8-KFinancial Events

APPLIED MATERIALS INC /DE 8-K Report, Exit or Disposal Costs (May 10, 2012)

Filed May 10, 2012For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) announced on May 9, 2012, a significant restructuring plan for its Energy and Environmental Solutions (EES) segment. This initiative is driven by challenging market conditions in the solar photovoltaic (PV) and light-emitting diode (LED) equipment sectors. The company aims to reduce the EES segment's annual revenue breakeven level to $500 million by fiscal year 2013, signaling a strategic shift in response to industry headwinds. The restructuring involves relocating manufacturing for its Precision Wafering System (PWS) solar business from Switzerland to Asia, with customer support and operations moving to Italy and China, while R&D remains in Switzerland. Additionally, development activities for the LED business will see substantial reductions. These actions are expected to impact approximately 250 positions globally and are projected to incur pre-tax costs ranging from $70 million to $100 million over the next 12 to 18 months.

Key Highlights

  • 1Applied Materials announces a restructuring of its Energy and Environmental Solutions (EES) segment due to challenging market conditions in solar PV and LED equipment.
  • 2The company aims to reduce the EES segment's breakeven revenue level to $500 million by FY2013.
  • 3Manufacturing for the Precision Wafering System (PWS) solar business will be relocated from Switzerland to Asia (Italy and China).
  • 4LED development activities will be significantly reduced as part of the plan.
  • 5The restructuring is expected to impact up to 250 positions globally.
  • 6Estimated pre-tax costs for the restructuring are between $70 million and $100 million, to be incurred over 12-18 months.
  • 7The company anticipates up to $55 million in cash expenditures related to this plan.

Frequently Asked Questions

Applied Materials is restructuring its Energy and Environmental Solutions (EES) segment due to challenging industry conditions affecting the solar photovoltaic (PV) and light-emitting diode (LED) equipment markets.

The total estimated pre-tax cost of implementing the plan is expected to range from $70 million to $100 million. This includes charges for fixed asset impairment, inventory, lease terminations, and severance costs.

The costs are expected to be incurred over the next 12 to 18 months, beginning in the third quarter of fiscal 2012. The estimated impact on earnings per share is $0.04 to $0.06. Inventory-related charges of up to $15 million will be included in both GAAP and non-GAAP results.

Yes, the plan includes workforce-related actions which will impact up to approximately 250 positions globally. These actions will be implemented in accordance with local legal requirements and in consultation with employees and employee representative bodies where required.