UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(FEE REQUIRED)
For the fiscal year ended December 31, 2000 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from ________to _________
Commission file number 2-69114
A. Full title of the plan and the address of the plan, if different from that of the
issuer named below:
Applied Materials, Inc. Employee Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
APPLIED MATERIALS, INC.
3050 Bowers Avenue
Santa Clara, California 95054
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
APPLIED MATERIALS, INC. EMPLOYEE SAVINGS AND RETIREMENT PLAN |
June 27, 2001
| By: | /s/ Julio A. Aranovich |
|
| |
| Julio A. Aranovich | |
|
Group Vice President, Global Human Resources Applied Global University |
APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
Table of Contents
Independent Accountants' Report
Financial Statements:
Consent of Independent Accountants (Exhibit 23.1)Statements of Net Assets Available for Benefits - December 31, 1999 and 2000
Statements of Changes in Net Assets Available for Benefits - years ended December 31, 1999 and 2000
INDEPENDENT ACCOUNTANTS' REPORT
To the Participants and Administrative Committee of the Applied Materials, Inc. Employee Savings and Retirement Plan:
We have audited the financial statements of the Applied Materials, Inc. Employee Savings and Retirement Plan (the Plan) as of December 31, 1999 and 2000, and for the years then ended, as listed in the accompanying table of contents. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1999 and 2000, and the changes in net assets available
for benefits for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ MOHLER, NIXON & WILLIAMS
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
May 24, 2001
APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, December 31,
1999 2000
- -------------------------------------------- --------------- ----------------
ASSETS
Investments, at fair value ............... $1,689,328,178 $1,158,853,124
Participant loans......................... 12,874,251 16,075,579
--------------- ----------------
Assets held for investment purposes .... 1,702,202,429 1,174,928,703
Employer contribution receivable.......... -- 1,977,767
--------------- ----------------
Total assets............................ 1,702,202,429 1,176,906,470
LIABILITIES
Forfeitures payable ...................... (110,742) (635,078)
--------------- ----------------
Net assets available for benefits........... $1,702,091,687 $1,176,271,392
=============== ================
See notes to financial statements.
APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years ended
December 31,
1999 2000
- ---------------------------------------------- ---------------- ----------------
Additions to net assets attributed to:
Investment income:
Dividends and interest....................... $21,665,002 $24,093,793
Net realized and unrealized
appreciation/(depreciation) in
fair value of investments.................. 951,243,819 (575,580,419)
---------------- ----------------
972,908,821 (551,486,626)
---------------- ----------------
Contributions:
Participant.................................. 49,172,401 82,234,009
Employer..................................... 15,510,060 25,976,031
---------------- ----------------
64,682,461 108,210,040
---------------- ----------------
Transfers in from Consilium, Inc.
Savings and Retirement Plan.................. 7,129,202 --
---------------- ----------------
Total additions............................ 1,044,720,484 (443,276,586)
---------------- ----------------
Deductions from net assets attributed to:
Withdrawals and distributions................ (64,716,074) (82,543,709)
Transfers out to other qualified plans....... (4,085,297) --
---------------- ----------------
Total deductions........................... (68,801,371) (82,543,709)
Net increase/(decrease) in net assets...... 975,919,113 (525,820,295)
Net assets available for benefits:
Beginning of year........................ 726,172,574 1,702,091,687
---------------- ----------------
End of year.............................. $1,702,091,687 $1,176,271,392
================ ================
See notes to financial statements.
APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 2000
Note 1 - Significant accounting policies
General
The following description of the Applied Materials, Inc. (Applied) Employee
Savings and Retirement Plan (the Plan) provides only general information.
Participants seeking detailed information about the Plan should refer to the
Plan document and the Summary Plan Description/Prospectus for the Plan.
