Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________
FORM 8-K
 ____________________________________________________________________
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 15, 2019
____________________________________________________________________
 Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
 
 
 
 
 
Delaware
 
000-06920
 
94-1655526
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
3050 Bowers Avenue
 
 
P.O. Box 58039 Santa Clara, CA
 
95052-8039
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (408) 727-5555
N/A
(Former name or former address, if changed since last report.)
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share
AMAT
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).   o






Item 2.02 Results of Operations and Financial Condition.
On August 15, 2019, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its third quarter ended July 28, 2019. A copy of Applied Materials’ press release is attached hereto as Exhibit 99.1.
The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Applied Materials, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
 
 
 
Exhibit No.
 
Description
 
 










SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 

Applied Materials, Inc.
 (Registrant)
  
Date:
August 15, 2019
By:
/s/ Christina Y. Lai
 
 
 
Christina Y. Lai
 
 
 
Corporate Secretary  
 






 




Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13067367&doc=3

APPLIED MATERIALS ANNOUNCES THIRD QUARTER 2019 RESULTS

Quarterly revenue of $3.56 billion
GAAP EPS of $0.61 and non-GAAP EPS of $0.74
Returns $724 million to shareholders

SANTA CLARA, Calif., Aug. 15, 2019 — Applied Materials, Inc. (NASDAQ:AMAT) today reported results for its third quarter ended July 28, 2019.
Third Quarter Results
Applied generated revenue of $3.56 billion. On a GAAP basis, the company recorded gross margin of 43.7 percent, operating income of $802 million or 22.5 percent of net sales, and earnings per share (EPS) of $0.61.
On a non-GAAP adjusted basis, the company reported gross margin of 44.0 percent, operating income of $820 million or 23.0 percent of net sales, and EPS of $0.74.
The company returned $724 million to shareholders including $528 million in share repurchases and dividends of $196 million.

“Applied Materials is delivering solid financial performance in a market environment that remains challenging for the time being,” said Gary Dickerson, president and CEO. “We are excited about the company’s future opportunities and are fully funding our R&D programs to develop new products and capabilities that will accelerate customers’ roadmaps and underpin our growth in the years ahead.”







Applied Materials, Inc.
Page 2 of 13
Quarterly Results Summary
 
Q3 FY2019
 
Q3 FY2018
 
Change
 
(In millions, except per share amounts and percentages)
Net sales
$
3,562

 
$
4,162

 
(14)%
Gross margin
43.7
%
 
44.8
%
 
(1.1) points
Operating margin
22.5
%
 
26.3
%
 
(3.8) points
Net income
$
571

 
$
1,016

 
(44)%
Diluted earnings per share
$
0.61

 
$
1.01

 
(40)%
Non-GAAP Adjusted Results
 
 
 
 
 
Non-GAAP adjusted gross margin
44.0
%
 
45.9
%
 
(1.9) points
Non-GAAP adjusted operating margin
23.0
%
 
27.4
%
 
(4.4) points
Non-GAAP adjusted net income
$
692

 
$
1,048

 
(34)%
Non-GAAP adjusted diluted EPS
$
0.74

 
$
1.04

 
(29)%

Applied adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), as of the first day of fiscal 2019 using the full retrospective method. Applied also adopted Accounting Standards Update 2017-07, Compensation—Retirement Benefits, as of the first day of fiscal 2019 using the retrospective method. All prior periods included in the unaudited consolidated condensed balance sheet as of Oct. 28, 2018, and the unaudited consolidated condensed statements of operations and cash flows for the three and nine months ended July 29, 2018, were restated under the new standards.
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.








Applied Materials, Inc.
Page 3 of 13


Business Outlook
In the fourth quarter of fiscal 2019, Applied expects net sales to be approximately $3.685 billion, plus or minus $150 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.72 to $0.80.
This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes net income tax benefit related to intra-entity intangible asset transfers of $0.03 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.

