
|
12 |
% |
Southeast Asia |
134 |
|
|
165 |
|
% of Total |
4 |
% |
|
4 |
% |
China |
1,117 |
|
|
1,647 |
|
% of Total |
31 |
% |
|
39 |
% |
|
|
|
|
Employees (In thousands) |
|
|
|
Regular Full Time |
21.6 |
|
|
20.7 |
|
APPLIED MATERIALS, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
|
|
(In millions, except
percentages) |
July 28, 2019 |
|
July 29, 2018 |
|
July 28, 2019 |
|
July 29, 2018 |
Non-GAAP Adjusted Gross
Profit |
|
|
|
|
|
|
|
Reported gross profit - GAAP
basis |
$ |
1,557 |
|
|
$ |
1,864 |
|
|
$ |
4,752 |
|
|
$ |
5,860 |
|
Certain items associated with
acquisitions1 |
9 |
|
|
45 |
|
|
28 |
|
|
134 |
|
Non-GAAP adjusted gross
profit |
$ |
1,566 |
|
|
$ |
1,909 |
|
|
$ |
4,780 |
|
|
$ |
5,994 |
|
Non-GAAP adjusted gross
margin |
44.0 |
% |
|
45.9 |
% |
|
44.0 |
% |
|
46.3 |
% |
Non-GAAP Adjusted Operating
Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
802 |
|
|
$ |
1,093 |
|
|
$ |
2,486 |
|
|
$ |
3,600 |
|
Certain items associated with
acquisitions1 |
13 |
|
|
49 |
|
|
41 |
|
|
147 |
|
Acquisition integration and deal
costs |
5 |
|
|
|
— |
|
|
12 |
|
|
2 |
|
Non-GAAP adjusted operating
income |
$ |
820 |
|
|
$ |
1,142 |
|
|
$ |
2,539 |
|
|
$ |
3,749 |
|
Non-GAAP adjusted operating
margin |
23.0 |
% |
|
27.4 |
% |
|
23.4 |
% |
|
29.0 |
% |
Non-GAAP Adjusted Net Income |
|
|
|
|
|
|
|
Reported net income - GAAP
basis |
$ |
571 |
|
|
$ |
1,016 |
|
|
$ |
2,008 |
|
|
$ |
2,281 |
|
Certain items associated with
acquisitions1 |
13 |
|
|
49 |
|
|
41 |
|
|
147 |
|
Acquisition integration and deal
costs |
5 |
|
|
|
— |
|
|
12 |
|
|
2 |
|
Impairment (gain on sale) of
strategic investments, net |
— |
|
|
(14 |
) |
|
— |
|
|
(10 |
) |
Loss (gain) on strategic
investments, net |
(8 |
) |
|
— |
|
|
(31 |
) |
|
— |
|
Income tax effect of share-based compensation2 |
— |
|
|
13 |
|
|
(4 |
) |
|
(13 |
) |
Income tax effect of changes in applicable U.S. tax laws3 |
— |
|
|
12 |
|
|
(24 |
) |
|
1,089 |
|
Income tax effects related to
amortization of intra-entity intangible asset transfers |
115 |
|
|
— |
|
|
56 |
|
|
— |
|
Resolution of prior years’ income
tax filings and other tax items |
(1 |
) |
|
(29 |
) |
|
75 |
|
|
(32 |
) |
Income tax effect of non-GAAP
adjustments4 |
(3 |
) |
|
1 |
|
|
(2 |
) |
|
(7 |
) |
Non-GAAP adjusted net income |
$ |
692 |
|
|
$ |
1,048 |
|
|
$ |
2,131 |
|
|
$ |
3,457 |
|
1 |
These items are incremental charges attributable to completed
acquisitions, consisting of amortization of purchased intangible
assets. |
|
|
2 |
GAAP basis tax benefit related
to share-based compensation is being recognized ratably over the
fiscal year on a non-GAAP basis. |
|
|
3 |
Charges to income tax
provision related to a one-time transition tax and a decrease in
U.S. deferred tax assets as a result of the recent U.S. tax
legislation. |
|
|
4 |
Adjustment 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 |
|
Nine Months Ended |
|
|
|
|
|
|
|
|
(In millions, except per share
amounts) |
July 28, 2019 |
|
July 29, 2018 |
|
July 28, 2019 |
|
July 29, 2018 |
Non-GAAP Adjusted Earnings Per
Diluted Share |
|
|
|
|
|
|
|
Reported earnings per diluted
share - GAAP basis |
$ |
0.61 |
|
|
$ |
1.01 |
|
|
$ |
2.11 |
|
|
$ |
2.20 |
|
Certain items associated with
acquisitions |
0.01 |
|
|
0.05 |
|
|
0.04 |
|
|
0.13 |
|
