14:37 | 21.07.2010
Applied Materials Announces Restructuring of Energy and Environmental Solutions Segment
Applied Materials, Inc. (Nasdaq:AMAT) today announced plans to
restructure its Energy and Environmental Solutions (EES) segment to put
a primary emphasis on opportunities in crystalline silicon (c-Si) solar
and advanced energy, including light emitting diode (LED) technology.
Upon completion of the restructuring plan, annual operating expenses are
expected to decrease by at least $100 million on an annualized basis.
The restructuring plan is intended to make EES a profitable segment in
fiscal year 2011.
As part of the restructuring, Applied will discontinue sales to new
customers of its SunFab™ fully-integrated lines for manufacturing thin
film solar panels and will offer individual tools for sale to thin film
solar manufacturers, including chemical vapor deposition (CVD) and
physical vapor deposition (PVD) equipment. R&D efforts to improve thin
film panel efficiency and high-productivity deposition will continue.
The company will support existing SunFab customers with services,
upgrades and capacity increases through its Applied Global Services
segment. Applied’s solar R&D center in Xi’an, China will concentrate on
advancing its c-Si solar and other technologies.
“While Applied has delivered significant innovations with our SunFab
production line and made substantial progress on our technology roadmap,
the thin film market has been negatively impacted by several factors,
including delays in utility-scale solar adoption, solar panel
manufacturers’ challenges in obtaining affordable capital, changes and
uncertainty in government renewable energy policies, and competitive
pressure from crystalline silicon technologies,” said Mike Splinter,
chairman and CEO of Applied Materials. “Led by Mark Pinto, EES will
focus on our industry-leading crystalline silicon solar business and on
pursuing other opportunities in advanced energy technologies like LED
The company also plans to divest its low-emissivity architectural glass
coating products, while continuing development activities in emerging
technologies such as “smart” electrochromic glass.
The cost of implementing the EES restructuring plan is expected to be in
the range of approximately $375 million to $425 million, or $0.18 to
$0.21 per share, which will be reported as cost of products sold and
restructuring and asset impairments in the company’s consolidated
statements of operations for the third quarter of fiscal 2010. As part
of the total pre-tax cost, Applied anticipates that it will record: (i)
inventory charges of up to $240 million; (ii) equipment and intangible
assets impairment charges of up to $95 million; (iii) employee severance
of up to $50 million; and (iv) other obligations of up to $40 million.
This action is expected to impact between 400 to 500 positions globally.
A number of affected employees may transfer to other groups or functions
within the company. Cash expenditures related to these charges are
expected to be no more than $80 million. In addition to the charges
under the EES plan, the company will record a favorable adjustment of
approximately $20 million to the restructuring plan previously announced
on November 11, 2009 due to changes in business requirements.
Revised Q3 FY2010 Business Outlook
In May, the company announced its target for non-GAAP EPS for the third
quarter of fiscal 2010 of between $0.22 and $0.26 per share, which did
not include any potential restructuring charges. The revised target is
for non-GAAP earnings of $0.10 to $0.14 per share, which would have been
at the high end of the previous target after taking into account the
approximately $0.14 per share impact of the inventory charges and other
obligations related to today’s actions.
Watch Mike Splinter address the EES restructuring on the Applied
Materials Blog: http://bit.ly/boKnz1.
Safe Harbor Statement
This release contains forward-looking statements, including those
relating to the expected scope, costs, timing and benefits of the EES
Plan and Applied’s business outlook, opportunities and Q3’10 targets.
All forward-looking statements are based on management’s estimates,
projections and assumptions as of the date hereof and include the
assumptions that underlie such statements. These statements are subject
to known and unknown risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by such
statements, including but not limited to: uncertain global economic and
industry conditions; Applied’s ability to implement the program as
planned and achieve the anticipated benefits, which may be affected by:
customer requirements, changes in business conditions and/or operational
needs, business acquisitions or divestitures, retention of key
employees, U.S. and international labor and employment laws, delays and
increased costs; the ability to accurately forecast financial results;
and other risks described in Applied’s filings with the Securities and
Exchange Commission. Applied undertakes no obligation to revise or
update any forward-looking statements.
Applied will hold a conference call today at 7:00 a.m. PDT. To attend,
visit the company’s investor relations website at http://www.appliedmaterials.com/investors/07212010_conf_call.html
or dial 1-706-679-5064, or toll-free 1-877-356-9175. A live audio
webcast of this event will be available on Applied’s website. Replays
and an audio/MP3 will be available beginning Wednesday, July 21 by 5:00
p.m. PDT through August 17, 2010.
About Applied Materials
Applied Materials, Inc. is the global leader in Nanomanufacturing
Technology™ solutions with a broad portfolio of innovative equipment,
service and software products for the fabrication of semiconductor
chips, flat panel displays, solar photovoltaic cells, flexible
electronics and energy efficient glass. At Applied Materials, we apply
nanomanufacturing technology to improve the way people live. Learn more