Applied Materials, Inc. (NASDAQ:AMAT) today reported results for
its second quarter ended April 28, 2019.
Second Quarter Results
Applied generated revenue of $3.54 billion. On a GAAP basis, the
company recorded gross margin of 43.2 percent, operating income of
$776 million or 21.9 percent of net sales, and earnings per share
(EPS) of $0.70.
On a non-GAAP adjusted basis, the company reported gross margin
of 43.5 percent, operating income of $794 million or 22.4 percent
of net sales, and EPS of $0.70.
The company returned $814 million to shareholders including $625
million in share repurchases and dividends of $189 million. As
previously announced on March 8, 2019, Applied’s Board of Directors
approved a five percent increase in the quarterly cash dividend
from $0.20 to $0.21 per share.
“In the second fiscal quarter Applied Materials delivered
results toward the top-end of our guidance range, reflecting solid
execution across the company in a business environment that remains
challenging,” said Gary Dickerson, president and CEO. “Looking
ahead, we maintain a positive view of our markets as powerful new
demand drivers for semiconductors and displays take shape, creating
tremendous opportunities for Applied Materials.”
Quarterly Results Summary
|
Q2 FY2019 |
|
Q2 FY2018 |
|
Change |
|
|
|
(In millions, except per share amounts and percentages) |
Net sales |
$ |
3,539 |
|
|
$ |
4,579 |
|
|
(23)% |
Gross margin |
43.2 |
% |
|
44.9 |
% |
|
(1.7) points |
Operating margin |
21.9 |
% |
|
28.2 |
% |
|
(6.3) points |
Net income |
$ |
666 |
|
|
$ |
1,100 |
|
|
(39)% |
Diluted earnings per
share |
$ |
0.70 |
|
|
$ |
1.06 |
|
|
(34)% |
Non-GAAP Adjusted Results |
|
|
|
|
|
Non-GAAP adjusted gross
margin |
43.5 |
% |
|
45.9 |
% |
|
(2.4) points |
Non-GAAP adjusted operating
margin |
22.4 |
% |
|
29.3 |
% |
|
(6.9) points |
Non-GAAP adjusted net
income |
$ |
660 |
|
|
$ |
1,244 |
|
|
(47)% |
Non-GAAP adjusted diluted
EPS |
$ |
0.70 |
|
|
$ |
1.19 |
|
|
(41)% |
|
|
|
|
|
|
|
|
|
|
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 six months ended April
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 third quarter of fiscal 2019, Applied expects net sales
to be approximately $3.525 billion, plus or minus $150 million.
Non-GAAP adjusted diluted EPS is expected to be in the range of
$0.67 to $0.75.
This outlook for non-GAAP adjusted diluted EPS excludes known
charges related to completed acquisitions of $0.01 per share and
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.
Second Quarter Reportable Segment
Information
Semiconductor
Systems |
Q2 FY2019 |
|
Q2 FY2018 |
|
|
|
(In millions, except percentages) |
Net sales |
$ |
2,184 |
|
|
$ |
2,901 |
|
Foundry, logic and other |
58 |
% |
|
30 |
% |
DRAM |
18 |
% |
|
32 |
% |
Flash |
24 |
% |
|
38 |
% |
Operating income |
579 |
|
|
992 |
|
Operating margin |
26.5 |
% |
|
34.2 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
589 |
|
|
$ |
1,038 |
|
Non-GAAP adjusted operating
margin |
27.0 |
% |
|
35.8 |
% |
Applied Global
Services |
Q2 FY2019 |
|
Q2 FY2018 |
|
|
|
(In millions, except percentages) |