The Plan is a defined contribution plan that Applied established in 1981 to provide benefits to eligible employees, as defined in the Plan document. The Plan covers all eligible U.S. or expatriate employees of Applied. Eligible employees of Applied may enroll in the Plan after receipt of their first paycheck. The Plan is intended to comply with the applicable requirements of the Internal Revenue Code (the Code) and the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Administration
Under ERISA, Applied is the designated administrator of the Plan. Applied's
Board of Directors has appointed an Administrative Committee (the 401(k)
Committee) to manage the day-to-day operation and administration of the Plan.
Applied has contracted with Fidelity Institutional Retirement Services Company
(Fidelity) to maintain the Plan's individual participant accounts, and with
Fidelity Management Trust Company (Fidelity Trust) to act as the custodian and
trustee. Applied currently pays administrative expenses on behalf of the
Plan, except for loan fees paid by Plan participants who elect to receive a
Plan loan. Loan fees are insignificant to these financial statements, and are
therefore reported as withdrawals. Brokerage commissions and other charges
incurred in connection with investment transactions are paid from Plan assets.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and changes
therein, and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Basis of accounting
The financial statements of the Plan are prepared using the accrual method of
accounting. Participant and Applied matching contributions are recorded in
the period during which Applied withholds payroll deductions from
participant's earnings. Benefits are recorded when paid.
Investments
Investments of the Plan are held by Fidelity Trust and are invested in the
investment options available in the Plan based solely upon instructions
received from Plan participants or as provided in the Plan document. The
Plan's investments are valued at fair value, as measured by quoted market
prices, as of the last day of the Plan year. Purchases and sales of
securities are recorded on a trade-date basis and dividends are recorded on
the ex-dividend date. Participant loans are valued at cost, which
approximates fair value.
During 1999, the PBHG Emerging Growth Fund was replaced with the Dreyfus Small Cap Stock Index Fund, and a new fund, the Vanguard Mid-Cap Index Fund, was added.
Income taxes
The Plan is intended to qualify for favorable federal and state income tax
treatment accorded to plans that qualify under Section 401(a) of the Code, and
therefore to be exempt from federal income and state franchise taxes. The
Plan has been amended subsequent to receipt of its most recent Internal
Revenue Service favorable determination letter dated May 22, 1996. Prior to
the end of the applicable remedial amendment period, Applied intends to submit
the Plan, as amended, for a new favorable determination letter, which is
expected to be received in due course.
Reclassifications
Certain reclassifications were made in the 1999 financial statements to
conform with the 2000 presentation.
Risks and uncertainties
The Plan provides participants with various investment options in any
combination of mutual funds, stocks, bonds, fixed income securities and other
investment securities. Investment securities are exposed to various risks,
such as those associated with interest rates, market conditions and credit
worthiness of the securities' issuers. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in risks in the near term could materially affect participants'
account balances and the amounts reported in the financial statements.
Note 2 - Acquisitions and transfers
In December 1998, Applied acquired Consilium, Inc. (Consilium), and eligible employees of Consilium started to contribute to the Plan in March 1999. Consilium sponsored a defined contribution plan (the Consilium Plan), which was merged with the Plan during 1999. As a result, Consilium Plan assets of $7,129,202 were transferred into the Plan during 1999.
In October 1999, Applied acquired the remaining 50 percent ownership interest in AKT, Inc. (AKT). Prior to the acquisition, AKT was a 50 percent-owned joint venture, and AKT's U.S. employees were eligible to contribute to the Plan. As a result of the acquisition, the Plan became a single employer plan.
In October 1999, Applied acquired Obsidian, Inc. (Obsidian), and the employees of Obsidian became eligible to contribute to the Plan.
During 1999, Applied transferred certain employees to a third-party company. As a result, the account balances of the affected participants were transferred to the third-party company's 401(k) plan in 1999.
In March 2000, Applied acquired Etec Systems, Inc. (Etec), and the employees of Etec became eligible to contribute to the Plan in April 2000.
Note 3 - Participation and benefits
Participant contributions
Participants may elect to have Applied contribute up to 15 percent of their
eligible pre-tax compensation, subject to a dollar limit established by the
Code. For participants who elect to contribute a portion of their
compensation to the Plan, taxable compensation is reduced by the amount
contributed. Participant salary deferral contributions are invested in
various funds in one-percent increments according to the participant's
direction.
