Applied Materials : Applied Materials Announces Second Quarter Results

    Applied Materials : Applied Materials Announces Second Quarter Results

  *Second consecutive quarter with more than $2 billion in new orders
  *Net sales of $1.97 billion up 25 percent sequentially
  *Non-GAAP adjusted EPS of 16 cents exceeded high end of outlook; GAAP loss
    of 11 cents per share reflected impairment charges in Energy and
    Environmental Solutions

SANTA CLARA, Calif., May 16, 2013 - Applied Materials, Inc. (NASDAQ:AMAT), the
global leader in manufacturing solutions for the semiconductor, display and
solar industries, today reported results for its second quarter of fiscal 2013
ended April 28, 2013.

Applied generated orders of $2.27 billion, up 7 percent from the prior
quarter, with Silicon Systems Group orders up 14 percent from the first
quarter and Display orders up 41 percent sequentially. Net sales were $1.97
billion, up 25 percent sequentially.

Applied reported non-GAAP adjusted operating income of $285 million and
non-GAAP adjusted net income of $199 million or 16 cents per diluted share.
The company recorded a GAAP operating loss of $68 million and a GAAP net loss
of $129 million or 11 cents per diluted share. The GAAP net loss included
$278 million in goodwill and intangible assetimpairment chargesassociated
withthe Energy and Environmental Solutions (EES) segment, which were
primarily the result of the further deterioration in solar equipment market
conditions, along with $10 million in charges related to previously announced
restructuring plans. The company continues to aggressively reduce spending in
the EES segment.

"For the second quarter in a row, Applied had strong order performance of over
$2 billion," said Mike Splinter, chairman and chief executive officer. "We are
seeing increasing pull from some of our largest strategic customers for our
key enabling technologies. We remain committed to driving profitable growth."

Quarterly Results Summary

          GAAP Results              Q2 FY2013       Q1 FY2013      Q2 FY2012
           Net sales              $1.97 billion   $1.57 billion  $2.54 billion
    Operating income (loss)       $(68) million    $39 million   $409 million
       Net income (loss)          $(129) million   $34 million   $289 million
  Diluted earnings (loss) per
          share (EPS)                $(0.11)          $0.03          $0.22
   Non-GAAP Adjusted Results
  Non-GAAP adjusted operating
             income                $285 million   $112 million   $490 million
  Non-GAAP adjusted net income     $199 million    $69 million   $349 million
 Non-GAAP adjusted diluted EPS        $0.16           $0.06          $0.27

Applied's non-GAAP adjusted results exclude the impact of the following, where
applicable: certain discrete tax items; restructuring charges and any
associated adjustments; certain acquisition-related costs; and impairments of
assets, goodwill, or investments. 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" below.

Second Quarter Reportable Segment Results and Comparisons to the Prior Quarter

Silicon Systems Group (SSG) orders were $1.55 billion, up 14 percent, with
growth primarily driven by memory. Net sales were $1.29 billion, up 33
percent, led by foundry. Non-GAAP adjusted operating income increased to $329
million or 25.5 percent of net sales. GAAP operating income increased to $283
million or 21.9 percent of net sales. New order composition was: foundry 66
percent; logic/other 13 percent; flash 11 percent; and DRAM 10 percent.

Applied Global Services (AGS) orders were $481 million, down 12 percent
primarily due to the timing of service contract renewals which are typically
concentrated in the first fiscal quarter. Net sales were $517 million, up 10
percent. Non-GAAP adjusted operating income increased to $120 million and rose
by 3.9 points to 23.2 percent of net sales. GAAP operating income increased to
$118 million or 22.8 percent of net sales.

Display orders were $195 million, up 41 percent driven by the initial recovery
in TV equipment investment. Net sales were $127 million, up 46 percent.
Non-GAAP adjusted operating income increased to $21 million or 16.5 percent of
net sales. GAAP operating income increased to $19 million or 15.0 percent of
net sales.

Energy and Environmental Solutions (EES) orders were $39 million, down 43
percent. Net sales were $38 million, down 17 percent. EES had a non-GAAP
adjusted operating loss of $34 million; EES recorded a GAAP operating loss of
$322 million, which included impairment charges of $278 million.

