10-QPeriod: Q2 FY2015

APPLIED MATERIALS INC /DE Quarterly Report for Q2 Ended Apr 26, 2015

Filed May 21, 2015For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) reported solid financial results for the second quarter and first half of fiscal year 2015, demonstrating year-over-year growth in net sales and income. For the three months ended April 26, 2015, net sales increased to $2.44 billion from $2.35 billion in the prior year, while net income rose to $364 million ($0.29 diluted EPS) from $262 million ($0.21 diluted EPS) in the comparable period. The company's performance was primarily driven by strong demand in the Silicon Systems Group and Applied Global Services segments, offsetting weaker performance in the Energy and Environmental Solutions segment. A key development during the quarter was the mutual termination of the proposed business combination with Tokyo Electron Limited (TEL). While this termination had implications for derivative gains and acquisition-related costs, the company reported no termination fees. Applied Materials continued its commitment to returning capital to shareholders through dividends and maintained a strong liquidity position with over $4.1 billion in cash, cash equivalents, and investments.

Financial Highlights

55 data points
Beta

Revenue

$2.44B

41.6% Gross Margin

Net Income

$364.00M

14.9% Net Margin

EPS (Diluted)

$0.29

Total Assets

$13.59B

Cash & Equivalents

$3.07B

Free Cash Flow

$234.00M

Financial Statements
Beta
Revenue$2.44B
Cost of Revenue$1.43B
Gross Profit$1.02B
R&D Expenses$365.00M
Operating Expenses$600.00M
Operating Income$416.00M
Interest Expense$24.00M
Net Income$364.00M
EPS (Basic)$0.30
EPS (Diluted)$0.29
Shares Outstanding (Basic)1.23B
Shares Outstanding (Diluted)1.24B

Key Highlights

  • 1Net sales for the second quarter of fiscal 2015 rose to $2.44 billion, up 3.8% year-over-year, driven by the Semiconductor Systems and Global Services segments.
  • 2Diluted earnings per share increased to $0.29 for the second quarter of fiscal 2015, compared to $0.21 in the same period last year.
  • 3Net income for the second quarter of fiscal 2015 was $364 million, a significant increase from $262 million in the prior year's second quarter.
  • 4The proposed business combination with Tokyo Electron Limited (TEL) was mutually terminated on April 26, 2015, with no termination fee payable by either party.
  • 5The company maintained a strong liquidity position with $3.07 billion in cash and cash equivalents and over $4.16 billion in total cash, cash equivalents, and investments as of April 26, 2015.
  • 6Applied Materials declared and paid quarterly cash dividends of $0.10 per share, reflecting its commitment to returning capital to shareholders.
  • 7The Silicon Systems Group continues to be the largest segment, contributing significantly to net sales and operating income, with strong demand from memory and foundry customers.

Frequently Asked Questions

For the three months ended April 26, 2015, Applied Materials reported net sales of $2.44 billion, an increase from $2.35 billion in the same period last year. Net income was $364 million, or $0.29 per diluted share, up from $262 million, or $0.21 per diluted share, in the prior year's quarter. The six-month period also showed growth in net sales and net income compared to the previous year.

Applied Materials and TEL mutually agreed to terminate their business combination agreement on April 26, 2015. This termination means the intended merger will not occur, and importantly, no termination fee was payable by either company. The termination also impacted the company's financial results through gains and losses on associated derivative instruments and certain acquisition-related costs.

Applied Materials maintained a strong liquidity position. As of April 26, 2015, the company had $3.07 billion in cash and cash equivalents and a total of $4.16 billion in cash, cash equivalents, and investments. The company also has significant available borrowing capacity under its credit facilities.

The Silicon Systems Group remains the largest segment and performed well, driven by demand from memory and foundry customers. The Applied Global Services segment also showed strong growth in spares and services. The Display segment saw mixed results with increased net sales but lower new orders year-over-year. The Energy and Environmental Solutions segment continues to operate at a loss due to low investment in the solar industry.