Q1 FY2022 | Q1 FY2021 | Change | |||||||||||||||
(In millions, except per share amounts and percentages) | |||||||||||||||||
Net sales | $ | 6,271 | $ | 5,162 | 21% | ||||||||||||
Gross margin | 47.2 | % | 45.5 | % | 1.7 points | ||||||||||||
Operating margin | 31.5 | % | 24.9 | % | 6.6 points | ||||||||||||
Net income | $ | 1,792 | $ | 1,130 | 59% | ||||||||||||
Diluted earnings per share | $ | 2.00 | $ | 1.22 | 64% | ||||||||||||
Non-GAAP Adjusted Results | |||||||||||||||||
Non-GAAP adjusted gross margin | 47.3 | % | 45.9 | % | 1.4 points | ||||||||||||
Non-GAAP adjusted operating margin | 31.7 | % | 29.0 | % | 2.7 points | ||||||||||||
Non-GAAP adjusted net income | $ | 1,696 | $ | 1,282 | 32% | ||||||||||||
Non-GAAP adjusted diluted EPS | $ | 1.89 | $ | 1.39 | 36% |
Semiconductor Systems | Q1 FY2022 | Q1 FY2021 | |||||||||
(In millions, except percentages) | |||||||||||
Net sales | $ | 4,567 | $ | 3,553 | |||||||
Foundry, logic and other | 60 | % | 58 | % | |||||||
DRAM | 25 | % | 17 | % | |||||||
Flash memory | 15 | % | 25 | % | |||||||
Operating income | $ | 1,771 | $ | 1,261 | |||||||
Operating margin | 38.8 | % | 35.5 | % | |||||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 1,778 | $ | 1,281 | |||||||
Non-GAAP adjusted operating margin | 38.9 | % | 36.1 | % |
Applied Global Services | Q1 FY2022 | Q1 FY2021 | |||||||||
(In millions, except percentages) | |||||||||||
Net sales | $ | 1,320 | $ | 1,155 | |||||||
Operating income | $ | 403 | $ | 332 | |||||||
Operating margin | 30.5 | % | 28.7 | % | |||||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 403 | $ | 340 | |||||||
Non-GAAP adjusted operating margin | 30.5 | % | 29.4 | % |
Display and Adjacent Markets | Q1 FY2022 | Q1 FY2021 | |||||||||
(In millions, except percentages) | |||||||||||
Net sales | $ | 366 | $ | 411 | |||||||
Operating income | $ | 76 | $ | 65 | |||||||
Operating margin | 20.8 | % | 15.8 | % | |||||||
Non-GAAP Adjusted Results | |||||||||||
Non-GAAP adjusted operating income | $ | 77 | $ | 75 | |||||||
Non-GAAP adjusted operating margin | 21.0 | % | 18.2 | % |
Three Months Ended | |||||||||||
(In millions, except per share amounts) | January 30, 2022 | January 31, 2021 | |||||||||
Net sales | $ | 6,271 | $ | 5,162 | |||||||
Cost of products sold | 3,312 | 2,813 | |||||||||
Gross profit | 2,959 | 2,349 | |||||||||
Operating expenses: | |||||||||||
Research, development and engineering | 654 | 606 | |||||||||
Marketing and selling | 167 | 147 | |||||||||
General and administrative | 166 | 161 | |||||||||
Severance and related charges | (4) | 152 | |||||||||
Total operating expenses | 983 | 1,066 | |||||||||
Income from operations | 1,976 | 1,283 | |||||||||
Interest expense | 57 | 61 | |||||||||
Interest and other income, net | 6 | 18 | |||||||||
Income before income taxes | 1,925 | 1,240 | |||||||||
Provision for income taxes | 133 | 110 | |||||||||
Net income | $ | 1,792 | $ | 1,130 | |||||||
Earnings per share: | |||||||||||
Basic | $ | 2.02 | $ | 1.23 | |||||||
Diluted | $ | 2.00 | $ | 1.22 | |||||||
Weighted average number of shares: | |||||||||||
Basic | 889 | 915 | |||||||||
Diluted | 897 | 925 |
(In millions) | January 30, 2022 | October 31, 2021 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 5,264 | $ | 4,995 | |||||||
Short-term investments | 473 | 464 | |||||||||