Acquisition integration and deal
costs |
0.01 |
|
|
|
— |
|
|
0.01 |
|
|
|
— |
|
Impairment (gain on sale) of
strategic investments, net |
— |
|
|
(0.01 |
) |
|
— |
|
|
(0.01 |
) |
Loss (gain) on strategic
investments, net |
(0.01 |
) |
|
— |
|
|
(0.03 |
) |
|
— |
|
Income tax effect of share-based compensation |
— |
|
|
0.01 |
|
|
— |
|
|
(0.01 |
) |
Income tax effect of changes in
applicable U.S. tax laws |
— |
|
|
0.01 |
|
|
(0.03 |
) |
|
1.05 |
|
Income tax effects related to amortization of intra-entity
intangible asset transfers |
0.12 |
|
|
— |
|
|
0.06 |
|
|
— |
|
Resolution of prior years’ income
tax filings and other tax items |
— |
|
|
(0.03 |
) |
|
0.08 |
|
|
(0.03 |
) |
Non-GAAP adjusted earnings per
diluted share |
$ |
0.74 |
|
|
$ |
1.04 |
|
|
$ |
2.24 |
|
|
$ |
3.33 |
|
Weighted average number of
diluted shares |
937 |
|
|
1,005 |
|
|
950 |
|
|
1,039 |
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
|
|
(In millions, except
percentages) |
July 28, 2019 |
|
July 29, 2018 |
|
July 28, 2019 |
|
July 29, 2018 |
Semiconductor Systems Non-GAAP
Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
613 |
|
|
$ |
831 |
|
|
$ |
1,823 |
|
|
$ |
2,847 |
|
Certain items associated with
acquisitions1 |
11 |
|
|
45 |
|
|
32 |
|
|
137 |
|
Non-GAAP adjusted operating
income |
$ |
624 |
|
|
$ |
876 |
|
|
$ |
1,855 |
|
|
$ |
2,984 |
|
Non-GAAP adjusted operating
margin |
27.5 |
% |
|
34.0 |
% |
|
27.6 |
% |
|
35.8 |
% |
AGS Non-GAAP Adjusted Operating
Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
259 |
|
|
$ |
280 |
|
|
$ |
827 |
|
|
$ |
814 |
|
Acquisition integration
costs |
— |
|
|
|
— |
|
|
— |
|
|
1 |
|
Non-GAAP adjusted operating
income |
$ |
259 |
|
|
$ |
280 |
|
|
$ |
827 |
|
|
$ |
815 |
|
Non-GAAP adjusted operating
margin |
27.8 |
% |
|
29.4 |
% |
|
28.7 |
% |
|
29.3 |
% |
Display and Adjacent Markets
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
41 |
|
|
$ |
156 |
|
|
$ |
198 |
|
|
$ |
456 |
|
Certain items associated with
acquisitions1 |
2 |
|
|
4 |
|
|
9 |
|
|
10 |
|
Acquisition integration
costs |
1 |
|
|
|
— |
|
|
1 |
|
|
1 |
|
Non-GAAP adjusted operating
income |
$ |
44 |
|
|
$ |
160 |
|
|
$ |
208 |
|
|
$ |
467 |
|
Non-GAAP adjusted operating
margin |
13.0 |
% |
|
26.0 |
% |
|
17.4 |
% |
|
26.3 |
% |
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.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP
ADJUSTED EFFECTIVE INCOME TAX RATE
|
Three Months Ended |
(In millions, except
percentages) |
July 28, 2019 |
|
|
Provision for income taxes - GAAP
basis (a) |
$ |
211 |
|
Income tax effects related to
amortization of intra-entity intangible asset transfers |
(115 |
) |
Resolutions of prior years’
income tax filings and other tax items |
1 |
|
Income tax effect of non-GAAP
adjustments |
3 |
|
Non-GAAP adjusted provision for
income taxes (b) |
$ |
100 |
|
|
|
Income before income taxes - GAAP
basis (c) |
$ |
782 |
|
Certain items associated with
acquisitions |
13 |
|
Acquisition integration and deal
costs |
5 |
|
Loss (gain) on strategic
investments, net |
(8 |
) |
Non-GAAP adjusted income before
income taxes (d) |
$ |
792 |
|
|
|
Effective income tax rate - GAAP
basis (a/c) |
27.0 |
% |
|
|
Non-GAAP adjusted effective
income tax rate (b/d) |
12.6 |
% |
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