Additional Quarterly Financial Information

  *Backlog increased by 9 percent sequentially to $2.30 billion including
    negative adjustments of $102 million.
  *Gross margin was 43.2 percent on a non-GAAP adjusted basis, up from 39.8
    percent in the prior quarter reflecting higher net sales and lower
    inventory charges. GAAP gross margin was 41.0 percent.
  *RD&E increased by $40 million or 13 percent sequentially. On a
    year-over-year basis, RD&E as a proportion of RD&E plus SG&A increased by
    5 points to 59 percent, reflecting the impact of structural changes aimed
    at funding growth initiatives.
  *The effective tax rate was 24.9 percent on a non-GAAP adjusted basis. The
    GAAP effective tax rate was (43.3) percent, reflecting the effects of the
    goodwill impairment charge, which were not deductible.
  *The company paid $108 million in cash dividends and used $100 million to
    repurchase 8 million shares of its common stock.
  *Cash, cash equivalents and investments ended the quarter at $2.85 billion,
    up slightly from the prior quarter.

Business Outlook

For the third quarter of fiscal 2013, Applied expects net sales to be up
slightly from the previous quarter. The company expects non-GAAP adjusted EPS
to be in the range of $0.16 to $0.20. The non-GAAP adjusted EPS outlook
excludes known charges related to completed acquisitions of approximately
$0.04 per share but does not exclude other non-GAAP adjustments that may arise
subsequent to this release.

Use of Non-GAAP Adjusted Financial Measures

Management uses non-GAAP adjusted results to evaluate the company's operating
and financial performance in light of business objectives and for planning
purposes. These measures are not in accordance with GAAP and may differ from
non-GAAP methods of accounting and reporting used by other companies. Applied
believes these measures enhance 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. The presentation of
this additional information should not be considered a substitute for results
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 statements
regarding Applied's performance, customer demand, industry conditions, market
outlooks, and business outlooks for the third quarter of fiscal 2013, as well
as 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: the level of demand for Applied's products,
which is subject to many factors, including uncertain global economic and
industry conditions, end-demand for electronic products and semiconductors,
and customers' new technology and capacity requirements; variability of
operating expenses and results among the company's segments caused by
differing conditions in the served markets; the concentrated nature of
Applied's customer base; Applied's ability to (i)develop, deliver and support
a broad range of products, expand its markets and develop new markets,
(ii)timely align its cost structure with business conditions and achieve the
intended objectives of cost-reduction activities, (iii)plan and manage its
resources and production capability, (iv)obtain and protect intellectual
property rights in key technologies, (v)attract, motivate and retain key
employees, and (vi)accurately forecast future results, which depends on
multiple assumptions related to, without limitation, market conditions,
customer requirements and business needs; and other risks described in
Applied's SEC filings, including its most recent Form 10-Q. All
forward-looking statements are based on management's estimates, projections
and assumptions as of the date hereof. The company undertakes no obligation to
update any forward-looking statements.

About Applied Materials

Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in providing
innovative equipment, services and software to enable the manufacture of
advanced semiconductor, flat panel display and solar photovoltaic products.
Our technologies help make innovations like smartphones, flat screen TVs and
solar panels more affordable and accessible to consumers and businesses around
the world. Learn more at www.appliedmaterials.com.

Contact:

Kevin Winston (editorial/media) 408.235.4498
Michael Sullivan (financial community) 408.986.7977