Net sales |
$ |
984 |
|
|
$ |
945 |
|
Operating income |
283 |
|
|
279 |
|
Operating margin |
28.8 |
% |
|
29.5 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
283 |
|
|
$ |
279 |
|
Non-GAAP adjusted operating
margin |
28.8 |
% |
|
29.5 |
% |
Display and Adjacent Markets |
Q2 FY2019 |
|
Q2 FY2018 |
|
|
|
(In millions, except percentages) |
Net sales |
$ |
348 |
|
|
$ |
719 |
|
Operating income |
42 |
|
|
210 |
|
Operating margin |
12.1 |
% |
|
29.2 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
46 |
|
|
$ |
214 |
|
Non-GAAP adjusted operating
margin |
13.2 |
% |
|
29.8 |
% |
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 third 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;
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; changes in U.S. tax laws and
regulation, and our interpretations of them; 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 |
|
Six Months Ended |
(In
millions, except per share amounts) |
April 28, 2019 |
|
April 29, 2018 |
|
April 28, 2019 |
|
April 29, 2018 |
Net sales |
$ |
3,539 |
|
|
$ |
4,579 |
|
|
$ |
7,292 |
|
|
$ |
8,784 |
|
Cost of
products sold |
2,009 |
|
|
2,523 |
|
|
4,097 |
|
|
4,788 |
|
Gross
profit |
1,530 |
|
|
2,056 |
|
|
3,195 |
|
|
3,996 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research, development and engineering |
508 |
|
|
509 |
|
|
1,024 |
|
|
998 |
|
Marketing and selling |
133 |
|
|
130 |
|
|
264 |
|
|
256 |
|
General and administrative |
113 |
|
|
125 |
|
|
223 |
|
|
235 |
|
Total
operating expenses |
754 |
|
|
764 |
|
|
1,511 |
|
|
1,489 |
|
Income
from operations |
776 |
|
|
1,292 |
|
|
1,684 |
|
|
2,507 |
|
Interest
expense |
60 |
|
|
56 |
|
|
120 |
|
|
115 |
|
Interest
and other income, net |
43 |
|
|
25 |
|
|
83 |
|
|
52 |
|
Income
before income taxes |
759 |
|
|
1,261 |
|
|
1,647 |
|
|
2,444 |
|
Provision for income taxes |
93 |
|
|
161 |
|
|
210 |
|
|
1,179 |
|
Net
income |
$ |
666 |
|
|
$ |
1,100 |
|
|
$ |
1,437 |
|
|
$ |
1,265 |
|
Earnings
per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.71 |
|
|
$ |
1.07 |
|
|
$ |
1.51 |
|
|
$ |
1.21 |
|
Diluted |
$ |
0.70 |
|
|
$ |
1.06 |
|
|
$ |
1.50 |
|
|
$ |
1.20 |
|
Weighted
average number of shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
942 |
|
|
1,029 |
|
|
950 |
|
|
1,042 |
|
Diluted |
948 |
|
|
1,040 |
|
|
957 |
|
|
1,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED BALANCE SHEETS
(In millions) |
April 28, 2019 |
|
October 28, 2018 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
3,116 |
|
|
$ |
3,440 |
|
Short-term investments |
507 |
|
|
590 |
|
Accounts receivable, net |
2,264 |
|
|
2,323 |
|
Inventories |
3,677 |
|
|
3,721 |
|
Other current assets |
498 |
|
|
530 |
|
Total current assets |
10,062 |
|
|
10,604 |
|
Long-term investments |
1,609 |
|
|
1,568 |
|
Property, plant and equipment,
net |
1,494 |
|
|
1,407 |
|
Goodwill |
3,399 |
|
|
3,368 |
|
Purchased technology and other
intangible assets, net |
185 |
|
|
213 |
|
Deferred income taxes and
other assets |
2,026 |
|
|
473 |
|
Total assets |
$ |
18,775 |
|
|
$ |
17,633 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
