Applied Materials, Inc. (NASDAQ:AMAT) today reported record
revenue, operating profit and earnings per share in its second
quarter ended April 29, 2018.
Second Quarter Results
Compared to the second quarter of fiscal 2017, Applied grew net
sales by 29 percent to $4.57 billion. On a GAAP basis, the company
increased gross margin by 0.7 points to 45.8 percent, and grew
operating income by 41 percent to $1.33 billion or 29.1 percent of
net sales. GAAP earnings per share (EPS) grew 43 percent to
$1.09.
On a non-GAAP adjusted basis, over the same period, the company
increased gross margin by 0.4 points to 46.7 percent, grew
operating income by 40 percent to $1.38 billion or 30.2 percent of
net sales, and increased EPS by 54 percent to $1.22.
The company generated $611 million in cash from operations and
returned $2.6 billion to shareholders through $2.5 billion in share
repurchases and dividends of $105 million.
“Applied’s performance in the second fiscal quarter was another
all-time record for the company, which demonstrates strong
execution and customer pull for materials solutions that help
accelerate roadmaps and bring new devices to market faster,” said
Gary Dickerson, president and CEO. “Applied has the broadest
opportunity across major technology trends, and our markets are
strong, with long-term growth drivers firmly in place.”
Quarterly Results Summary
|
Q2 FY2018 |
|
Q2 FY2017 |
|
Change |
|
(In millions, except per share amounts and
percentages) |
Net sales |
$ |
4,567 |
|
|
$ |
3,546 |
|
|
29 |
% |
Gross margin |
45.8 |
% |
|
45.1 |
% |
|
0.7 points |
Operating margin |
29.1 |
% |
|
26.5 |
% |
|
2.6 points |
Net income |
$ |
1,129 |
|
|
$ |
824 |
|
|
37 |
% |
Diluted earnings per
share |
$ |
1.09 |
|
|
$ |
0.76 |
|
|
43 |
% |
Non-GAAP Adjusted Results |
|
|
|
|
|
Non-GAAP adjusted gross
margin |
46.7 |
% |
|
46.3 |
% |
|
0.4 points |
Non-GAAP adjusted
operating margin |
30.2 |
% |
|
27.8 |
% |
|
2.4 points |
Non-GAAP adjusted net
income |
$ |
1,273 |
|
|
$ |
861 |
|
|
48 |
% |
Non-GAAP adjusted
diluted EPS |
$ |
1.22 |
|
|
$ |
0.79 |
|
|
54 |
% |
A reconciliation of the GAAP and non-GAAP adjusted results is
provided in the financial tables included in this release. See also
“Use of Non-GAAP Adjusted Financial Measures” section.
Business Outlook
In the third quarter of fiscal 2018, Applied expects net sales
to be in the range of $4.33 billion to $4.53 billion; the midpoint
of the range would be an increase of approximately 18 percent, year
over year. Non-GAAP adjusted diluted EPS is expected to be in the
range of $1.13 to $1.21; the midpoint of the range would be an
increase of approximately 36 percent, year over year.
This outlook for non-GAAP adjusted diluted EPS excludes known
charges related to completed acquisitions of $0.05 per share and
includes the normalized tax benefit of share-based compensation of
$0.01 per share, but does not reflect any items that are unknown at
this time, such as any additional charges related to acquisitions
or other non-operational or unusual items, as well as other tax
related items, which we are not able to predict without
unreasonable efforts due to their inherent uncertainty.