                           APPLIED MATERIALS, INC.
          UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                              Three Months Ended            Six Months Ended
(In millions, except   April28,  January27,  April29,  April28,  April29,
per share amounts)      2013        2013        2012       2013       2012
Net sales              $ 1,973     $  1,573     $ 2,541   $ 3,546     $ 4,730
Cost of products
sold                     1,165          991       1,530     2,156       2,933
Gross margin               808          582       1,011     1,390       1,797
Operating expenses:
 Research,
 development and
 engineering               344          304         321       648         625
 Selling, general
 and administrative        244          230         281       474         584
 Impairment of
 goodwill and
 intangible assets         278            -           -       278           -
 Restructuring
 charges and asset
 impairments                10            9           -        19           -
Total operating
expenses                   876          543         602     1,419       1,209
Income (loss) from
operations                 (68 )         39         409       (29 )       588
Impairments of
strategic
investments                  2            -           3         2           3
Interest and other
expenses                    24           24          23        48          47
Interest and other
income, net                  4            3           4         7           8
Income (loss) before
income taxes               (90 )         18         387       (72 )       546
Provision (benefit)
for income taxes            39          (16 )        98        23         140
Net income (loss)      $  (129 )   $     34     $   289   $   (95 )   $   406
Earnings (loss) per
share:
 Basic and diluted     $ (0.11 )   $   0.03     $  0.22   $ (0.08 )   $  0.31
Weighted average
number of shares:
 Basic                   1,203        1,198       1,289     1,200       1,294
 Diluted                 1,203        1,212       1,301     1,200       1,305

                           APPLIED MATERIALS, INC.
               UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

                                           April28,  January27,  October28,
(In millions)                               2013        2013         2012
ASSETS
Current assets:
     Cash and cash equivalents             $  1,545   $    1,523   $    1,392
     Short-term investments                     225          230          545
     Accounts receivable, net                 1,275        1,109        1,220
     Inventories                              1,318        1,278        1,272
     Other current assets                       750          625          673
Total current assets                          5,113        4,765        5,102
Long-term investments                         1,080        1,062        1,055
Property, plant and equipment, net              886          900          910
Goodwill                                      3,294        3,518        3,518
Purchased technology and other
intangible assets, net                        1,194        1,302        1,355
Deferred income taxes and other assets          128          167          162
Total assets                               $ 11,695   $   11,714   $   12,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued
     expenses                              $  1,462   $    1,287   $    1,510
     Customer deposits and deferred
     revenue                                    739          678          755
Total current liabilities                     2,201        1,965        2,265
Long-term debt                                1,946        1,946        1,946
Other liabilities                               650          662          656
Total liabilities                             4,797        4,573        4,867
Total stockholders' equity                    6,898        7,141        7,235
Total liabilities and stockholders'
equity                                     $ 11,695   $   11,714   $   12,102

                           APPLIED MATERIALS, INC.
          UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                              Three Months Ended            Six Months Ended
                       April28,  January27,  April29,  April28,  April29,
(In millions)            2013        2013        2012       2013       2012
Cash flows from
operating activities:
 Net income (loss)     $  (129 )  $      34    $   289    $   (95 )  $   406
 Adjustments required
 to reconcile net
 income (loss) to cash
 provided by operating
 activities:
   Depreciation and
   amortization            106          106        108        212        220
   Impairment of
   goodwill and
   intangible assets       278            -          -        278          -
   Restructuring
   charges and asset
   impairments              10            9          -         19          -
   Deferred income
   taxes and other          32          (78 )       14        (46 )       53
   Share-based
   compensation             39           42         43         81         96
   Net change in
   operating assets
   and liabilities,
   net of amounts
   acquired               (112 )        (97 )      149       (209 )        9
Cash provided by
operating activities       224           16        603        240        784
Cash flows from
investing activities:
 Capital expenditures      (51 )        (49 )      (39 )     (100 )      (76 )
 Cash paid for
 acquisition, net of
 cash acquired              (1 )          -         (7 )       (1 )   (4,186 )
 Proceeds from sales
 and maturities of
 investments               158          445        247        603        560
 Purchases of
 investments              (167 )       (143 )     (460 )     (310 )     (714 )
Cash provided by (used
in) investing
activities                 (61 )        253       (259 )      192     (4,416 )
Cash flows from
financing activities:
 Proceeds from common
 stock issuances            67           18         43         85         45
 Common stock
 repurchases              (100 )        (48 )     (200 )     (148 )     (400 )
 Payments of dividends
 to stockholders          (108 )       (108 )     (104 )     (216 )     (208 )
Cash used in financing
activities                (141 )       (138 )     (261 )     (279 )     (563 )
Effect of exchange
rate changes on cash
and cash equivalents         -            -         (3 )        -         (4 )
Increase (decrease) in
cash and cash
equivalents                 22          131         80        153     (4,199 )
Cash and cash
equivalents-
beginning of period      1,523        1,392      1,681      1,392      5,960
Cash and cash
equivalents- end of
period                 $ 1,545    $   1,523    $ 1,761    $ 1,545    $ 1,761
Supplemental cash flow
information:
 Cash payments for
 income taxes          $   122    $      32    $   146    $   154    $   179
 Cash refunds from
 income taxes          $     2    $      65    $     1    $    67    $     4
 Cash payments for
 interest              $     7    $      39    $     7    $    46    $    48