Accounts receivable, net | 4,405 | 4,953 | |||||||||
Inventories | 4,526 | 4,309 | |||||||||
Other current assets | 1,039 | 1,386 | |||||||||
Total current assets | 15,707 | 16,107 | |||||||||
Long-term investments | 2,026 | 2,055 | |||||||||
Property, plant and equipment, net | 1,974 | 1,934 | |||||||||
Goodwill | 3,479 | 3,479 | |||||||||
Purchased technology and other intangible assets, net | 94 | 104 | |||||||||
Deferred income taxes and other assets | 2,148 | 2,146 | |||||||||
Total assets | $ | 25,428 | $ | 25,825 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 3,867 | $ | 4,268 | |||||||
Contract liabilities | 2,397 | 2,076 | |||||||||
Total current liabilities | 6,264 | 6,344 | |||||||||
Long-term debt | 5,454 | 5,452 | |||||||||
Income taxes payable | 1,068 | 1,090 | |||||||||
Other liabilities | 752 | 692 | |||||||||
Total liabilities | 13,538 | 13,578 | |||||||||
Total stockholders’ equity | 11,890 | 12,247 | |||||||||
Total liabilities and stockholders’ equity | $ | 25,428 | $ | 25,825 |
(In millions) | Three Months Ended | ||||||||||
January 30, 2022 | January 31, 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 1,792 | $ | 1,130 | |||||||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 102 | 94 | |||||||||
Severance and related charges | (4) | 148 | |||||||||
Share-based compensation | 118 | 107 | |||||||||
Deferred income taxes | 1 | 28 | |||||||||
Other | 16 | — | |||||||||
Net change in operating assets and liabilities | 633 | (86) | |||||||||
Cash provided by operating activities | 2,658 | 1,421 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (144) | (121) | |||||||||
Cash paid for acquisitions, net of cash acquired | — | (12) | |||||||||
Proceeds from sales and maturities of investments | 318 | 358 | |||||||||
Purchases of investments | (312) | (441) | |||||||||
Cash used in investing activities | (138) | (216) | |||||||||
Cash flows from financing activities: | |||||||||||
Common stock repurchases | (1,803) | — | |||||||||
Tax withholding payments for vested equity awards | (235) | (142) | |||||||||
Payments of dividends to stockholders | (214) | (201) | |||||||||
Cash used in financing activities | (2,252) | (343) | |||||||||
Increase in cash, cash equivalents and restricted cash equivalents | 268 | 862 | |||||||||
Cash, cash equivalents and restricted cash equivalents—beginning of period | 5,101 | 5,466 | |||||||||
Cash, cash equivalents and restricted cash equivalents — end of period | $ | 5,369 | $ | 6,328 | |||||||
Reconciliation of cash, cash equivalents, and restricted cash equivalents | |||||||||||
Cash and cash equivalents | $ | 5,264 | $ | 6,213 | |||||||
Restricted cash equivalents included in deferred income taxes and other assets | 105 | 115 | |||||||||
Total cash, cash equivalents, and restricted cash equivalents | $ | 5,369 | $ | 6,328 | |||||||
Supplemental cash flow information: | |||||||||||
Cash payments for income taxes | $ | 80 | $ | 110 | |||||||
Cash refunds from income taxes | $ | 123 | $ | 19 | |||||||
Cash payments for interest | $ | 34 | $ | 35 |
(In millions) | Q1 FY2022 | Q1 FY2021 | |||||||||
Unallocated net sales | $ | 18 | $ | 43 | |||||||
Unallocated cost of products sold and expenses | (178) | (167) | |||||||||
Share-based compensation | (118) | (107) | |||||||||