Participants are also allowed to make rollover contributions of amounts received from other tax-qualified employer-sponsored retirement plans or conduit IRAs. Such contributions are deposited in the appropriate investment funds in accordance with the participant's direction and the Plan's provisions.
Applied matching contributions
Participants in the Plan become eligible for Applied matching contributions
immediately upon enrolling in the Plan. Matching contributions are invested
primarily in the Applied Materials, Inc. Common Stock Fund (the Stock Fund),
and cannot be transferred to other investment funds until a participant has
completed 10 years of service or is fully vested and age 50. Such
participants may transfer their matching contributions into or out of the
Stock Fund. Applied matches 100 percent of participant contributions up to
the first three percent of compensation contributed, and 50 percent of every
dollar between four percent and six percent of compensation contributed.
Applied's contributions are made bi-weekly, and may be in the form of cash,
shares of Applied's common stock or any combination thereof. Fidelity Trust
will use cash contributions to purchase shares of Applied's common stock in
the open market (at the then prevailing market price), directly from Applied,
or from other persons in private transactions. During 1999 and 2000,
Applied's matching contributions have been in the form of cash contributions.
Applied can change the matching contribution rate, subject to the limits of
the Plan and the Code. No changes in the matching contribution rate were made
during 1999 or 2000.
Participant accounts
Each participant's account is credited with the participant's contribution and
his or her portion of Applied contributions and Plan earnings or losses.
Payment of benefits
Upon termination, a participant or beneficiary generally will receive a lump-
sum cash distribution, but may elect to receive whole shares of Applied's
common stock for any portion of his or her vested account balance in the Stock
Fund. The Plan provides for automatic lump-sum distribution, upon participant
termination of employment, of account balances that do not exceed $5,000.
Loans to participants
The Plan allows participants to borrow up to the lesser of $50,000 or 50
percent of their vested account balances (excluding Applied matching
contributions). Loans are secured by the participants' vested balances, bear
interest at prime plus one percent at the time of the borrowing and must be
repaid to the Plan from bi-weekly payroll deductions over the loan term, which
will be a minimum of one year and a maximum of five years. Loans are
generally payable in full upon a participant's termination of employment from
Applied, or the occurrence of certain other events. Specific loan terms and
conditions are established by the 401(k) Committee. Outstanding loans at
December 31, 2000 carry interest rates ranging from 7.0 percent to 10.0
percent.
Vesting
Participants are immediately vested in their salary deferral and rollover
contributions and any related earnings. Upon three years of credited service,
participants begin to vest 20 percent each year in Applied's matching
contributions allocated to their accounts, and are fully vested after seven
years of credited service. Participants who are actively employed by Applied
become fully vested upon death, total disability, attainment of normal
retirement age or termination of the Plan. As required by the Code, former
employees of certain acquired companies have different vesting schedules
according to their original vesting schedules and years of service with their
former employer. If a participant leaves Applied prior to becoming fully
vested, the unvested portion of his or her matching account will be forfeited.
Forfeitures can be used to offset Applied's matching contribution.
Forfeitures used to offset Applied's matching contribution in 1999 and 2000
were $6,069,911 and $6,707,704, respectively.
Note 4 - Party-in-interest and related party transactions
As allowed by the Plan, participants may elect to invest in the Stock Fund. In addition, Applied matching contributions are generally invested in the Stock Fund. Aggregate investment in Applied's common stock at December 31, 1999 and 2000 was as follows:
Number of shares Fair Value Cost
- -------- ---------------- --------------- -------------
1999 20,087,790 $1,272,671,701 $271,486,359
2000 21,982,052 $841,974,259 $957,418,895
The Stock Fund invests primarily in Applied's common stock. The remainder of the Fund is invested in the Fidelity Institutional Cash Portfolio Money Market to allow for timely handling of exchanges, withdrawals and distributions.
