News Release

• Applied delivers in line results and expects sequential growth in net sales and non-GAAP EPS
• Company returns $740 million to shareholders through dividends and share repurchases

SANTA CLARA, Calif., Feb. 18, 2016 - Applied Materials, Inc. (NASDAQ:AMAT), the global leader in materials engineering solutions for the semiconductor, display and solar industries, today reported results for its first quarter ended January 31, 2016.

First quarter orders were $2.28 billion, down 6 percent sequentially and flat year over year. Net sales were $2.26 billion, down 5 percent sequentially and down 4 percent year over year.

On a non-GAAP adjusted basis, the company reported first quarter gross margin of 42.4 percent, operating margin of 17.8 percent, and net income of $302 million or $0.26 per diluted share. The company recorded GAAP gross margin of 40.6 percent, operating margin of 15.7 percent, and net income of $286 million or $0.25 per diluted share.

The company generated $207 million in cash from operations during the first quarter, paid dividends of $115 million and used $625 million to repurchase 35 million shares of common stock.

"As the market moves into the sweet spot for Applied's materials engineering technology, we see strong demand for our semiconductor, display and service businesses," said Gary Dickerson, president and CEO. "We are maintaining a positive outlook for 2016 as our customers make strategic, inflection-driven investments that play to our strengths."

Quarterly Results Summary

								Change
		Q1 FY2016		Q4 FY2015		Q1 FY2015		Q1 FY2016 vs. Q4 FY2015		Q1 FY2016 vs. Q1 FY2015
		(In millions, except per share amounts and percentages)
New orders		$2,275		$2,424		$2,273		(6)%		-%
Net sales		$2,257		$2,368		$2,359		(5)%		(4)%
Gross margin		40.6%		40.5%		40.7%		0.1 points		(0.1) points
Operating margin		15.7%		17.9%		19.4%		(2.2) points		(3.7) points
Net income		$286		$336		$348		(15)%		(18)%
Diluted earnings per share (EPS)		$0.25		$0.28		$0.28		(11)%		(11)%

								Change
Non-GAAP Adjusted Results		Q1 FY2016		Q4 FY2015		Q1 FY2015		Q1 FY2016 vs. Q4 FY2015		Q1 FY2016 vs. Q1 FY2015
		(In millions, except per share amounts and percentages)
Non-GAAP adjusted gross margin		42.4%		42.2%		42.3%		0.2 points		0.1 points
Non-GAAP adjusted operating margin		17.8%		19.3%		18.9%		(1.5) points		(1.1) points
Non-GAAP adjusted net income		$302		$347		$338		(13)%		(11)%
Non-GAAP adjusted diluted EPS		$0.26		$0.29		$0.27		(10)%		(4)%

Applied's non-GAAP adjusted results exclude the impact of the following, where applicable: 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; and certain discrete adjustments and tax items. 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

For the second quarter of fiscal 2016, Applied expects net sales to be up 5 percent to 10 percent sequentially. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.30 to $0.34.

This outlook excludes known charges related to completed acquisitions of $0.04 per share and does not exclude other non-GAAP adjustments that may arise subsequent to this release.

First Quarter Reportable Segment Information

Silicon Systems	Q1 FY2016				Q4 FY2015				Q1 FY2015
	(In millions, except percentages)
New orders	$	1,275			$	1,444			$	1,426
Foundry	38		%		35		%		34		%
DRAM	29		%		21		%		34		%
Flash	22		%		31		%		18		%
Logic and other	11		%		13		%		14		%
Net sales	1,373				1,494				1,446
Operating income	265				318				307
Operating margin	19.3		%		21.3		%		21.2		%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	312			$	365			$	350
Non-GAAP adjusted operating margin	22.7		%		24.4		%		24.2		%

Applied Global Services	Q1 FY2016				Q4 FY2015				Q1 FY2015
	(In millions, except percentages)
New orders	$	773			$	761			$	690
Net sales	626				637				583
Operating income	156				171				153
Operating margin	24.9		%		26.8		%		26.2		%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	156			$	170			$	154
Non-GAAP adjusted operating margin	24.9		%		26.7		%		26.4		%

Display	Q1 FY2016				Q4 FY2015				Q1 FY2015
	(In millions, except percentages)
New orders	$	183			$	195			$	107
Net sales	213				191				275
Operating income	38				19				72
Operating margin	17.8		%		9.9		%		26.2		%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	38			$	19			$	73
Non-GAAP adjusted operating margin	17.8		%		9.9		%		26.5		%

Energy and Environmental Solutions	Q1 FY2016				Q4 FY2015				Q1 FY2015
	(In millions, except percentages)
New orders	$	44			$	24			$	50
Net sales	45				46				55
Operating income (loss)	6				-				(4		)
Operating margin	13.3		%		-		%		(7.3		)%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income (loss)	$	4			$	(1	)		$	(3	)
Non-GAAP adjusted operating margin	8.9		%		(2.2		)%		(5.5		)%

Backlog Information

Applied's backlog decreased 1% to $3.11 billion and included negative adjustments of $51 million. Backlog composition by reportable segment was as follows:

Silicon Systems	51	%
Applied Global Services	30	%
Display	16	%
Energy and Environmental Solutions	3	%

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 those regarding anticipated growth and trends in our businesses and markets, industry outlooks, technology transitions, our financial performance and market share positions, our business outlook for the second quarter of fiscal 2016, 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; and other risks and uncertainties described in our SEC filings, including our most recent Forms 10-K 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 global leader in materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. 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