Severance and related charges | 4 | (144) | |||||||||
Total | $ | (274) | $ | (375) |
Q1 FY2022 | Q1 FY2021 | ||||||||||
Net Sales by Geography (In millions) | |||||||||||
United States | $ | 847 | $ | 343 | |||||||
% of Total | 14 | % | 6 | % | |||||||
Europe | $ | 281 | $ | 299 | |||||||
% of Total | 4 | % | 6 | % | |||||||
Japan | $ | 561 | $ | 458 | |||||||
% of Total | 9 | % | 9 | % | |||||||
Korea | $ | 1,121 | $ | 1,289 | |||||||
% of Total | 18 | % | 25 | % | |||||||
Taiwan | $ | 1,249 | $ | 1,200 | |||||||
% of Total | 20 | % | 23 | % | |||||||
Southeast Asia | $ | 225 | $ | 190 | |||||||
% of Total | 3 | % | 4 | % | |||||||
China | $ | 1,987 | $ | 1,383 | |||||||
% of Total | 32 | % | 27 | % | |||||||
Employees (In thousands) | |||||||||||
Regular Full Time | 28.5 | 24.2 |
Three Months Ended | |||||||||||
(In millions, except percentages) | January 30, 2022 | January 31, 2021 | |||||||||
Non-GAAP Adjusted Gross Profit | |||||||||||
Reported gross profit - GAAP basis | $ | 2,959 | $ | 2,349 | |||||||
Certain items associated with acquisitions1 | 6 | 8 | |||||||||
Certain incremental expenses related to COVID-192 | — | 12 | |||||||||
Non-GAAP adjusted gross profit | $ | 2,965 | $ | 2,369 | |||||||
Non-GAAP adjusted gross margin | 47.3 | % | 45.9 | % | |||||||
Non-GAAP Adjusted Operating Income | |||||||||||
Reported operating income - GAAP basis | $ | 1,976 | $ | 1,283 | |||||||
Certain items associated with acquisitions1 | 9 | 13 | |||||||||
Acquisition integration and deal costs | 4 | 24 | |||||||||
Certain incremental expenses related to COVID-192 | — | 24 | |||||||||
Severance and related charges3 | (4) | 152 | |||||||||
Non-GAAP adjusted operating income | $ | 1,985 | $ | 1,496 | |||||||
Non-GAAP adjusted operating margin | 31.7 | % | 29.0 | % | |||||||
Non-GAAP Adjusted Net Income | |||||||||||
Reported net income - GAAP basis | $ | 1,792 | $ | 1,130 | |||||||
Certain items associated with acquisitions1 | 9 | 13 | |||||||||
Acquisition integration and deal costs | 4 | 24 | |||||||||
Certain incremental expenses related to COVID-192 | — | 24 | |||||||||
Severance and related charges3 | (4) | 152 | |||||||||
Realized loss (gain) on strategic investments, net | 2 | (2) | |||||||||
Unrealized loss (gain) on strategic investments, net | (5) | (6) | |||||||||
Income tax effect of share-based compensation4 | (58) | (29) | |||||||||
Income tax effects related to intra-entity intangible asset transfers | 18 | 20 | |||||||||
Resolution of prior years’ income tax filings and other tax items | (62) | (3) | |||||||||
Income tax effect of non-GAAP adjustments5 | — | (41) | |||||||||
Non-GAAP adjusted net income | $ | 1,696 | $ | 1,282 |
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. | ||||
2 | Temporary incremental employee compensation during the COVID-19 pandemic. | ||||
3 | The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees. | ||||
4 | GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis. | ||||
5 | Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes. | ||||
Three Months Ended | |||||||||||
(In millions, except per share amounts) | January 30, 2022 | January 31, 2021 | |||||||||
Non-GAAP Adjusted Earnings Per Diluted Share | |||||||||||
Reported earnings per diluted share - GAAP basis | $ | 2.00 | $ | 1.22 | |||||||