Certain Plan investments in mutual funds are managed by the Plan trustee, Fidelity Trust. Any purchases and sales of these funds are performed in the open market at fair market value and qualify as party-in-interest transactions. Such transactions are permitted under the provisions of the Plan and are exempt from the prohibition of party-in-interest transactions under ERISA and applicable exemptions promulgated thereunder.
Note 5 - Investments
The following table includes the fair values of investments and investment funds that represent five percent or more of the Plan's net assets at December 31:
1999 2000
- ------------------------------------------- ------------------ ---------------
Fidelity:
Retirement Government Money
Market Portfolio......................... $116,291,423 $69,834,846
Equity Income Fund ........................ 40,890,928 37,313,177
Intermediate Bond Fund .................... 18,123,149 14,350,427
Magellan Fund ............................. 102,140,717 82,058,516
Contrafund ................................ 21,085,628 19,451,516
Spartan U.S. Equity Index Fund ............ 25,767,104 19,907,011
Applied Materials, Inc. Common Stock Fund* .. 1,296,766,990 857,069,644
Janus Worldwide Fund ........................ 54,932,080 41,977,696
INVESCO Total Return Fund ................... 4,715,907 3,263,024
Vanguard Mid-Cap Index Fund.................. 1,425,965 4,760,460
Dreyfus Small Cap Stock Index Fund........... 7,188,287 8,866,807
Participant Loans ........................... 12,874,251 16,075,579
------------------ ---------------
Assets held for investment purposes...... $1,702,202,429 $1,174,928,703
================== ===============
*
Includes Applied matching contributions, which are nonparticipant-directed. See Note 6 for further details.The Stock Fund includes investments in the Fidelity Institutional Cash Portfolio Money Market of $24,095,289 at December 31, 1999 and $15,095,385 at December 31, 2000. The balance of the Stock Fund is invested in Applied's common stock.
The Plan's investments, including gains and losses on investments bought, sold and held during the year, appreciated/(depreciated) in value as follows for the years ended December 31:
1999 2000
- ------------------------------------------- ------------------ ---------------
Mutual funds.............................. $26,197,694 ($32,946,224)
Common stock.............................. 925,046,125 (542,634,195)
------------------ ---------------
$951,243,819 ($575,580,419)
================== ===============
Note 6 - Nonparticipant-directed investments
As discussed in Note 3, Applied matching contributions are generally invested in the Stock Fund and cannot be transferred to other investment funds until a participant meets certain criteria. As a result, the portion of the Stock Fund that relates to employer contributions is a nonparticipant-directed investment. The net assets and significant components of the changes in net assets relating to nonparticipant-directed investments are as follows for the years ended December 31:
1999 2000
- ------------------------------------------- ------------------ ---------------
Net Assets:
Common Stock .............................. $694,447,764 $433,576,558
================== ===============
Changes in Net Assets:
Employer contributions..................... $15,326,503 $23,547,914
Net realized and unrealized
appreciation/(depreciation) in
fair value of investments............... 138,696,766 (266,563,415)
Withdrawals and distributions.............. (17,183,694) (28,749,407)
Transfers from/(to) participant-directed
investments............................. (51,111,806) 10,893,702
------------------ ---------------
Net increase/(decrease)................. 85,727,769 (260,871,206)
Net assets - beginning of year.......... 608,719,995 694,447,764
------------------ ---------------
Net assets - end of year................ $694,447,764 $433,576,558
================== ===============
Note 7 - Plan termination and/or modification
Applied currently intends to continue the Plan indefinitely for the benefit of
its participants and their beneficiaries; however, it reserves the right to
terminate and/or modify the Plan at any time and for any reason, subject to
the provisions of ERISA. In the event the Plan is terminated, participants
would become fully vested in their accounts.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
23.1 Consent of Independent Accountants
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-52072 and No. 333-31289) of Applied
Materials, Inc. of our report dated May 24, 2001, with respect to the
financial statements of the Applied Materials, Inc. Employee Savings and
Retirement Plan included in this Annual Report on Form 11-K.
/s/ MOHLER, NIXON & WILLIAMS
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 27, 2001