Second Quarter Reportable Segment
Information
Semiconductor
Systems |
Q2 FY2018 |
|
Q2 FY2017 |
|
(In millions, except percentages) |
Net sales |
$ |
2,999 |
|
|
$ |
2,404 |
|
Foundry |
21 |
% |
|
41 |
% |
DRAM |
31 |
% |
|
19 |
% |
Flash |
37 |
% |
|
33 |
% |
Logic and
other |
11 |
% |
|
7 |
% |
Operating income |
1,071 |
|
|
808 |
|
Operating margin |
35.7 |
% |
|
33.6 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted
operating income |
$ |
1,117 |
|
|
$ |
854 |
|
Non-GAAP adjusted
operating margin |
37.2 |
% |
|
35.5 |
% |
Applied Global
Services |
Q2 FY2018 |
|
Q2 FY2017 |
|
(In millions, except percentages) |
Net sales |
$ |
943 |
|
|
$ |
724 |
|
Operating income |
278 |
|
|
194 |
|
Operating margin |
29.5 |
% |
|
26.8 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted
operating income |
$ |
278 |
|
|
$ |
195 |
|
Non-GAAP adjusted
operating margin |
29.5 |
% |
|
26.9 |
% |
Display and
Adjacent Markets |
Q2 FY2018 |
|
Q2 FY2017 |
|
(In millions, except percentages) |
Net sales |
$ |
600 |
|
|
$ |
391 |
|
Operating income |
162 |
|
|
84 |
|
Operating margin |
27.0 |
% |
|
21.5 |
% |
Non-GAAP Adjusted Results |
|
|
Non-GAAP adjusted
operating income |
$ |
166 |
|
|
$ |
84 |
|
Non-GAAP adjusted
operating margin |
27.7 |
% |
|
21.5 |
% |
Use of Non-GAAP Adjusted Financial Measures
Applied provides investors with certain non-GAAP
adjusted financial measures, which are adjusted for the impact of
certain costs, expenses, gains and losses, including certain items
related to mergers and acquisitions; restructuring charges and any
associated adjustments; impairments of assets, or investments; gain
or loss on sale of strategic investments; tax effect of share-based
compensation; certain income tax items and other discrete
adjustments. Additionally, the second quarter and first half of
fiscal 2018 non-GAAP results exclude estimated discrete income tax
expense items associated with changes to recent U.S. tax
legislation. Reconciliations of these non-GAAP measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP are provided in the financial tables included
in this release.
Management uses these non-GAAP adjusted financial measures to
evaluate the company’s operating and financial performance and for
planning purposes, and as performance measures in its executive
compensation program. Applied believes these measures enhance an
overall understanding of our performance and investors’ ability to
review the company’s business from the same perspective as the
company’s management, and facilitate comparisons of this period’s
results with prior periods on a consistent basis by excluding items
that we do not believe are indicative of our ongoing operating
performance. There are limitations in using non-GAAP financial
measures because the non-GAAP financial measures are not prepared
in accordance with generally accepted accounting principles, may be
different from non-GAAP financial measures used by other companies,
and may exclude certain items that may have a material impact upon
our reported financial results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings
call that begins at 1:30 p.m. Pacific Time today. A live webcast
will be available at www.appliedmaterials.com. A replay will be
available on the website beginning at 5:00 p.m. Pacific Time
today.
Forward-Looking Statements
This press release contains forward-looking statements,
including those regarding anticipated growth and trends in our
businesses and markets, industry outlooks and demand drivers,
technology transitions, our business and financial performance and
market share positions, our capital allocation, our investment and
growth strategies, our development of new products and
technologies, our business outlook for the third quarter of fiscal
2018, and other statements that are not historical facts. These
statements and their underlying assumptions are subject to risks
and uncertainties and are not guarantees of future performance.
Factors that could cause actual results to differ materially from
those expressed or implied by such statements include, without
limitation: the level of demand for our products; global economic
and industry conditions; consumer demand for electronic products;
the demand for semiconductors; customers’ technology and capacity
requirements; the introduction of new and innovative technologies,
and the timing of technology transitions; our ability to develop,
deliver and support new products and technologies; the concentrated
nature of our customer base; our ability to expand our
current markets, increase market share and develop new markets;
market acceptance of existing and newly developed products; our
ability to obtain and protect intellectual property rights in key
technologies; our ability to achieve the objectives of operational
and strategic initiatives, align our resources and cost structure
with business conditions, and attract, motivate and retain key
employees; the variability of operating expenses and results among
products and segments, and our ability to accurately forecast
future results, market conditions, customer requirements and
business needs; changes in U.S. tax laws and regulation, and our
interpretations of them; and other risks and uncertainties
described in our SEC filings, including our most recent Forms 10-Q
and 8-K. All forward-looking statements are based on management’s
current estimates, projections and assumptions, and we assume no
obligation to update them.
About Applied Materials
Applied Materials, Inc. (Nasdaq:AMAT) is the leader in materials
engineering solutions used to produce virtually every new chip and
advanced display in the world. Our expertise in modifying materials
at atomic levels and on an industrial scale enables customers to
transform possibilities into reality. At Applied Materials, our
innovations make possible the technology shaping the future. Learn
more at www.appliedmaterials.com.