Certain items associated with acquisitions | 0.01 | 0.01 | |||||||||
Acquisition integration and deal costs | — | 0.02 | |||||||||
Certain incremental expenses related to COVID-19 | — | 0.02 | |||||||||
Severance and related charges | — | 0.13 | |||||||||
Unrealized loss (gain) on strategic investments, net | (0.01) | — | |||||||||
Income tax effect of share-based compensation | (0.06) | (0.03) | |||||||||
Income tax effects related to intra-entity intangible asset transfers | 0.02 | 0.02 | |||||||||
Resolution of prior years’ income tax filings and other tax items | (0.07) | — | |||||||||
Non-GAAP adjusted earnings per diluted share | $ | 1.89 | $ | 1.39 | |||||||
Weighted average number of diluted shares | 897 | 925 |
Three Months Ended | |||||||||||
(In millions, except percentages) | January 30, 2022 | January 31, 2021 | |||||||||
Semiconductor Systems Non-GAAP Adjusted Operating Income | |||||||||||
Reported operating income - GAAP basis | $ | 1,771 | $ | 1,261 | |||||||
Certain items associated with acquisitions1 | 7 | 10 | |||||||||
Acquisition integration costs | — | (2) | |||||||||
Certain incremental expenses related to COVID-192 | — | 12 | |||||||||
Non-GAAP adjusted operating income | $ | 1,778 | $ | 1,281 | |||||||
Non-GAAP adjusted operating margin | 38.9 | % | 36.1 | % | |||||||
AGS Non-GAAP Adjusted Operating Income | |||||||||||
Reported operating income - GAAP basis | $ | 403 | $ | 332 | |||||||
Certain incremental expenses related to COVID-192 | — | 8 | |||||||||
Non-GAAP adjusted operating income | $ | 403 | $ | 340 | |||||||
Non-GAAP adjusted operating margin | 30.5 | % | 29.4 | % | |||||||
Display and Adjacent Markets Non-GAAP Adjusted Operating Income | |||||||||||
Reported operating income - GAAP basis | $ | 76 | $ | 65 | |||||||
Certain items associated with acquisitions1 | 1 | 1 | |||||||||
Certain incremental expenses related to COVID-192 | — | 1 | |||||||||
Severance and related charges3 | — | 8 | |||||||||
Non-GAAP adjusted operating income | $ | 77 | $ | 75 | |||||||
Non-GAAP adjusted operating margin | 21.0 | % | 18.2 | % | |||||||
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. | ||||
2 | Temporary incremental employee compensation during the COVID-19 pandemic. | ||||
3 | The severance and related charges related to workforce reduction actions globally across the Display and Adjacent Markets business. | ||||
Three Months Ended | |||||
(In millions, except percentages) | January 30, 2022 | ||||
Provision for income taxes - GAAP basis (a) | $ | 133 | |||
Income tax effect of share-based compensation | 58 | ||||
Income tax effects related to intra-entity intangible asset transfers | (18) | ||||
Resolutions of prior years’ income tax filings and other tax items | 62 | ||||
Non-GAAP adjusted provision for income taxes (b) | $ | 235 | |||
Income before income taxes - GAAP basis (c) | $ | 1,925 | |||
Certain items associated with acquisitions | 9 | ||||
Acquisition integration and deal costs | 4 | ||||
Severance and related charges | (4) | ||||
Realized loss (gain) on strategic investments, net | 2 | ||||
Unrealized loss (gain) on strategic investments, net | (5) | ||||
Non-GAAP adjusted income before income taxes (d) | $ | 1,931 | |||
Effective income tax rate - GAAP basis (a/c) | 6.9 | % | |||
Non-GAAP adjusted effective income tax rate (b/d) | 12.2 | % |