2,212 |
|
|
$ |
2,721 |
|
Contract liabilities |
1,393 |
|
|
1,201 |
|
Total current liabilities |
3,605 |
|
|
3,922 |
|
Income taxes payable |
1,326 |
|
|
1,254 |
|
Long-term debt |
5,311 |
|
|
5,309 |
|
Other liabilities |
332 |
|
|
303 |
|
Total liabilities |
10,574 |
|
|
10,788 |
|
Total stockholders’
equity |
8,201 |
|
|
6,845 |
|
Total liabilities and
stockholders’ equity |
$ |
18,775 |
|
|
$ |
17,633 |
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
Three Months Ended |
|
Six Months Ended |
(In millions) |
April 28, 2019 |
|
April 29, 2018 |
|
April 28, 2019 |
|
April 29, 2018 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
666 |
|
|
$ |
1,100 |
|
|
$ |
1,437 |
|
|
$ |
1,265 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
94 |
|
|
108 |
|
|
182 |
|
|
227 |
|
Share-based compensation |
65 |
|
|
64 |
|
|
130 |
|
|
129 |
|
Deferred income taxes |
8 |
|
|
40 |
|
|
49 |
|
|
72 |
|
Other |
(10 |
) |
|
11 |
|
|
(9 |
) |
|
11 |
|
Net change in operating assets and liabilities |
(23 |
) |
|
(712 |
) |
|
(155 |
) |
|
373 |
|
Cash provided by operating
activities |
800 |
|
|
611 |
|
|
1,634 |
|
|
2,077 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
(118 |
) |
|
(121 |
) |
|
(251 |
) |
|
(324 |
) |
Cash paid for acquisitions, net of cash acquired |
(23 |
) |
|
— |
|
|
(23 |
) |
|
(5 |
) |
Proceeds from sales and maturities of investments |
442 |
|
|
488 |
|
|
906 |
|
|
2,432 |
|
Purchases of investments |
(430 |
) |
|
(345 |
) |
|
(827 |
) |
|
(729 |
) |
Cash provided by (used in)
investing activities |
(129 |
) |
|
22 |
|
|
(195 |
) |
|
1,374 |
|
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from common stock issuances |
73 |
|
|
56 |
|
|
73 |
|
|
56 |
|
Common stock repurchases |
(625 |
) |
|
(2,500 |
) |
|
(1,375 |
) |
|
(3,282 |
) |
Tax withholding payments for vested equity awards |
(6 |
) |
|
(13 |
) |
|
(80 |
) |
|
(154 |
) |
Payments of dividends to stockholders |
(189 |
) |
|
(105 |
) |
|
(381 |
) |
|
(211 |
) |
Cash used in financing
activities |
(747 |
) |
|
(2,562 |
) |
|
(1,763 |
) |
|
(3,591 |
) |
Decrease in cash and cash
equivalents |
(76 |
) |
|
(1,929 |
) |
|
(324 |
) |
|
(140 |
) |
Cash and cash
equivalents — beginning of period |
3,192 |
|
|
6,799 |
|
|
3,440 |
|
|
5,010 |
|
Cash and cash
equivalents — end of period |
$ |
3,116 |
|
|
$ |
4,870 |
|
|
$ |
3,116 |
|
|
$ |
4,870 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
|
|
|
|
Cash payments for income taxes |
$ |
198 |
|
|
$ |
139 |
|
|
$ |
232 |
|
|
$ |
217 |
|
Cash refunds from income taxes |
$ |
10 |
|
|
$ |
1 |
|
|
$ |
18 |
|
|
$ |
41 |
|
Cash payments for interest |
$ |
76 |
|
|
$ |
76 |
|
|
$ |
110 |
|
|
$ |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION
Corporate and Other
(In millions) |
Q2 FY2019 |
|
Q2 FY2018 |
Unallocated net sales |
$ |
23 |
|
|
$ |
14 |
|
Unallocated cost of products
sold and expenses |
(86 |
) |
|
(139 |
) |
Share-based compensation |
(65 |
) |
|
(64 |
) |
Total |
$ |
(128 |
) |
|
$ |
(189 |
) |
Additional Information
|
Q2 FY2019 |
|
Q2 FY2018 |
|
|
Net Sales by Geography (In
millions) |
|