Contact:
Ricky Gradwohl (editorial/media) 408.235.4676Michael
Sullivan (financial community) 408.986.7977
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
per share amounts) |
April 29, 2018 |
|
April 30, 2017 |
|
April 29, 2018 |
|
April 30, 2017 |
Net sales |
$ |
4,567 |
|
|
$ |
3,546 |
|
|
$ |
8,771 |
|
|
$ |
6,824 |
|
Cost of products
sold |
2,477 |
|
|
1,946 |
|
|
4,761 |
|
|
3,779 |
|
Gross profit |
2,090 |
|
|
1,600 |
|
|
4,010 |
|
|
3,045 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research,
development and engineering |
509 |
|
|
437 |
|
|
997 |
|
|
854 |
|
Marketing
and selling |
130 |
|
|
116 |
|
|
256 |
|
|
234 |
|
General
and administrative |
124 |
|
|
107 |
|
|
234 |
|
|
210 |
|
Total operating
expenses |
763 |
|
|
660 |
|
|
1,487 |
|
|
1,298 |
|
Income from
operations |
1,327 |
|
|
940 |
|
|
2,523 |
|
|
1,747 |
|
Interest expense |
56 |
|
|
44 |
|
|
115 |
|
|
82 |
|
Interest and other
income, net |
24 |
|
|
12 |
|
|
49 |
|
|
14 |
|
Income before income
taxes |
1,295 |
|
|
908 |
|
|
2,457 |
|
|
1,679 |
|
Provision for income
taxes |
166 |
|
|
84 |
|
|
1,193 |
|
|
152 |
|
Net income |
$ |
1,129 |
|
|
$ |
824 |
|
|
$ |
1,264 |
|
|
$ |
1,527 |
|
Earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
1.10 |
|
|
$ |
0.76 |
|
|
$ |
1.21 |
|
|
$ |
1.42 |
|
Diluted |
$ |
1.09 |
|
|
$ |
0.76 |
|
|
$ |
1.20 |
|
|
$ |
1.40 |
|
Weighted average number
of shares: |
|
|
|
|
|
|
|
Basic |
1,029 |
|
|
1,078 |
|
|
1,042 |
|
|
1,078 |
|
Diluted |
1,040 |
|
|
1,087 |
|
|
1,056 |
|
|
1,088 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED BALANCE SHEETS
(In millions) |
April 29, 2018 |
|
October 29, 2017 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
4,870 |
|
|
$ |
5,010 |
|
Short-term investments |
482 |
|
|
2,266 |
|
Accounts
receivable, net |
2,665 |
|
|
2,338 |
|
Inventories |
3,494 |
|
|
2,930 |
|
Other
current assets |
380 |
|
|
374 |
|
Total current
assets |
11,891 |
|
|
12,918 |
|
Long-term
investments |
1,214 |
|
|
1,143 |
|
Property, plant and
equipment, net |
1,257 |
|
|
1,066 |
|
Goodwill |
3,368 |
|
|
3,368 |
|
Purchased technology
and other intangible assets, net |
313 |
|
|
412 |
|
Deferred income taxes
and other assets |
455 |
|
|
512 |
|
Total assets |
$ |
18,498 |
|
|
$ |
19,419 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
2,619 |
|
|
$ |
2,450 |
|
Customer
deposits and deferred revenue |
1,961 |
|
|
1,665 |
|
Total current
liabilities |
4,580 |
|
|
4,115 |
|
Income taxes
payable |
1,282 |
|
|
392 |
|
Long-term debt |
5,306 |
|
|
5,304 |
|
Other liabilities |
288 |
|
|
259 |
|
Total liabilities |
11,456 |
|
|
10,070 |
|
Total stockholders’
equity |
7,042 |
|
|
9,349 |
|
Total liabilities and
stockholders’ equity |
$ |
18,498 |
|
|
$ |
19,419 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(In
millions) |
Three Months Ended |
|
Six Months Ended |
April 29, 2018 |
|
April 30, 2017 |
