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):   February 13, 2007

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)

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))

 

 

Item 2.02 Results of Operations and Financial Condition.

On February 13, 2007, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its first fiscal quarter ended January 28, 2007. 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
99.1		Press Release issued by Applied Materials, Inc. dated February 13, 2007.

SIGNATURE

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.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release issued by Applied Materials, Inc. dated February 13, 2007.

Release:		Immediate
Contact:		Randy Bane (investment community)		David Miller (editorial/media)
		(408) 986-7977		(408) 563-9582

APPLIED MATERIALS ANNOUNCES RESULTS
FOR FIRST QUARTER OF FISCAL 2007

•		Net Sales: $2.28 billion (23% increase year over year; 10% decrease quarter over quarter)
•		Net Income: $403 million (183% increase year over year; 10% decrease quarter over quarter)
•		EPS: $0.29 ($0.20 increase year over year; $0.01 decrease quarter over quarter)
•		New Orders: $2.54 billion (24% increase year over year; 6% decrease quarter over quarter)

     SANTA CLARA, Calif., February 13, 2007 — Applied Materials, Inc. reported results for its first fiscal quarter ended January 28, 2007. Net sales were $2.28 billion, up 23 percent from $1.86 billion for the first quarter of fiscal 2006, and down 10 percent from $2.52 billion for the fourth quarter of fiscal 2006. Gross margin for the first quarter of fiscal 2007 was 46.7 percent, up from 45.1 percent for the first quarter of fiscal 2006, and down from 47.1 percent for the fourth quarter of fiscal 2006. Net income for the first quarter of fiscal 2007 was $403 million, or $0.29 per share, up from net income of $143 million, or $0.09 per share, for the first quarter of fiscal 2006, and down from net income of $449 million, or $0.30 per share, for the fourth quarter of fiscal 2006.

     New orders of $2.54 billion for the first quarter of fiscal 2007 increased 24 percent from $2.04 billion for the first quarter of fiscal 2006, and decreased 6 percent from $2.69 billion for the fourth quarter of fiscal 2006. The decline in orders for the first quarter reflected a significant decrease in Display orders as customers delayed their capacity expansion plans. This decline was partially offset by record Fab Solutions orders and increased Silicon orders. Regional distribution of new orders for the first quarter of fiscal 2007 was: Taiwan 24 percent, North America 22 percent, Korea 19 percent, Europe 13 percent, Japan 12 percent, and Southeast Asia and China 10 percent. Backlog at the end of the first quarter of fiscal 2007 was $3.55 billion, compared to $3.40 billion at the end of the fourth quarter of fiscal 2006.

     “We executed effectively and met our operational objectives for the quarter,” said Mike Splinter, president and CEO. “Rapid customer acceptance of our new leading-edge platforms for chemical vapor deposition and metal etch, as well as strong demand for Applied’s service products, set the stage for future growth.”

     Results by reportable segment for the first quarter of fiscal 2007 were:

										Operating
(In millions)		New Orders				Net Sales				Income (loss)
Silicon		$	1,755			$	1,490			$	520
Fab Solutions		$	686			$	525			$	146
Display		$	67			$	230			$	64
Adjacent Technologies		$	31			$	32			$	(15	)

Applied Materials, Inc.
February 13, 2007
Page 2 of 5

     Non-GAAP net income was $405 million, or $0.29 per share, for the first quarter of fiscal 2007. Management uses non-GAAP net income and non-GAAP EPS 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 Generally Accepted Accounting Principles (GAAP). Applied believes that these measures are useful to investors because they 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. These non-GAAP measures exclude charges related to (i) equity-based compensation, (ii) inventory fair value adjustments on products sold and amortization of purchased intangible assets associated with acquisitions, (iii) resolution of income tax audits and retroactive reinstatement of tax credits, and (iv) asset impairment and restructuring activities. These financial measures may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for net income or EPS prepared in accordance with GAAP. Reconciliations of reported net income and reported EPS to non-GAAP net income and non-GAAP EPS, respectively, are included at the end of this press release.

     This press release contains forward-looking statements, including statements regarding the company’s performance, technology leadership, strategic position and future growth. Forward-looking statements may contain words such as “expect,” “anticipate,” “believe,” “may,” “should,” “will,” “estimate,” “forecast,” “continue” or similar expressions, and include 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. Risks and uncertainties include, but are not limited to: the sustainability of demand in the nanomanufacturing technology industry and broadening of demand for emerging applications such as solar, which are subject to many factors, including global economic conditions, business spending, consumer confidence, demand for electronic products and semiconductors, and geopolitical uncertainties; customers’ capacity requirements, including capacity utilizing the latest technology; the timing, rate, amount and sustainability of capital spending for new nanomanufacturing technology products; the company’s ability to successfully develop, deliver and support a broad range of products and to expand its markets and develop new markets; the successful integration and performance of acquired businesses; the effectiveness of joint ventures; retention of key employees; the company’s ability to maintain effective cost controls and to timely align its cost structure with business conditions; the company’s ability to effectively manage its resources and production capability, including its supply chain; and other risks described in Applied Materials’ Securities and Exchange Commission filings, including its reports on Forms 10-K, 10-Q and 8-K. 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.