United States |
457 |
|
|
345 |
|
% of Total |
13 |
% |
|
8 |
% |
Europe |
215 |
|
|
292 |
|
% of Total |
6 |
% |
|
6 |
% |
Japan |
520 |
|
|
502 |
|
% of Total |
15 |
% |
|
11 |
% |
Korea |
441 |
|
|
1,232 |
|
% of Total |
13 |
% |
|
27 |
% |
Taiwan |
794 |
|
|
666 |
|
% of Total |
22 |
% |
|
15 |
% |
Southeast Asia |
119 |
|
|
242 |
|
% of Total |
3 |
% |
|
5 |
% |
China |
993 |
|
|
1,300 |
|
% of Total |
28 |
% |
|
28 |
% |
|
|
|
|
Employees (In thousands) |
|
|
|
Regular Full Time |
21.4 |
|
|
19.8 |
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
percentages) |
April 28, 2019 |
|
April 29, 2018 |
|
April 28, 2019 |
|
April 29, 2018 |
Non-GAAP Adjusted Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported gross profit - GAAP
basis |
$ |
1,530 |
|
|
$ |
2,056 |
|
|
$ |
3,195 |
|
|
$ |
3,996 |
|
Certain items associated with
acquisitions1 |
9 |
|
|
44 |
|
|
19 |
|
|
89 |
|
Non-GAAP adjusted gross
profit |
$ |
1,539 |
|
|
$ |
2,100 |
|
|
$ |
3,214 |
|
|
$ |
4,085 |
|
Non-GAAP adjusted gross
margin |
43.5 |
% |
|
45.9 |
% |
|
44.1 |
% |
|
46.5 |
% |
Non-GAAP Adjusted Operating
Income |
|
|
|
|
|
|
|
Reported operating income -
GAAP basis |
$ |
776 |
|
|
$ |
1,292 |
|
|
$ |
1,684 |
|
|
$ |
2,507 |
|
Certain items associated with
acquisitions1 |
14 |
|
|
49 |
|
|
28 |
|
|
98 |
|
Acquisition integration and
deal costs |
4 |
|
|
1 |
|
|
7 |
|
|
2 |
|
Non-GAAP adjusted operating
income |
$ |
794 |
|
|
$ |
1,342 |
|
|
$ |
1,719 |
|
|
$ |
2,607 |
|
Non-GAAP adjusted operating
margin |
22.4 |
% |
|
29.3 |
% |
|
23.6 |
% |
|
29.7 |
% |
Non-GAAP Adjusted Net
Income |
|
|
|
|
|
|
|
Reported net income - GAAP
basis |
$ |
666 |
|
|
$ |
1,100 |
|
|
$ |
1,437 |
|
|
$ |
1,265 |
|
Certain items associated with
acquisitions1 |
14 |
|
|
49 |
|
|
28 |
|
|
98 |
|
Acquisition integration and
deal costs |
4 |
|
|
1 |
|
|
7 |
|
|
2 |
|
Impairment (gain on sale) of
strategic investments, net |
— |
|
|
5 |
|
|
— |
|
|
4 |
|
Loss (gain) on strategic
investments, net |
(11 |
) |
|
— |
|
|
(23 |
) |
|
— |
|
Income tax effect of
share-based compensation2 |
1 |
|
|
13 |
|
|
(4 |
) |
|
(26 |
) |
Income tax effect of changes
in applicable U.S. tax laws3 |
— |
|
|
71 |
|
|
(24 |
) |
|
1,077 |
|
Income tax effects related to
amortization of intra-entity intangible asset transfers |
(31 |
) |
|
— |
|
|
(59 |
) |
|
— |
|
Resolution of prior years’
income tax filings and other tax items |
17 |
|
|
10 |
|
|
76 |
|
|
(3 |
) |
Income tax effect of non-GAAP
adjustments4 |
— |
|
|
(5 |
) |
|
1 |
|
|
(8 |
) |
Non-GAAP adjusted net
income |
$ |
660 |
|
|
$ |
1,244 |
|
|
$ |
1,439 |
|
|
$ |
2,409 |
|
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 |
|
Six Months Ended |
(In millions, except per share
amounts) |
April 28, 2019 |
|
April 29, 2018 |
|
April 28, 2019 |
|
April 29, 2018 |
Non-GAAP Adjusted Earnings Per Diluted Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported earnings per diluted
share - GAAP basis |
$ |
0.70 |
|
|
$ |
1.06 |
|
|
$ |
1.50 |
|
|
$ |
1.20 |
|
Certain items associated with
acquisitions |
0.01 |
|
|
0.04 |
|
|
0.03 |
|
|
0.09 |
|
Loss (gain) on strategic