April 29, 2018 |
|
April 30, 2017 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
1,129 |
|
|
$ |
824 |
|
|
$ |
1,264 |
|
|
$ |
1,527 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
108 |
|
|
103 |
|
|
227 |
|
|
200 |
|
Share-based compensation |
64 |
|
|
53 |
|
|
129 |
|
|
107 |
|
Deferred
income taxes |
45 |
|
|
(16 |
) |
|
86 |
|
|
9 |
|
Other |
11 |
|
|
— |
|
|
11 |
|
|
9 |
|
Net
change in operating assets and liabilities |
(746 |
) |
|
(53 |
) |
|
360 |
|
|
(149 |
) |
Cash provided by
operating activities |
611 |
|
|
911 |
|
|
2,077 |
|
|
1,703 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Capital
expenditures |
(121 |
) |
|
(77 |
) |
|
(324 |
) |
|
(141 |
) |
Cash paid
for acquisitions, net of cash acquired |
— |
|
|
(26 |
) |
|
(5 |
) |
|
(26 |
) |
Proceeds
from sales and maturities of investments |
488 |
|
|
601 |
|
|
2,432 |
|
|
887 |
|
Purchases
of investments |
(345 |
) |
|
(1,779 |
) |
|
(729 |
) |
|
(2,368 |
) |
Cash provided by (used
in) investing activities |
22 |
|
|
(1,281 |
) |
|
1,374 |
|
|
(1,648 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Debt
borrowings, net of issuance costs |
— |
|
|
2,176 |
|
|
— |
|
|
2,176 |
|
Proceeds
from common stock issuances and others |
56 |
|
|
46 |
|
|
56 |
|
|
46 |
|
Common
stock repurchases |
(2,500 |
) |
|
(282 |
) |
|
(3,282 |
) |
|
(412 |
) |
Tax
withholding payments for vested equity awards |
(13 |
) |
|
(9 |
) |
|
(154 |
) |
|
(111 |
) |
Payments
of dividends to stockholders |
(105 |
) |
|
(108 |
) |
|
(211 |
) |
|
(216 |
) |
Cash provided by (used
in) financing activities |
(2,562 |
) |
|
1,823 |
|
|
(3,591 |
) |
|
1,483 |
|
Increase (decrease) in
cash and cash equivalents |
(1,929 |
) |
|
1,453 |
|
|
(140 |
) |
|
1,538 |
|
Cash and cash
equivalents — beginning of period |
6,799 |
|
|
3,491 |
|
|
5,010 |
|
|
3,406 |
|
Cash and cash
equivalents — end of period |
$ |
4,870 |
|
|
$ |
4,944 |
|
|
$ |
4,870 |
|
|
$ |
4,944 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Cash
payments for income taxes |
$ |
139 |
|
|
$ |
30 |
|
|
$ |
217 |
|
|
$ |
65 |
|
Cash
refunds from income taxes |
$ |
1 |
|
|
$ |
6 |
|
|
$ |
41 |
|
|
$ |
8 |
|
Cash
payments for interest |
$ |
76 |
|
|
$ |
41 |
|
|
$ |
110 |
|
|
$ |
75 |
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION
Corporate and Other
(In millions) |
Q2 FY2018 |
|
Q2 FY2017 |
Unallocated net
sales |
$ |
25 |
|
|
$ |
27 |
|
Unallocated cost of
products sold and expenses |
(145 |
) |
|
(120 |
) |
Share-based
compensation |
(64 |
) |
|
(53 |
) |
Total |
$ |
(184 |
) |
|
$ |
(146 |
) |
Additional Information
|
Q2 FY2018 |
|
Q2 FY2017 |
Net Sales by Geography
(In millions) |
|
United States |
394 |
|
|
383 |
|
% of
Total |
9 |
% |
|
11 |
% |
Europe |
312 |
|
|
189 |
|
% of
Total |
7 |
% |
|
5 |
% |
Japan |
503 |
|
|
332 |
|
% of
Total |
11 |
% |
|
9 |
% |
Korea |
1,248 |
|
|
942 |
|
% of
Total |