Third Quarter Reportable Segment Information
Semiconductor Systems
Q3 FY2019
 
Q3 FY2018
 
(In millions, except percentages)
Net sales
$
2,273

 
$
2,578

Foundry, logic and other
49
%
 
36
%
DRAM
27
%
 
25
%
Flash
24
%
 
39
%
Operating income
613

 
831

Operating margin
27.0
%
 
32.2
%
Non-GAAP Adjusted Results
 
 
Non-GAAP adjusted operating income
$
624

 
$
876

Non-GAAP adjusted operating margin
27.5
%
 
34.0
%

Applied Global Services
Q3 FY2019
 
Q3 FY2018
 
(In millions, except percentages)
Net sales
$
931

 
$
952

Operating income
259

 
280

Operating margin
27.8
%
 
29.4
%
Non-GAAP Adjusted Results
 
 
Non-GAAP adjusted operating income
$
259

 
$
280

Non-GAAP adjusted operating margin
27.8
%
 
29.4
%









Applied Materials, Inc.
Page 4 of 13

Display and Adjacent Markets
Q3 FY2019
 
Q3 FY2018
 
(In millions, except percentages)
Net sales
$
339

 
$
616

Operating income
41

 
156

Operating margin
12.1
%
 
25.3
%
Non-GAAP Adjusted Results
 
 
Non-GAAP adjusted operating income
$
44

 
$
160

Non-GAAP adjusted operating margin
13.0
%
 
26.0
%


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, 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 its 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 management does not believe are indicative of Applied's 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.




Applied Materials, Inc.
Page 5 of 13

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 fourth quarter of fiscal 2019 and beyond, 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; global trade issues and changes in trade policies; 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;  changes in income tax laws; 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; 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) 408.235.4676
Michael Sullivan (financial community) 408.986.7977






Applied Materials, Inc.
Page 6 of 13


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 
 
Three Months Ended
 
Nine Months Ended
(In millions, except per share amounts)
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
Net sales
$
3,562

 
$
4,162

 
$
10,854

 
$
12,946

Cost of products sold
2,005

 
2,298

 
6,102

 
7,086

Gross profit
1,557

 
1,864

 
4,752

 
5,860

Operating expenses:
 
 
 
 
 
 
 
Research, development and engineering
515

 
505

 
1,539

 
1,503

Marketing and selling
128

 
138

 
392

 
394

General and administrative
112

 
128

 
335

 
363

Total operating expenses
755

 
771

 
2,266

 
2,260

Income from operations
802

 
1,093

 
2,486

 
3,600

Interest expense
58

 
59

 
178

 
174

Interest and other income, net
38

 
43

 
121

 
95

Income before income taxes
782

 
1,077

 
2,429

 
3,521

Provision for income taxes
211

 
61

 
421

 
1,240

Net income
$
571

 
$
1,016

 
$
2,008

 
$
2,281

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.61

 
$
1.02

 
$
2.13

 
$
2.22

Diluted
$
0.61

 
$
1.01

 
$
2.11

 
$
2.20

Weighted average number of shares:
 
 
 
 
 
 
 
Basic
929

 
994

 
943

 
1,026

Diluted
937

 
1,005

 
950

 
1,039








Applied Materials, Inc.
Page 7 of 13


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
 
(In millions)
July 28,
2019
 
October 28,
2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
3,014

 
$
3,440

Short-term investments
547

 
590

Accounts receivable, net
2,373

 
2,323

Inventories
3,539

 
3,721

Other current assets
569

 
530

Total current assets
10,042

 
10,604

Long-term investments
1,650

 
1,568

Property, plant and equipment, net
1,513

 
1,407

Goodwill
3,399

 
3,368

Purchased technology and other intangible assets, net
170

 
213

Deferred income taxes and other assets
2,031

 
473

Total assets
$
18,805

 
$
17,633

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
2,355

 
$
2,721

Contract liabilities
1,430

 
1,201

Total current liabilities
3,785

 
3,922

Income taxes payable
1,253

 
1,254

Long-term debt
5,312

 
5,309

Other liabilities
339

 
303

Total liabilities
10,689

 
10,788

Total stockholders’ equity
8,116

 
6,845

Total liabilities and stockholders’ equity
$
18,805

 
$
17,633









Applied Materials, Inc.
Page 8 of 13


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
(In millions)
Three Months Ended
 
Nine Months Ended
July 28,
2019
 
July 29,
2018
July 28,
2019
 
July 29,
2018
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income
$
571

 
$
1,016

 
$
2,008

 
$
2,281

Adjustments required to reconcile net income to cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
89

 
110

 
271

 
337

Share-based compensation
67

 
64

 
197

 
193

Deferred income taxes
8

 
22

 
57

 
94

Other
(10
)
 
(7
)
 
(19
)
 
4

Net change in operating assets and liabilities
62

 
(572
)
 
(93
)
 
(199
)
Cash provided by operating activities
787

 
633

 
2,421

 
2,710

Cash flows from investing activities:
 
