10-QPeriod: Q3 FY2000

APPLIED MATERIALS INC /DE Quarterly Report for Q3 Ended Jul 30, 2000

Filed September 7, 2000For Securities:AMAT

Summary

Applied Materials Inc. (AMAT) demonstrated robust financial performance for the nine months ended July 30, 2000, driven by a significant upswing in the semiconductor industry. Net sales more than doubled compared to the same period in the prior year, reaching $6.64 billion, while net income surged to $1.4 billion. This growth was fueled by a substantial increase in new orders, reflecting strong demand for semiconductor manufacturing equipment due to the industry's expansion and technological transitions. The company's financial health remains strong, with a healthy current ratio and a substantial cash balance, positioning it well to navigate industry cycles. The company completed the acquisition of Etec Systems, Inc. in March 2000, accounted for as a pooling of interests, which contributed to the reported figures. While operating expenses increased in absolute terms to support growth and R&D, they represented a smaller percentage of net sales compared to the previous year, indicating operational leverage. AMAT's management expresses confidence in its liquidity and ability to meet operational needs for the next 12 months, despite the inherent volatility and competitive nature of the semiconductor equipment market.

Key Highlights

  • 1Net sales for the nine months ended July 30, 2000, grew by 91% to $6.64 billion, compared to $3.48 billion in the prior year period.
  • 2Net income for the nine months ended July 30, 2000, increased significantly to $1.4 billion, up from $443.9 million in the same period last year.
  • 3Diluted earnings per share for the nine months ended July 30, 2000, reached $1.63, a substantial increase from $0.54 in the prior year.
  • 4The company recorded record new orders of $3.3 billion in the third fiscal quarter of 2000, indicating continued strong demand.
  • 5Acquisition of Etec Systems, Inc. was completed on March 29, 2000, accounted for as a pooling of interests.
  • 6Cash, cash equivalents, and short-term investments stood at $3.7 billion as of July 30, 2000, indicating strong liquidity.
  • 7Gross margin improved to 50.4% for the nine months ended July 30, 2000, compared to 46.5% in the prior year period, driven by higher business volume.

Frequently Asked Questions

Applied Materials experienced significant growth. For the nine months ended July 30, 2000, net sales increased by 91% to $6.64 billion, and net income more than tripled to $1.4 billion, compared to the same period in 1999. Diluted earnings per share also saw a substantial rise to $1.63 from $0.54.

The strong performance was driven by a robust expansion in the semiconductor industry, leading to record new orders for Applied Materials' equipment. Factors like increasing demand for semiconductors in internet, communication, and digital devices, coupled with the industry's transition to smaller device sizes, new materials, and 300mm wafer processing, fueled the demand for the company's products and services.

A key event was the acquisition of Etec Systems, Inc. on March 29, 2000, which was accounted for as a pooling of interests. The company also experienced a two-for-one stock split in the form of a 100% stock dividend effective March 15, 2000. Additionally, the company benefited from a non-recurring income of $68 million related to a prior litigation settlement with ASM International.

Applied Materials maintains a strong financial position with $3.7 billion in cash, cash equivalents, and short-term investments as of July 30, 2000. The current ratio was healthy at 3.2:1. Management believes its existing liquidity, combined with cash generated from operations, will be sufficient to meet liquidity requirements for the next 12 months, despite the cyclical nature of the industry.