                           APPLIED MATERIALS, INC.
                      UNAUDITED SUPPLEMENTAL INFORMATION

Reportable Segment Results

                      Q2 FY2013                    Q1 FY2013                    Q2 FY2012
                               Operating                    Operating                    Operating
(In            New      Net     Income      New      Net     Income      New      Net     Income
millions)    Orders    Sales    (Loss)    Orders    Sales    (Loss)    Orders    Sales    (Loss)
SSG          $ 1,551  $ 1,291  $   283    $ 1,363  $   969  $   134    $ 1,969  $ 1,777  $   504
AGS              481      517      118        544      471       89        650      551      109
Display          195      127       19        138       87        3         84      134        7
EES*              39       38     (322 )       68       46      (54 )       62       79      (63 )
Corporate          -        -     (166 )        -        -     (133 )        -        -     (148 )
Consolidated $ 2,266  $ 1,973  $   (68 )  $ 2,113  $ 1,573  $    39    $ 2,765  $ 2,541  $   409

* Operating loss for the second quarter of fiscal 2013 includes $278 million
in goodwill and intangible asset impairment charges

Corporate Unallocated Expenses

(In millions)                                 Q2 FY2013  Q1 FY2013  Q2 FY2012
Restructuring charges and asset impairments,
net                                            $      4   $      4   $      -
Share-based compensation                             39         42         43
Other unallocated expenses                          123         87        105
Corporate                                      $    166   $    133   $    148

                           APPLIED MATERIALS, INC.
                      UNAUDITED SUPPLEMENTAL INFORMATION

Additional Information

                                    Q2 FY2013      Q1 FY2013      Q2 FY2012
New Orders and Net Sales by
Geography
                                    New     Net    New     Net    New     Net
(In $ millions)                   Orders  Sales  Orders  Sales  Orders  Sales
United States                       398    362     391    401     673    518
         % of Total                  18 %   18 %    19 %   25 %    24 %   20 %
Europe                              173    144     134    119     271    229
         % of Total                   8 %    7 %     6 %    8 %    10 %    9 %
Japan                               191    157     181     98     121    169
         % of Total                   8 %    8 %     9 %    6 %     4 %    7 %
Korea                               259    226     198    205     704    750
         % of Total                  11 %   12 %     9 %   13 %    26 %   30 %
Taiwan                              902    828     906    565     810    654
         % of Total                  40 %   42 %    43 %   36 %    29 %   26 %
Southeast Asia                       67     73      65     58      68     64
         % of Total                   3 %    4 %     3 %    4 %     3 %    2 %
China                               276    183     238    127     118    157
         % of Total                  12 %    9 %    11 %    8 %     4 %    6 %
Employees (In thousands)
Regular Full Time                         13.6           13.7           14.6