 
 
 
 
 
 
Capital expenditures
(93
)
 
(133
)
 
(344
)
 
(457
)
Cash paid for acquisitions, net of cash acquired
(5
)
 

 
(28
)
 
(5
)
Proceeds from sales and maturities of investments
479

 
391

 
1,385

 
2,823

Purchases of investments
(543
)
 
(932
)
 
(1,370
)
 
(1,661
)
Cash provided by (used in) investing activities
(162
)
 
(674
)
 
(357
)
 
700

Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from common stock issuances

 

 
73

 
56

Common stock repurchases
(528
)
 
(1,250
)
 
(1,903
)
 
(4,532
)
Tax withholding payments for vested equity awards
(3
)
 
(6
)
 
(83
)
 
(160
)
Payments of dividends to stockholders
(196
)
 
(199
)
 
(577
)
 
(410
)
Cash used in financing activities
(727
)
 
(1,455
)
 
(2,490
)
 
(5,046
)
Decrease in cash and cash equivalents
(102
)
 
(1,496
)
 
(426
)
 
(1,636
)
Cash and cash equivalents — beginning of period
3,116

 
4,870

 
3,440

 
5,010

Cash and cash equivalents — end of period
$
3,014

 
$
3,374

 
$
3,014

 
$
3,374

Supplemental cash flow information:
 
 
 
 
 
 
 
Cash payments for income taxes
$
221

 
$
64

 
$
453

 
$
281

Cash refunds from income taxes
$
2

 
$
10

 
$
20

 
$
51

Cash payments for interest
$
33

 
$
33

 
$
143

 
$
143







Applied Materials, Inc.
Page 9 of 13

APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other
(In millions)
Q3 FY2019
 
Q3 FY2018
Unallocated net sales
$
19

 
$
16

Unallocated cost of products sold and expenses
(63
)
 
(126
)
Share-based compensation
(67
)
 
(64
)
Total
$
(111
)
 
$
(174
)
Additional Information
 
Q3 FY2019
 
Q3 FY2018
Net Sales by Geography (In millions)
 
United States
552

 
348

% of Total
15
%
 
9
%
Europe
162

 
224

% of Total
5
%
 
5
%
Japan
556

 
700

% of Total
16
%
 
17
%
Korea
445

 
572

% of Total
12
%
 
14
%
Taiwan
596

 
506

% of Total
17
%
 
12
%
Southeast Asia
134

 
165

% of Total
4
%
 
4
%
China
1,117

 
1,647

% of Total
31
%
 
39
%
 
 
 
 
Employees (In thousands)
 
 
 
Regular Full Time
21.6

 
20.7









Applied Materials, Inc.
Page 10 of 13
 APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 
Three Months Ended
 
Nine Months Ended
(In millions, except percentages)
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
Non-GAAP Adjusted Gross Profit
 
 
 
 
 
 
 
Reported gross profit - GAAP basis
$
1,557

 
$
1,864

 
$
4,752

 
$
5,860

Certain items associated with acquisitions1
9

 
45

 
28

 
134

Non-GAAP adjusted gross profit
$
1,566

 
$
1,909

 
$
4,780

 
$
5,994

Non-GAAP adjusted gross margin
44.0
%
 
45.9
%
 
44.0
%
 
46.3
%
Non-GAAP Adjusted Operating Income
 
 
 
 
 
 
 
Reported operating income - GAAP basis
$
802

 
$
1,093

 
$
2,486

 
$
3,600

Certain items associated with acquisitions1
13

 
49

 
41

 
147

Acquisition integration and deal costs
5

 

 
12

 
2

Non-GAAP adjusted operating income
$
820

 
$
1,142

 
$
2,539

 
$
3,749

Non-GAAP adjusted operating margin
23.0
%
 
27.4
%
 
23.4
%
 
29.0
%
Non-GAAP Adjusted Net Income
 
 
 
 
 
 
 
Reported net income - GAAP basis
$
571

 
$
1,016

 
$
2,008

 
$
2,281

Certain items associated with acquisitions1
13

 
49

 
41

 
147

Acquisition integration and deal costs
5

 

 
12

 
2

Impairment (gain on sale) of strategic investments, net

 
(14
)
 

 
(10
)
Loss (gain) on strategic investments, net
(8
)
 

 
(31
)
 

Income tax effect of share-based compensation2

 
13

 
(4
)
 
