10-KPeriod: FY2010

APPLIED MATERIALS INC /DE Annual Report, Year Ended Oct 31, 2010

Filed December 10, 2010For Securities:AMAT

Summary

Applied Materials Inc. (AMAT) demonstrated a significant recovery in fiscal year 2010, with net sales increasing by 90% to $9.55 billion, up from $5.01 billion in fiscal year 2009. This rebound was driven by a strong resurgence in demand across its core semiconductor and display equipment segments, reflecting a broader economic recovery. The company saw a substantial increase in new orders, more than doubling to $10.25 billion, indicating robust future sales potential. Despite the positive top-line growth, the company faced challenges in its Energy and Environmental Solutions segment, particularly with its thin-film solar business, leading to significant restructuring charges and inventory write-downs. The acquisition of Semitool in late 2009 strengthened its Silicon Systems Group. Applied Materials continues to invest heavily in R&D, focusing on next-generation chip technologies like 22nm and below designs, and advanced packaging solutions like through-silicon vias (TSVs).

Financial Highlights

56 data points
Beta

Revenue

$9.55B

38.9% Gross Margin

Net Income

$938.00M

9.8% Net Margin

EPS (Diluted)

$0.70

Total Assets

$10.94B

Cash & Equivalents

$1.86B

Free Cash Flow

$1.72B

Financial Statements
Beta
Revenue$9.55B
Cost of Revenue$5.83B
Gross Profit$3.71B
R&D Expenses$1.14B
SG&A Expenses$942.00M
Operating Expenses$2.33B
Operating Income$1.38B
Interest Expense$21.00M
Net Income$938.00M
EPS (Basic)$0.70
EPS (Diluted)$0.70
Shares Outstanding (Basic)1.34B
Shares Outstanding (Diluted)1.35B

Key Highlights

  • 1Net sales surged 90% year-over-year to $9.55 billion in FY2010, recovering strongly from the prior year's downturn.
  • 2New orders more than doubled to $10.25 billion, signaling a robust demand pipeline for semiconductor equipment.
  • 3The Silicon Systems Group (SSG) segment experienced a significant rebound, with net sales increasing by 171% to $5.30 billion.
  • 4The company acquired Semitool Inc. in December 2009, enhancing its offerings in electrochemical plating and wafer surface preparation for advanced packaging.
  • 5Applied Materials continued its commitment to innovation with substantial R&D investments, focusing on emerging technologies like 22nm chip designs and 3D ICs.
  • 6Restructuring charges of $486 million impacted the Energy and Environmental Solutions segment, largely due to challenges in the thin-film solar market.
  • 7The company maintained a strong financial position, with cash, cash equivalents, and investments increasing to $3.89 billion, while repurchasing $350 million in stock.

Frequently Asked Questions

The primary driver was the significant increase in demand for semiconductor manufacturing equipment, fueled by a broader economic recovery and increased capital spending by semiconductor manufacturers, particularly in memory and foundry segments. The display segment also contributed to the rebound.

The company faced significant challenges in its Energy and Environmental Solutions segment, specifically within its thin-film solar business. This led to restructuring actions, including workforce reductions and inventory write-downs totaling $486 million, due to adverse market conditions.

The acquisition of Semitool, a leader in electrochemical plating and wafer surface preparation, significantly strengthened Applied Materials' Silicon Systems Group segment, particularly its offerings for advanced chip packaging solutions like through-silicon vias (TSVs).

Applied Materials is heavily investing in R&D to support next-generation technologies. Key areas include enabling chip designs for 22nm and below geometries, high-k/metal gate technologies, double patterning, and advanced packaging solutions like through-silicon vias (TSVs) for 3D ICs.