investments, net |
— |
|
|
— |
|
|
(0.02 |
) |
|
— |
|
Income tax effect of
share-based compensation |
— |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.03 |
) |
Income tax effect of changes
in applicable U.S. tax laws |
— |
|
|
0.07 |
|
|
(0.02 |
) |
|
1.02 |
|
Income tax effects related to
amortization of intra-entity intangible asset transfers |
(0.03 |
) |
|
— |
|
|
(0.06 |
) |
|
— |
|
Resolution of prior years’
income tax filings and other tax items |
0.02 |
|
|
0.01 |
|
|
0.08 |
|
|
|
— |
|
Non-GAAP adjusted earnings per
diluted share |
$ |
0.70 |
|
|
$ |
1.19 |
|
|
$ |
1.50 |
|
|
$ |
2.28 |
|
Weighted average number of
diluted shares |
948 |
|
|
1,040 |
|
|
957 |
|
|
|
1,056 |
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
percentages) |
April 28, 2019 |
|
April 29, 2018 |
|
April 28, 2019 |
|
April 29, 2018 |
Semiconductor Systems Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income -
GAAP basis |
$ |
579 |
|
|
$ |
992 |
|
|
$ |
1,210 |
|
|
$ |
2,016 |
|
Certain items associated with
acquisitions1 |
10 |
|
|
46 |
|
|
21 |
|
|
92 |
|
Non-GAAP adjusted operating
income |
$ |
589 |
|
|
$ |
1,038 |
|
|
$ |
1,231 |
|
|
$ |
2,108 |
|
Non-GAAP adjusted operating
margin |
27.0 |
% |
|
35.8 |
% |
|
27.7 |
% |
|
36.6 |
% |
AGS Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
Reported operating income -
GAAP basis |
$ |
283 |
|
|
$ |
279 |
|
|
$ |
568 |
|
|
$ |
534 |
|
Acquisition integration
costs |
— |
|
|
|
— |
|
|
— |
|
|
1 |
|
Non-GAAP adjusted operating
income |
$ |
283 |
|
|
$ |
279 |
|
|
$ |
568 |
|
|
$ |
535 |
|
Non-GAAP adjusted operating
margin |
28.8 |
% |
|
29.5 |
% |
|
29.2 |
% |
|
29.3 |
% |
Display and Adjacent Markets
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income -
GAAP basis |
$ |
42 |
|
|
$ |
210 |
|
|
$ |
157 |
|
|
$ |
300 |
|
Certain items associated with
acquisitions1 |
4 |
|
|
3 |
|
|
7 |
|
|
6 |
|
Acquisition integration
costs |
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Non-GAAP adjusted operating
income |
$ |
46 |
|
|
$ |
214 |
|
|
$ |
164 |
|
|
$ |
307 |
|
Non-GAAP adjusted operating
margin |
13.2 |
% |
|
29.8 |
% |
|
19.2 |
% |
|
26.4 |
% |
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 MonthsEnded |
|
|
|
|
(In millions, except
percentages) |
April 28, 2019 |
Provision for income taxes -
GAAP basis (a) |
$ |
93 |
|
Income tax effect of
share-based compensation |
(1 |
) |
Income tax effects related to
amortization of intra-entity intangible asset transfers |
31 |
|
Resolutions of prior years’
income tax filings and other tax items |
(17 |
) |
Non-GAAP adjusted provision
for income taxes (b) |
$ |
106 |
|
|
|
Income before income taxes -
GAAP basis (c) |
$ |
759 |
|
Certain items associated with
acquisitions |
14 |
|
Acquisition integration and
deal costs |
4 |
|
Loss (gain) on strategic
investments, net |
(11 |
) |
Non-GAAP adjusted income
before income taxes (d) |
$ |
766 |
|
|
|
Effective income tax rate -
GAAP basis (a/c) |
12.3 |
% |
|
|
Non-GAAP adjusted effective
income tax rate (b/d) |
13.8 |
% |
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