01—Abstract
Summary
Summary of the 10-K filed December 11, 2009. Cited figures are marked; the original filing is the authoritative source.
Applied Materials, Inc. (AMAT) filed its 2009 10-K report, reflecting a challenging year marked by significant economic headwinds impacting the semiconductor, flat panel display, and solar industries.
The company experienced a substantial decrease in net sales and new orders compared to the prior year, driven by a severe downturn in capital equipment spending by its customers. This downturn led to a net loss for the fiscal year. Despite the difficult market conditions, AMAT continued to invest heavily in research and development (R&D) to maintain its technological leadership, focusing on next-generation chip designs and manufacturing processes.
The company also underwent restructuring to align its cost structure with the prevailing market demand. Looking ahead, AMAT anticipated a recovery in the fiscal year 2010, particularly in the semiconductor capital equipment sector, projecting a significant increase in net sales. The company's diverse business segments, including Silicon, Applied Global Services, Display, and Energy & Environmental Solutions, are all subject to the cyclical nature of their respective end markets.
02—Key points
Key Highlights
- Net sales declined significantly to $5.01 billion in fiscal year 2009 from $8.13 billion in fiscal year 2008, reflecting a challenging economic environment impacting the semiconductor, display, and solar industries.
- The company reported a net loss of $305.3 million in fiscal year 2009, a reversal from a net income of $960.7 million in fiscal year 2008.
- Research, Development, and Engineering (RD&E) expenses remained substantial at $934.1 million (19% of net sales), underscoring the company's commitment to innovation despite the downturn.
- Backlog decreased to $2.7 billion from $4.8 billion year-over-year, primarily due to customer cancellations and financial debookings, signaling reduced customer commitments.
- Applied Materials announced a workforce reduction of approximately 1,800 to 2,000 positions during fiscal year 2009 as part of a restructuring program to manage costs.
- The company maintained a strong balance sheet with $3.3 billion in cash, cash equivalents, and investments at the end of fiscal year 2009.
- Applied Materials anticipated a recovery in fiscal year 2010, projecting an increase in total net sales of more than 30% compared to fiscal year 2009.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2009, Applied Materials lost $0.06.
- Revenue$5.01B100.0%
- Cost of revenue−$3.58B71.5%
- Gross profit$1.43B28.5%
- Operating costs−$1.82B36.4%
- Operating income−$394.0M7.9%
- Interest, other & tax$89.0M1.8%
- Net income−$305.0M6.1%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed December 11, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $5.01B$8.13B | −38.3% |
| Cost of Revenue | $3.58B$4.69B | −23.5% |
| Gross Profit | $1.43B$3.44B | −58.4% |
| R&D Expenses | $934.00M$1.10B | −15.4% |
| SG&A Expenses | $735.00M— | — |
| Operating Expenses | $1.82B$2.09B | −12.6% |
| Operating Income | -$394.00M$1.36B | −129.1% |
| Interest Expense | $21.00M$20.51M | +2.4% |
| Net Income | -$305.00M$960.75M | −131.7% |
| EPS (Basic) | $-0.23$0.71 | −132.4% |
| EPS (Diluted) | $-0.23$0.70 | −132.9% |
| Shares Outstanding (Basic) | 1.33B1.35B | −1.6% |
| Shares Outstanding (Diluted) | 1.33B1.37B | −3.0% |
05—Questions
Frequently Asked Questions
What was the primary reason for the significant decline in Applied Materials' financial performance in fiscal year 2009?
The primary reason for the significant decline in Applied Materials' financial performance in fiscal year 2009 was the severe downturn in the global semiconductor, flat panel display, and solar industries, driven by unfavorable economic and market conditions. This led to a substantial reduction in capital equipment spending by customers.
How did Applied Materials respond to the challenging market conditions in fiscal year 2009?
Applied Materials responded to the challenging market conditions by implementing a restructuring program that included reducing its global workforce by approximately 1,800 to 2,000 positions. The company also focused on cost control initiatives and continued significant investment in research and development to maintain its technological edge.
What is Applied Materials' outlook for fiscal year 2010?
Applied Materials anticipated a recovery in fiscal year 2010, particularly in the semiconductor capital equipment market. The company projected that total net sales would increase by more than 30% compared to fiscal year 2009.
What is the significance of the company's R&D spending in this period?
Applied Materials continued to invest heavily in R&D, spending $934.1 million (19% of net sales) in fiscal year 2009. This sustained investment is crucial for developing new technologies and products that meet the evolving demands of customers in advanced chip designs and manufacturing processes, thereby maintaining its competitive position in the industry.
06—Continue