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

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

APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate Unallocated Expenses

(In millions)		Q1 FY2016				Q4 FY2015				Q1 FY2015
Share-based compensation		$	54			$	46			$	48
Certain items associated with terminated business combination		-				-				20
Gain on derivatives associated with terminated business combination, net		-				-				(78		)
Other unallocated expenses		57				39				80
Total corporate		$	111			$	85			$	70

Additional Information

		Q1 FY2016						Q4 FY2015						Q1 FY2015
New Orders and Net Sales by Geography
(In $ millions)		New Orders			Net Sales			New Orders			Net Sales			New Orders			Net Sales
United States		369			293			282			301			411			369
% of Total		16	%		13	%		12	%		13	%		18	%		16	%
Europe		156			138			155			172			148			153
% of Total		7	%		6	%		6	%		7	%		6	%		6	%
Japan		109			334			452			278			242			243
% of Total		5	%		15	%		19	%		12	%		11	%		10	%
Korea		373			268			207			239			546			536
% of Total		17	%		12	%		8	%		10	%		24	%		23	%
Taiwan		574			637			846			758			545			556
% of Total		25	%		28	%		35	%		32	%		24	%		24	%
Southeast Asia		232			90			100			143			85			92
% of Total		10	%		4	%		4	%		6	%		4	%		4	%
China		462			497			382			477			296			410
% of Total		20	%		22	%		16	%		20	%		13	%		17	%
Employees (In thousands)
Regular Full Time		14.6						14.6						14.1

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

		Three Months Ended
(In millions, except percentages)		January 31,  2016				October 25,  2015				January 25,  2015
Non-GAAP Adjusted Gross Profit
Reported gross profit - GAAP basis		$	916			$	959			$	959
Certain items associated with acquisitions1		42				42				40
Inventory charges (reversals) related to restructuring3, 4		(1		)		1				-
Other significant gains, losses or charges, net5		-				(2		)		-
Non-GAAP adjusted gross profit		$	957			$	1,000			$	999
Non-GAAP adjusted gross margin		42.4		%		42.2		%		42.3		%
Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis		$	354			$	423			$	458
Certain items associated with acquisitions1		48				47				46
Acquisition integration costs		-				-				1
Gain on derivatives associated with terminated business combination, net		-				-				(78		)
Certain items associated with terminated business combination2		-				-				20
Reversals related to restructuring, net3, 4		(1		)		(1		)		-
Other significant gains, losses or charges, net5		-				(13		)		-
Non-GAAP adjusted operating income		$	401			$	456			$	447
Non-GAAP adjusted operating margin		17.8		%		19.3		%		18.9		%
Non-GAAP Adjusted Net Income
Reported net income - GAAP basis		$	286			$	336			$	348
Certain items associated with acquisitions1		48				47				46
Acquisition integration costs		-				-				1
Gain on derivatives associated with terminated business combination, net		-				-				(78		)
Certain items associated with terminated business combination2		-				-				20
Reversals related to restructuring, net3, 4		(1		)		(1		)		-
Impairment (gain on sale) of strategic investments, net		(2		)		(2		)		1
Loss on early extinguishment of debt		5				-				-
Other significant gains, losses or charges, net5		-				(13		)		-
Reinstatement of federal R&D tax credit, resolution of prior years' income tax filings and other tax items		(29		)		(18		)		(17		)
Income tax effect of non-GAAP adjustments		(5		)		(2		)		17
Non-GAAP adjusted net income		$	302			$	347			$	338

1	These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2	These items are incremental charges related to the terminated business combination agreement with Tokyo Electron Limited, consisting of acquisition-related and integration planning costs.
3	Results for three months ended January 31, 2016 included a $1 million reversal of inventory charges related to cost reductions in the solar business.
4	Results for the three months ended October 25, 2015 included a $2 million favorable adjustment of restructuring reserves related to prior restructuring plans and $1 million of inventory charges related to cost reductions in the solar business.
5	These items are significant gains, losses, or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future.

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

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

		Three Months Ended
(In millions, except percentages)		January 31,  2016				October 25,  2015				January 25,  2015
Silicon Systems Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis		$	265			$	318			$	307
Certain items associated with acquisitions1		47				47				43
Non-GAAP adjusted operating income		$	312			$	365			$	350
Non-GAAP adjusted operating margin		22.7		%		24.4		%		24.2		%
AGS Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis		$	156			$	171			$	153
Certain items associated with acquisitions1		-				-				1
Other significant gains, losses or charges, net4		-				(1		)		-
Non-GAAP adjusted operating income		$	156			$	170			$	154
Non-GAAP adjusted operating margin		24.9		%		26.7		%		26.4		%
Display Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis		$	38			$	19			$	72
Certain items associated with acquisitions1		-				-				1
Non-GAAP adjusted operating income		$	38			$	19			$	73
Non-GAAP adjusted operating margin		17.8		%		9.9		%		26.5		%
EES Non-GAAP Adjusted Operating Income (Loss)
Reported operating income (loss) - GAAP basis		$	6			$	-			$	(4	)
Certain items associated with acquisitions1		1				-				1
Reversals related to restructuring, net2,3		(3		)		(1		)		-
Non-GAAP adjusted operating income (loss)		$	4			$	(1	)		$	(3	)
Non-GAAP adjusted operating margin		8.9		%		(2.2		)%		(5.5		)%

1	These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2	Results for the three months ended January 31, 2016 included $3 million of favorable adjustment of employee-related costs and $1 million reversal of inventory charges, partially offset by $1 million of fixed asset impairment charges related to cost reductions in the solar business.
3	Results for the three months ended October 25, 2015 included a $2 million favorable adjustment of restructuring reserves related to prior restructuring plans and $1 million of inventory charges related to cost reductions in the solar business.
4	These items are significant gains, losses, or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future.

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

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