10-QPeriod: Q3 FY2013

APPLIED MATERIALS INC /DE Quarterly Report for Q3 Ended Jul 28, 2013

Filed August 22, 2013For Securities:AMAT

Summary

Applied Materials Inc. (AMAT) reported its third quarter fiscal year 2013 results, showing a sequential increase in net sales and a return to profitability after a challenging prior quarter. Net sales for the three months ended July 28, 2013, were $1.975 billion, a slight increase from the previous quarter but a decrease compared to the same period in the prior year. Net income for the quarter was $168 million, or $0.14 per diluted share, a significant improvement from a net loss in the prior quarter, though lower than the year-ago period. The company's performance was impacted by mixed industry trends. While the Display segment showed strong growth driven by LCD TV equipment demand, and the Silicon Systems Group saw moderate improvements from memory customers, the Energy and Environmental Solutions segment continued to be a drag due to overcapacity in the solar industry. Overall, the company navigated a challenging market environment, marked by ongoing semiconductor industry cyclicality and subdued solar equipment demand.

Financial Highlights

52 data points
Beta

Revenue

$1.98B

40.8% Gross Margin

Net Income

$168.00M

8.5% Net Margin

EPS (Diluted)

$0.14

Total Assets

$11.75B

Cash & Equivalents

$1.75B

Free Cash Flow

$324.00M

Financial Statements
Beta
Revenue$1.98B
Cost of Revenue$1.17B
Gross Profit$806.00M
R&D Expenses$334.00M
Operating Expenses$556.00M
Operating Income$250.00M
Interest Expense$23.00M
Net Income$168.00M
EPS (Basic)$0.14
EPS (Diluted)$0.14
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net sales for the third quarter of fiscal 2013 were $1.975 billion, slightly up from the previous quarter but down 16% year-over-year.
  • 2Net income for the quarter was $168 million ($0.14 per diluted share), a significant improvement from a net loss in the second quarter but down from $218 million ($0.17 per diluted share) in the prior year's third quarter.
  • 3The company recorded a goodwill impairment charge of $224 million and intangible asset impairment charges of $54 million in the second quarter of fiscal 2013, impacting prior period results but not the current quarter's operational performance.
  • 4The Display segment showed strong growth with a 282% increase in new orders year-over-year, driven by LCD TV equipment demand.
  • 5The Silicon Systems Group, the largest segment, experienced a 22% sequential decline in new orders but a slight 3% increase year-over-year, with foundry customers driving demand.
  • 6The Energy and Environmental Solutions segment continued to struggle, with operating losses and a 46% year-over-year decline in new orders due to persistent solar industry overcapacity.
  • 7The company maintained a strong cash position, with cash and cash equivalents totaling $1.745 billion and total cash, cash equivalents, and investments at $3.030 billion.

Frequently Asked Questions

Applied Materials Inc. reported net sales of $1.975 billion for the third quarter of fiscal 2013, a slight increase from the previous quarter but a 16% decrease compared to the same period in fiscal 2012. Net income for the quarter was $168 million, or $0.14 per diluted share, a notable improvement from the prior quarter's loss but down from $218 million ($0.17 per diluted share) in the prior year's third quarter. This performance reflects mixed demand across its segments and industry cycles.

The Display segment demonstrated strong growth, with a significant increase in new orders year-over-year driven by demand for LCD TV equipment. The Silicon Systems Group, the largest segment, saw a year-over-year increase in new orders, primarily from memory customers, though foundry customer demand softened sequentially. The Energy and Environmental Solutions segment continued to face significant headwinds due to overcapacity in the solar industry, resulting in operating losses and a decline in new orders.

In the second quarter of fiscal 2013, Applied Materials recorded substantial impairment charges, including a $224 million goodwill impairment and $54 million in intangible asset impairment charges, primarily related to the Energy and Environmental Solutions segment due to deteriorating solar industry conditions. These charges affected prior period results but did not directly impact the operational performance of the third quarter of fiscal 2013 itself, though they contributed to a higher effective tax rate for the nine-month period.

Applied Materials maintained a strong financial position. As of July 28, 2013, the company had $1.745 billion in cash and cash equivalents and a total of $3.030 billion in cash, cash equivalents, and investments. Operating activities generated $604 million in cash for the nine months ended July 28, 2013. The company also had access to a $1.6 billion revolving credit facility, none of which was outstanding, indicating ample liquidity.