01—Abstract
Summary
Summary of the 10-K filed December 4, 2013. Cited figures are marked; the original filing is the authoritative source.
Applied Materials, Inc. (AMAT) reported a decrease in net sales for fiscal year 2013 to $7.51 billiona, down from $8.72 billion in fiscal year 2012, primarily impacted by lower demand in the semiconductor and solar equipment markets.
Despite the revenue decline, the company demonstrated resilience with a modest increase in operating margin to 5.8%b due to effective cost management, including restructuring initiatives and a favorable product mix. The Silicon Systems Group remained the largest segment, though it experienced a sales decline, while the Display segment saw a recovery. The Energy and Environmental Solutions segment continued to face challenges due to industry overcapacity, leading to significant goodwill and intangible asset impairments.
Financially, the company maintained a strong liquidity position with $2.9 billionc in cash, cash equivalents, and investments. Applied Materials continued its commitment to returning capital to shareholders through dividends and share repurchases.
A significant development during the year was the announcement of a proposed merger of equals with Tokyo Electron Limited (TEL), aimed at creating a more comprehensive materials engineering and patterning solutions provider. The company's substantial investment in Research, Development, and Engineering (RD&E) highlights its focus on future innovation and maintaining a competitive edge in the rapidly evolving technology landscape.
02—Key points
Key Highlights
- Net sales decreased by 14% to $7.51 billion in fiscal year 2013, compared to $8.72 billion in fiscal year 2012, primarily due to weaker demand in the semiconductor and solar equipment markets.
- Operating income saw a slight increase to $432 million in fiscal year 2013, up from $411 million in fiscal year 2012, with operating margin improving to 5.8% from 4.7%.
- The Silicon Systems Group, the largest segment, experienced a 14% decrease in net sales but remained the dominant contributor to revenue.
- The Display segment showed a positive trend with a 14% increase in net sales, driven by recovering demand for TV manufacturing equipment and continued demand for mobile display equipment.
- The Energy and Environmental Solutions segment continued to struggle, with net sales down 59% and significant goodwill and intangible asset impairments recorded due to industry overcapacity in the solar market.
- Applied Materials announced a significant proposed merger of equals with Tokyo Electron Limited (TEL) in September 2013, aiming to create a combined entity with enhanced capabilities in precision materials engineering.
- The company maintained a strong liquidity position with cash, cash equivalents, and investments totaling $2.9 billion as of October 27, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Applied Materials kept $0.03.
- Revenue$7.51B100.0%
- Cost of revenue−$4.52B60.2%
- Gross profit$2.99B39.8%
- Operating costs−$2.56B34.1%
- Operating income$432.0M5.8%
- Interest, other & tax−$176.0M2.3%
- Net income$256.0M3.4%
Where FY2013 revenue went
$7.51B- Cost of revenue: $4.52B, 60% of revenue
- R&D: $1.32B, 18% of revenue
- Other operating costs: $1.24B, 17% of revenue
- Net income: $256.0M, 3.4% of revenue
- Interest, other & tax: $176.0M, 2.3% of revenue
Kept 3.4% as net incomeNet income $256.0M · 3.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed December 4, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $7.51B$8.72B | −13.9% |
| Cost of Revenue | $4.52B$5.41B | −16.4% |
| Gross Profit | $2.99B$3.31B | −9.7% |
| R&D Expenses | $1.32B$1.24B | +6.7% |
| Operating Expenses | $2.56B$2.90B | −11.8% |
| Operating Income | $432.00M$411.00M | +5.1% |
| Interest Expense | $95.00M$95.00M | 0.0% |
| Net Income | $256.00M$109.00M | +134.9% |
| EPS (Basic) | $0.21$0.09 | +133.3% |
| EPS (Diluted) | $0.21$0.09 | +133.3% |
| Shares Outstanding (Basic) | 1.20B1.27B | −5.1% |
| Shares Outstanding (Diluted) | 1.22B1.28B | −4.5% |
05—Questions
Frequently Asked Questions
What was Applied Materials' overall financial performance in fiscal year 2013?
In fiscal year 2013, Applied Materials experienced a decline in net sales to $7.51 billion from $8.72 billion in the prior year, primarily due to reduced demand in the semiconductor and solar equipment sectors. However, the company managed to improve its operating margin to 5.8% from 4.7% through effective cost controls and a favorable product mix.
How did the different business segments perform in fiscal year 2013?
The Silicon Systems Group, the largest segment, saw a 14% decrease in sales but remained the primary revenue driver. The Display segment showed a positive trend with a 14% increase in net sales, benefiting from the recovery in TV manufacturing equipment and strong mobile display demand. The Energy and Environmental Solutions segment continued to face significant headwinds, with sales down 59% and substantial impairments recorded due to overcapacity in the solar industry.
What is the significance of the proposed merger with Tokyo Electron Limited (TEL)?
The announcement of a proposed merger of equals with Tokyo Electron Limited (TEL) in September 2013 is a major strategic development. This combination aims to create a stronger, more diversified company with enhanced capabilities in materials engineering and patterning, positioning it for future growth in the semiconductor and display industries.
What is the company's financial health and liquidity status?
Applied Materials maintained a robust financial position with $2.9 billion in cash, cash equivalents, and investments as of October 27, 2013. This strong liquidity provides financial flexibility for operations, investments, and capital returns to shareholders.
06—Continue