27 |
% |
|
27 |
% |
Taiwan |
727 |
|
|
863 |
|
% of
Total |
16 |
% |
|
24 |
% |
Southeast Asia |
243 |
|
|
109 |
|
% of
Total |
5 |
% |
|
3 |
% |
China |
1,140 |
|
|
728 |
|
% of
Total |
25 |
% |
|
21 |
% |
|
|
|
|
Employees (In
thousands) |
|
|
|
Regular Full Time |
19.8 |
|
|
16.6 |
|
APPLIED MATERIALS, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
percentages) |
April 29, 2018 |
|
April 30, 2017 |
|
April 29, 2018 |
|
April 30, 2017 |
Non-GAAP Adjusted Gross
Profit |
|
|
|
|
|
|
|
Reported gross profit -
GAAP basis |
$ |
2,090 |
|
|
$ |
1,600 |
|
|
$ |
4,010 |
|
|
$ |
3,045 |
|
Certain items
associated with acquisitions1 |
44 |
|
|
41 |
|
|
89 |
|
|
83 |
|
Non-GAAP adjusted gross
profit |
$ |
2,134 |
|
|
$ |
1,641 |
|
|
$ |
4,099 |
|
|
$ |
3,128 |
|
Non-GAAP adjusted gross
margin |
46.7 |
% |
|
46.3 |
% |
|
46.7 |
% |
|
45.8 |
% |
Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
1,327 |
|
|
$ |
940 |
|
|
$ |
2,523 |
|
|
$ |
1,747 |
|
Certain items
associated with acquisitions1 |
49 |
|
|
46 |
|
|
98 |
|
|
93 |
|
Acquisition integration
costs |
1 |
|
|
1 |
|
|
2 |
|
|
2 |
|
Other gains, losses or
charges, net |
— |
|
|
— |
|
|
— |
|
|
(3 |
) |
Non-GAAP adjusted
operating income |
$ |
1,377 |
|
|
$ |
987 |
|
|
$ |
2,623 |
|
|
$ |
1,839 |
|
Non-GAAP adjusted
operating margin |
30.2 |
% |
|
27.8 |
% |
|
29.9 |
% |
|
26.9 |
% |
Non-GAAP Adjusted Net
Income |
|
|
|
|
|
|
|
Reported net income -
GAAP basis |
$ |
1,129 |
|
|
$ |
824 |
|
|
$ |
1,264 |
|
|
$ |
1,527 |
|
Certain items
associated with acquisitions1 |
49 |
|
|
46 |
|
|
98 |
|
|
93 |
|
Acquisition integration
costs |
1 |
|
|
1 |
|
|
2 |
|
|
2 |
|
Impairment (gain on
sale) of strategic investments, net |
5 |
|
|
— |
|
|
4 |
|
|
5 |
|
Other gains, losses or
charges, net |
— |
|
|
— |
|
|
— |
|
|
(3 |
) |
Income tax effect of
share-based compensation2 |
13 |
|
|
— |
|
|
(26 |
) |
|
— |
|
Income tax effect of
changes in applicable U.S. tax laws3 |
71 |
|
|
— |
|
|
1,077 |
|
|
— |
|
Resolution of prior
years’ income tax filings and other tax items |
10 |
|
|
(6 |
) |
|
(3 |
) |
|
(22 |
) |
Income tax effect of
non-GAAP adjustments4 |
(5 |
) |
|
(4 |
) |
|
(8 |
) |
|
(9 |
) |
Non-GAAP adjusted net
income |
$ |
1,273 |
|
|
$ |
861 |
|
|
$ |
2,408 |
|
|
$ |
1,593 |
|
1 |
These items
are incremental charges attributable to completed acquisitions,
consisting of amortization of purchased intangible assets. |
|
|
2 |
Applied
adopted the accounting standard related to share-based compensation
(ASU 2016-09) in the first quarter of fiscal 2018, which resulted
in $53 million tax benefit on a GAAP basis for the six months ended
April 29, 2018; this benefit is being recognized ratably over the
fiscal year on a non-GAAP basis. |
|
|
3 |
Charges to
income tax provision related to a one-time transition tax and a
decrease in U.S. deferred tax assets as a result of the recent U.S.