     Applied Materials will discuss its fiscal 2007 first quarter results, along with its outlook for the second quarter of fiscal 2007, on a conference call today beginning at 1:30 p.m. Pacific Standard Time. A webcast of the conference call will be available on Applied Materials’ web site.

     Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in Nanomanufacturing Technology™ solutions with a broad portfolio of innovative equipment, services and software products for the fabrication of semiconductor chips, flat panels, solar photovoltaic cells, flexible electronics and energy-efficient glass. At Applied Materials, we apply Nanomanufacturing Technology to improve the way people live. Learn more at www.appliedmaterials.com.

Applied Materials, Inc.
February 13, 2007
Page 3 of 5

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

		Three Months Ended
		January 29,				January 28,
(In thousands, except per share amounts)		2006				2007
Net sales		$	1,857,592			$	2,277,267
Cost of products sold			1,019,893				1,214,729
Gross margin			837,699				1,062,538
Operating expenses:
Research, development and engineering			272,877				287,567
Marketing and selling			100,773				106,912
General and administrative			105,263				121,811
Restructuring and asset impairments			214,847				(3,278	)
Income from operations			143,939				549,526
Pre-tax loss of equity method investment			—				3,937
Interest expense			8,705				10,468
Interest income			48,691				30,103
Income before income taxes			183,925				565,224
Provision for income taxes			41,145				161,748
Net income		$	142,780			$	403,476
Earnings per share:
Basic		$	0.09			$	0.29
Diluted		$	0.09			$	0.29
Weighted average number of shares:
Basic			1,598,260				1,394,710
Diluted			1,608,165				1,409,014

Applied Materials, Inc.
February 13, 2007
Page 4 of 5

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

		October 29,				January 28,
(In thousands)		2006				2007
ASSETS
Current assets:
Cash and cash equivalents		$	861,463			$	1,068,615
Short-term investments			1,035,875				1,014,205
Accounts receivable, net			2,026,199				2,051,606
Inventories			1,406,777				1,518,882
Deferred income taxes			455,473				461,142
Assets held for sale			37,211				31,005
Other current assets			258,021				260,130
Total current assets			6,081,019				6,405,585
Long-term investments			1,314,861				1,327,945
Property, plant and equipment			2,753,883				2,741,074
Less: accumulated depreciation and amortization			(1,729,589	)			(1,712,136	)
Net property, plant and equipment			1,024,294				1,028,938
Goodwill, net			572,558				572,558
Purchased technology and other intangible assets, net			201,066				191,646
Equity method investment			144,431				140,494
Deferred income taxes and other assets			142,608				140,837
Total assets		$	9,480,837			$	9,808,003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	202,535			$	202,521
Accounts payable and accrued expenses			2,023,651				1,910,718
Income taxes payable			209,859				330,957
Total current liabilities			2,436,045				2,444,196
Long-term debt			204,708				204,692
Other liabilities			188,684				192,404
Total liabilities			2,829,437				2,841,292
Stockholders’ equity:
Common stock			13,917				13,969
Additional paid-in capital			3,678,202				3,785,066
Retained earnings			9,472,303				9,805,927
Treasury stock			(6,494,012	)			(6,622,955	)
Accumulated other comprehensive loss			(19,010	)			(15,296	)
Total stockholders’ equity			6,651,400				6,966,711
Total liabilities and stockholders’ equity		$	9,480,837			$	9,808,003

Applied Materials, Inc.
February 13, 2007
Page 5 of 5

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

		Three Months Ended
		January 29,				January 28,
(In thousands, except per share amounts)		2006				2007
Non-GAAP Net Income
Reported net income (GAAP basis)		$	142,780			$	403,476
Equity-based compensation expense 1			51,952				34,900
Restructuring and asset impairments 2			214,847				(3,278	)
Impact of certain items associated with acquisitions 3			5,859				13,380
Resolution of audits of prior years’ income tax filings and credits4			—				(29,863	)
Income tax effect of Non-GAAP adjustments			(99,619	)			(13,434	)
Non-GAAP Net Income		$	315,819			$	405,181
Non-GAAP Net Income Per Diluted Share
Reported net income per diluted share (GAAP basis)		$	0.09			$	0.29
Equity-based compensation expense			0.02				0.02
Restructuring and asset impairments			0.08				—
Impact of certain items associated with acquisitions			—				0.01
Resolution of audits of prior years’ income tax filings and credits			—				(0.02	)
Non-GAAP Net Income — Per Diluted Share		$	0.20			$	0.29
Shares used in diluted shares calculation			1,608,165				1,409,014

1		Applied began expensing stock options in the first quarter of fiscal 2006.
2		Results for the three months ended January 29, 2006 included asset impairment and restructuring charges of $215 million, or $0.08 per diluted share, associated primarily with the facilities disinvestment program. Results for the first fiscal quarter ended January 28, 2007 included a net benefit of $3 million from the sale of the Hillsboro, Oregon facility.
3		Incremental charges attributable to acquisitions consisting of inventory fair value adjustments on products sold and amortization of purchased intangible assets.
4		Consists of $24 million benefit from the resolution of audits of prior years’ income tax filings and $6 million related to the retroactive reinstatement to January 1, 2006 of the research and development tax credit pursuant to the Tax Relief and Health Care Act of 2006.