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

                              Three Months Ended            Six Months Ended
(In millions, except   April28,  January27,  April29,  April28,  April29,
percentages)            2013        2013        2012       2013       2012
Non-GAAP Adjusted
Gross Margin
Reported gross
margin (GAAP basis)    $   808    $    582     $ 1,011    $ 1,390    $ 1,797
Certain items
associated with
acquisitions^1              43          43          59         86        163
Acquisition
integration and deal
costs                        1           1           -          2          -
Non-GAAP adjusted
gross margin           $   852    $    626     $ 1,070    $ 1,478    $ 1,960
Non-GAAP adjusted
gross margin percent
(% of net sales)          43.2 %      39.8 %      42.1 %     41.7 %     41.4 %
Non-GAAP Adjusted
Operating Income
Reported operating
income (loss) (GAAP
basis)                 $   (68 )  $     39     $   409    $   (29 )  $   588
Impairment of
goodwill and
intangible assets          278           -           -        278          -
Certain items
associated with
acquisitions^1              53          54          71        107        186
Acquisition
integration and deal
costs                       12          10          10         22         60
Restructuring
charges and asset
impairments^2, 3, 4         10           9           -         19          -
Non-GAAP adjusted
operating income       $   285    $    112     $   490    $   397    $   834
Non-GAAP adjusted
operating margin
percent (% of net
sales)                    14.4 %       7.1 %      19.3 %     11.2 %     17.6 %
Non-GAAP Adjusted
Net Income
Reported net income
(loss) (GAAP basis)     $ (129 )  $     34     $   289    $   (95 )  $   406
Impairment of
goodwill and
intangible assets          278           -           -        278          -
Certain items
associated with
acquisitions^1              53          54          71        107        186
Acquisition
integration and deal
costs                       12          10          10         22         60
Restructuring
charges and asset
impairments^2, 3, 4         10           9           -         19          -
Impairment of
strategic
investments                  2           -           3          2          3
Reinstatement of
federal R&D tax
credit                      (3 )       (10 )         -        (13 )        -
Resolution of audits
of prior years'
income tax filings           -         (11 )        (7 )      (11 )       (7 )
Income tax effect of
non-GAAP adjustments       (24 )       (17 )       (17 )      (41 )      (59 )
Non-GAAP adjusted
net income             $   199    $     69     $   349    $   268    $   589

1 These  items  are   incremental  charges   attributable  to   acquisitions, 
   consisting of  inventory  fair  value adjustments  on  products  sold,  and 
   amortization of purchased intangible assets.
2  Results for the three  months ended April 28,  2013 included $4 million  of 
   employee-related costs related  to the restructuring  program announced  on 
   October 3,  2012  and restructuring  and  asset impairment  charges  of  $6 
   million related to the restructuring program announced on May 10, 2012.
3 Results for the three months ended January 27, 2013 included $4 million  of 
   employee-related costs, net, related to the restructuring program announced
   on October 3, 2012, asset impairment  charges of $3 million related to  the 
   restructuring program announced on May 10, 2012 and severance charges of $2
   million related to the integration of Varian.
4 Results for the  six months  ended April 28,  2013 included  $8 million  of 
   employee-related costs, net, related to the restructuring program announced
   on October  3,  2012, restructuring  and  asset impairment  charges  of  $9 
   million related to the restructuring program announced on May 10, 2012  and 
   severance charges of $2 million related to the integration of Varian

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

                              Three Months Ended            Six Months Ended
(In millions except    April28,  January27,  April29,  April28,  April29,
per share amounts)      2013        2013        2012       2013       2012
Non-GAAP Adjusted
Earnings Per Diluted
Share
Reported earnings
(loss) per diluted
share (GAAP basis)     $ (0.11 )  $   0.03     $   0.22   $ (0.08 )  $   0.31
Impairment of
goodwill and
intangible assets         0.22           -            -      0.22           -
Certain items
associated with
acquisitions              0.04        0.03         0.04      0.07        0.11
Acquisition
integration and deal
costs                     0.01        0.01         0.01      0.02        0.03
Restructuring
charges and asset
impairments                  -        0.01            -      0.01           -
Reinstatement of
federal R&D tax
credit and
resolution of audits
of prior years'
income tax filings           -       (0.02 )          -     (0.02 )         -
Non-GAAP adjusted
earnings per diluted
share                  $  0.16    $   0.06     $   0.27   $  0.22    $   0.45
Weighted average
number of diluted
shares                   1,217       1,212        1,301     1,216       1,305