(13
)
Income tax effect of changes in applicable U.S. tax laws3

 
12

 
(24
)
 
1,089

Income tax effects related to amortization of intra-entity intangible asset transfers
115

 

 
56

 

Resolution of prior years’ income tax filings and other tax items
(1
)
 
(29
)
 
75

 
(32
)
Income tax effect of non-GAAP adjustments4
(3
)
 
1

 
(2
)
 
(7
)
Non-GAAP adjusted net income
$
692

 
$
1,048

 
$
2,131

 
$
3,457



These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
 
 
2
GAAP basis tax benefit related to share-based compensation 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.
Page 11 of 13

APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 
Three Months Ended
 
Nine Months Ended
(In millions, except per share amounts)
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
Non-GAAP Adjusted Earnings Per Diluted Share
 
 
 
 
 
 
 
Reported earnings per diluted share - GAAP basis
$
0.61

 
$
1.01

 
$
2.11

 
$
2.20

Certain items associated with acquisitions
0.01

 
0.05

 
0.04

 
0.13

Acquisition integration and deal costs
0.01

 

 
0.01

 

Impairment (gain on sale) of strategic investments, net

 
(0.01
)
 

 
(0.01
)
Loss (gain) on strategic investments, net
(0.01
)
 

 
(0.03
)
 

Income tax effect of share-based compensation

 
0.01

 

 
(0.01
)
Income tax effect of changes in applicable U.S. tax laws

 
0.01

 
(0.03
)
 
1.05

Income tax effects related to amortization of intra-entity intangible asset transfers
0.12

 

 
0.06

 

Resolution of prior years’ income tax filings and other tax items

 
(0.03
)
 
0.08

 
(0.03
)
Non-GAAP adjusted earnings per diluted share
$
0.74

 
$
1.04

 
$
2.24

 
$
3.33

Weighted average number of diluted shares
937

 
1,005

 
950

 
1,039


 
 







Applied Materials, Inc.
Page 12 of 13
 
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
 
 
Three Months Ended
 
Nine Months Ended
(In millions, except percentages)
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
Semiconductor Systems Non-GAAP Adjusted Operating Income
 
 
 
 
 
 
 
Reported operating income - GAAP basis
$
613

 
$
831

 
$
1,823

 
$
2,847

Certain items associated with acquisitions1
11

 
45

 
32

 
137

Non-GAAP adjusted operating income
$
624

 
$
876

 
$
1,855

 
$
2,984

Non-GAAP adjusted operating margin
27.5
%
 
34.0
%
 
27.6
%
 
35.8
%
AGS Non-GAAP Adjusted Operating Income
 
 
 
 
 
 
 
Reported operating income - GAAP basis
$
259

 
$
280

 
$
827

 
$
814

Acquisition integration costs

 

 

 
1

Non-GAAP adjusted operating income
$
259

 
$
280

 
$
827

 
$
815

Non-GAAP adjusted operating margin
27.8
%
 
29.4
%
 
28.7
%
 
29.3
%
Display and Adjacent Markets Non-GAAP Adjusted Operating Income
 
 
 
 
 
 
 
Reported operating income - GAAP basis
$
41

 
$
156

 
$
198

 
$
456

Certain items associated with acquisitions1
2

 
4

 
9

 
10

Acquisition integration costs
1

 

 
1

 
1

Non-GAAP adjusted operating income
$
44

 
$
160

 
$
208

 
$
467

Non-GAAP adjusted operating margin
13.0
%
 
26.0
%
 
17.4
%
 
26.3
%
 
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.






Applied Materials, Inc.
Page 13 of 13



UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
 
 
Three Months Ended
(In millions, except percentages)
July 28, 2019
 
 
Provision for income taxes - GAAP basis (a)
$
211

Income tax effects related to amortization of intra-entity intangible asset transfers
(115
)
Resolutions of prior years’ income tax filings and other tax items
1

Income tax effect of non-GAAP adjustments
3

Non-GAAP adjusted provision for income taxes (b)
$
100

 
 
Income before income taxes - GAAP basis (c)
$
782

Certain items associated with acquisitions
13

Acquisition integration and deal costs
5

Loss (gain) on strategic investments, net
(8
)
Non-GAAP adjusted income before income taxes (d)
$
792

 
 
Effective income tax rate - GAAP basis (a/c)
27.0
%
 
 
Non-GAAP adjusted effective income tax rate (b/d)
12.6
%