01—Abstract
Summary
Summary of the 10-K filed December 5, 2012. Cited figures are marked; the original filing is the authoritative source.
Applied Materials Inc. (AMAT) reported a decrease in net sales to $8.72 billiona for fiscal year 2012, down from $10.52 billion in fiscal year 2011.
This decline was primarily attributed to a significant downturn in the solar and display equipment markets, coupled with softening demand in the semiconductor sector, particularly in the latter half of the fiscal year. The company also incurred a substantial goodwill impairment charge of $421 millionb related to its Energy and Environmental Solutions segment, reflecting the challenging conditions in the solar industry.
Despite the revenue decline and a net loss of $0.09c per diluted share in fiscal 2012, Applied Materials completed the significant acquisition of Varian Semiconductor Equipment Associates for $4.2 billion, aiming to strengthen its position in ion implantation equipment and expand its technology portfolio. The company is strategically focusing on expanding market share in wafer fab equipment and enhancing technical capabilities, while also making selective investments in display and solar product development for future growth.
02—Key points
Key Highlights
- Net sales decreased by 17% year-over-year to $8.72 billion in fiscal 2012, primarily due to weak performance in the solar and display segments.
- The company completed the acquisition of Varian Semiconductor Equipment Associates for $4.2 billion, integrating its ion implantation technology.
- A significant goodwill impairment charge of $421 million was recorded in the fourth quarter of fiscal 2012 for the Energy and Environmental Solutions segment.
- Operating income decreased substantially from $2.40 billion in fiscal 2011 to $0.41 billion in fiscal 2012, impacted by lower sales and the goodwill impairment.
- The Silicon Systems Group remained the largest segment, contributing 64% of net sales, though new orders saw a slight decrease.
- Applied Materials continued to invest heavily in Research, Development, and Engineering (RD&E), spending $1.24 billion (14.2% of net sales) in fiscal 2012.
- The company repurchased approximately $516 million of its common stock in Q4 FY12 as part of its ongoing share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Applied Materials kept $0.01.
- Revenue$8.72B100.0%
- Cost of revenue−$5.41B62.0%
- Gross profit$3.31B38.0%
- Operating costs−$2.90B33.3%
- Operating income$411.0M4.7%
- Interest, other & tax−$302.0M3.5%
- Net income$109.0M1.3%
Where FY2012 revenue went
$8.72B- Cost of revenue: $5.41B, 62% of revenue
- R&D: $1.24B, 14% of revenue
- SG&A: $1.08B, 12% of revenue
- Net income: $109.0M, 1.3% of revenue
- Other operating costs: $589.0M, 6.8% of revenue
- Interest, other & tax: $302.0M, 3.5% of revenue
Kept 1.3% as net incomeNet income $109.0M · 1.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed December 5, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $8.72B$10.52B | −17.1% |
| Cost of Revenue | $5.41B$6.16B | −12.2% |
| Gross Profit | $3.31B$4.36B | −24.0% |
| R&D Expenses | $1.24B$1.12B | +10.6% |
| SG&A Expenses | $1.08B$901.00M | +19.4% |
| Operating Expenses | $2.90B$1.96B | +47.9% |
| Operating Income | $411.00M$2.40B | −82.9% |
| Interest Expense | $95.00M$59.00M | +61.0% |
| Net Income | $109.00M$1.93B | −94.3% |
| EPS (Basic) | $0.09$1.46 | −93.8% |
| EPS (Diluted) | $0.09$1.45 | −93.8% |
| Shares Outstanding (Basic) | 1.27B1.32B | −4.0% |
| Shares Outstanding (Diluted) | 1.28B1.33B | −4.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of the revenue decline in fiscal year 2012?
The primary drivers of the revenue decline were significantly reduced industry investment in solar photovoltaic (PV) equipment and a continued downturn in the flat panel display market. Additionally, demand for semiconductor manufacturing equipment softened in the second half of the fiscal year, impacting overall sales.
What impact did the Varian acquisition have on the company's financial results?
The acquisition of Varian Semiconductor Equipment Associates for $4.2 billion was completed in fiscal year 2012. While it broadened Applied Materials' technology portfolio, particularly in ion implantation, it also contributed to acquisition-related costs and integration expenses, which were reflected in the Selling, General, and Administrative expenses. Varian's operations were primarily included in the Silicon Systems Group and Applied Global Services segments.
What is the significance of the goodwill impairment charge?
The $421 million goodwill impairment charge recorded in the fourth quarter of fiscal 2012 for the Energy and Environmental Solutions segment highlights the severe challenges faced by the solar industry, including overcapacity, weaker operating performance, and deteriorating customer financial conditions. This impairment significantly impacted the company's reported net income for the year.
How did the company's segments perform in fiscal year 2012?
The Silicon Systems Group remained the largest segment by revenue, with sales slightly increasing year-over-year, driven partly by the Varian acquisition. The Applied Global Services segment saw a revenue decrease. Both the Display and Energy and Environmental Solutions segments experienced substantial declines in net sales due to challenging market conditions in their respective industries.
06—Continue