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

                              Three Months Ended            Six Months Ended
(In millions, except   April28,  January27,  April29,  April28,  April29,
percentages)            2013        2013        2012       2013       2012
SSG Non-GAAP
Adjusted Operating
Income
Reported operating
income (GAAP basis)    $  283     $   134      $  504     $  417     $  775
Certain items
associated with
acquisitions^1             45          44          60         89        161
Acquisition
integration and deal
costs                       1           1          10          2         24
Restructuring
charges and asset
impairments^3, 4            -           1           -          1          -
Non-GAAP adjusted
operating income       $  329     $   180      $  574     $  509     $  960
Non-GAAP adjusted
operating margin
percent (% of net
sales)                   25.5 %      18.6 %      32.3 %     22.5 %     30.8 %
AGS Non-GAAP
Adjusted Operating
Income
Reported operating
income (GAAP basis)    $  118     $    89      $  109     $  207     $  216
Certain items
associated with
acquisitions^1              1           1           2          2          8
Restructuring
charges and asset
impairments^2, 3, 4         1           1           -          2          -
Non-GAAP adjusted
operating income       $  120     $    91      $  111     $  211     $  224
Non-GAAP adjusted
operating margin
percent (% of net
sales)                   23.2 %      19.3 %      20.1 %     21.4 %     20.6 %
Display Non-GAAP
Adjusted Operating
Income
Reported operating
income (GAAP basis)    $   19     $     3      $    7     $   22     $   12
Certain items
associated with
acquisitions^1              2           2           2          4          4
Non-GAAP adjusted
operating income       $   21     $     5      $    9     $   26     $   16
Non-GAAP adjusted
operating margin
percent (% of net
sales)                   16.5 %       5.7 %       6.7 %     12.1 %      6.7 %
EES Non-GAAP
Adjusted Operating
Loss
Reported operating
loss (GAAP basis)      $ (322 )   $   (54 )    $  (63 )   $ (376 )   $  (86 )
Impairment of
goodwill and
intangible assets         278           -           -        278          -
Certain items
associated with
acquisitions^1              5           7           6         12         12
Restructuring
charges and asset
impairments^2, 3, 4         5           3           -          8          -
Non-GAAP adjusted
operating loss         $  (34 )   $   (44 )    $  (57 )   $  (78 )   $  (74 )
Non-GAAP adjusted
operating margin
percent (% of net
sales)                  (89.5 )%    (95.7 )%    (72.2 )%   (92.9 )%   (25.9 )%

1 These items are incremental charges attributable to acquisitions,
   consisting of inventory fair value adjustments on products sold, and
   amortization of purchased intangible assets.
2  Results for the three months ended April 28, 2013 included restructuring
   and asset impairment charges of $6 million related to the restructuring
   program announced on May 10, 2012.
3 Results for the three months ended January 27, 2013 included asset
   impairment charges of $3 million related to the restructuring program
   announced on May 10, 2012 and severance charges of $2 million related to
   the integration of Varian.
4 Results for the six months ended April 28, 2013 included restructuring and
   asset impairment charges of $9 million related to the restructuring program
   announced on May 10, 2012 and severance charges of $2 million related to
   the integration of Varian.

                           APPLIED MATERIALS, INC.

   UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED OPERATING EXPENSES

                                                    Three Months Ended
(In millions)                                April28, 2013  January27, 2013
Operating expenses (GAAP basis)              $      876      $       543
Impairment of goodwill and intangible assets       (278 )              -
Acquisition integration and deal costs              (11 )             (9 )
Certain items associated with acquisitions          (10 )            (11 )
Restructuring charges and asset impairments         (10 )             (9 )
Non-GAAP adjusted operating expenses         $      567      $       514

  UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX
                                     RATE

                                                   Three Months Ended
(In millions, except percentages)                    April28, 2013
Provision for income taxes (GAAP basis) (a)        $         39
Reinstatement of federal R&D tax credit                       3
Income tax effect of non-GAAP adjustments                    24
Non-GAAP adjusted provision for income taxes (b)   $         66
Income (loss) before income taxes (GAAP basis) (c) $        (90 )
Impairment of goodwill and intangible assets                278
Certain items associated with acquisitions                   53
Acquisition integration costs                                12
Restructuring charges and asset impairments                  10
Impairment of strategic investments                           2
Non-GAAP adjusted income before income taxes (d)   $        265
Effective income tax rate (GAAP basis) (a/c)              (43.3 )%
Non-GAAP adjusted effective income tax rate (b/d)          24.9 %

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