tax legislation. |
|
|
4 |
Adjustment
to provision for income taxes related to non-GAAP adjustments
reflected in income before income taxes. |
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
per share amounts) |
April 29, 2018 |
|
April 30, 2017 |
|
April 29, 2018 |
|
April 30, 2017 |
Non-GAAP Adjusted
Earnings Per Diluted Share |
|
|
|
|
|
|
|
Reported earnings per
diluted share - GAAP basis |
$ |
1.09 |
|
|
$ |
0.76 |
|
|
$ |
1.20 |
|
|
$ |
1.40 |
|
Certain items
associated with acquisitions |
0.04 |
|
|
0.04 |
|
|
0.09 |
|
|
0.08 |
|
Income tax effect of
share-based compensation |
0.01 |
|
|
— |
|
|
(0.03 |
) |
|
— |
|
Income tax effect of
changes in applicable U.S. tax laws |
0.07 |
|
|
— |
|
|
1.02 |
|
|
— |
|
Resolution of prior
years’ income tax filings and other tax items |
0.01 |
|
|
(0.01 |
) |
|
— |
|
|
(0.02 |
) |
Non-GAAP adjusted
earnings per diluted share |
$ |
1.22 |
|
|
$ |
0.79 |
|
|
$ |
2.28 |
|
|
$ |
1.46 |
|
Weighted average number
of diluted shares |
1,040 |
|
|
1,087 |
|
|
1,056 |
|
|
1,088 |
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Six Months Ended |
(In millions, except
percentages) |
April 29, 2018 |
|
April 30, 2017 |
|
April 29, 2018 |
|
April 30, 2017 |
Semiconductor Systems
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
1,071 |
|
|
$ |
808 |
|
|
$ |
2,066 |
|
|
$ |
1,498 |
|
Certain items
associated with acquisitions1 |
46 |
|
|
46 |
|
|
92 |
|
|
92 |
|
Non-GAAP adjusted
operating income |
$ |
1,117 |
|
|
$ |
854 |
|
|
$ |
2,158 |
|
|
$ |
1,590 |
|
Non-GAAP adjusted
operating margin |
37.2 |
% |
|
35.5 |
% |
|
36.9 |
% |
|
34.9 |
% |
AGS Non-GAAP Adjusted
Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
278 |
|
|
$ |
194 |
|
|
$ |
532 |
|
|
$ |
372 |
|
Acquisition integration
costs |
— |
|
|
1 |
|
|
1 |
|
|
2 |
|
Non-GAAP adjusted
operating income |
$ |
278 |
|
|
$ |
195 |
|
|
$ |
533 |
|
|
$ |
374 |
|
Non-GAAP adjusted
operating margin |
29.5 |
% |
|
26.9 |
% |
|
29.2 |
% |
|
26.7 |
% |
Display and Adjacent
Markets Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating
income - GAAP basis |
$ |
162 |
|
|
$ |
84 |
|
|
$ |
263 |
|
|
$ |
199 |
|
Certain items
associated with acquisitions1 |
3 |
|
|
— |
|
|
6 |
|
|
— |
|
Acquisition integration
costs |
1 |
|
|
— |
|
|
1 |
|
|
— |
|
Non-GAAP adjusted
operating income |
$ |
166 |
|
|
$ |
84 |
|
|
$ |
270 |
|
|
$ |
199 |
|
Non-GAAP adjusted
operating margin |
27.7 |
% |
|
21.5 |
% |
|
25.6 |
% |
|
24.5 |
% |
1 |
These
items are incremental charges attributable to completed
acquisitions, consisting of amortization of purchased intangible
assets. |
Note: The reconciliation of GAAP and non-GAAP
adjusted segment results above does not include certain revenues,
costs of products sold and operating expenses that are reported
within corporate and other and included in consolidated operating
income.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP
ADJUSTED EFFECTIVE INCOME TAX RATE
|
Three Months Ended |
(In millions, except
percentages) |
April 29, 2018 |
|
|
Provision for income
taxes - GAAP basis (a) |
$ |
166 |
|
Income tax effect of
share-based compensation |
(13 |
) |
Income tax effect of
changes in applicable U.S. tax laws |
(71 |
) |
Resolutions of prior
years’ income tax filings and other tax items |
(10 |
) |
Income tax effect of
non-GAAP adjustments |
5 |
|
Non-GAAP adjusted
provision for income taxes (b) |
$ |
77 |
|
|
|
Income before income
taxes - GAAP basis (c) |
$ |
1,295 |
|
Certain items
associated with acquisitions |
49 |
|
Acquisition integration
costs |
1 |
|
Impairment (gain on
sale) of strategic investments, net |
5 |
|
Non-GAAP adjusted
income before income taxes (d) |
$ |
1,350 |
|
|
|
Effective income tax
rate - GAAP basis (a/c) |
12.8 |
% |
|
|
Non-GAAP adjusted
effective income tax rate (b/d) |
5.7 |
% |
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