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Document and Entity Information	6 Months Ended
Document and Entity Information	May 02, 2010 USD ($) shares
Document and Entity Information [Abstract]
Entity Registrant Name	APPLIED MATERIALS INC /DE
Entity Central Index Key	0000006951
Document Type	10-Q
Document Period End Date	May 02, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--10-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float (actual number) \| $	$ 18,484,888,271
Entity Common Stock Shares Outstanding (actual number) \| shares	1,342,979,263

Consolidated Condensed Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	May 02, 2010	Apr. 26, 2009	May 02, 2010	Apr. 26, 2009
Consolidated Condensed Statements of Operations [Abstract]
Net sales	$ 2,295,540	$ 1,020,077	$ 4,144,442	$ 2,353,473
Cost of products sold	1,368,648	864,558	2,506,366	1,806,378
Gross margin	926,892	155,519	1,638,076	547,095
Operating expenses:
Research, development and engineering	305,928	236,335	574,931	465,875
General and administrative	125,779	101,080	250,578	242,321
Marketing and selling	100,420	84,678	197,615	168,793
Restructuring and asset impairments	8,968	26,709	112,812	159,481
Total operating expenses	541,095	448,802	1,135,936	1,036,470
Income (loss) from operations	385,797	(293,283)	502,140	(489,375)
Pre-tax loss of equity method investment		19,175		34,983
Impairment of equity method investment and strategic investments	3,671	77,081	4,861	77,081
Interest expense	5,206	5,058	10,266	11,052
Interest income	10,132	11,789	18,773	27,024
Income (loss) before income taxes	387,052	(382,808)	505,786	(585,467)
Provision (benefit) for income taxes	123,048	(127,418)	159,031	(197,143)
Net income (loss)	$ 264,004	$ (255,390)	$ 346,755	$ (388,324)
Earnings (loss) per share:
Basic	$ 0.2	$ (0.19)	$ 0.26	$ (0.29)
Diluted	$ 0.2	$ (0.19)	$ 0.26	$ (0.29)
Weighted average number of shares:
Basic	1,344,617	1,331,729	1,343,229	1,330,476
Diluted	1,352,436	1,331,729	1,350,802	1,330,476

Consolidated Condensed Balance Sheets - USD ($)
$ in Thousands

May 02, 2010

Oct. 25, 2009

Current assets:

Cash and cash equivalents

^[1]

$ 1,596,429

$ 1,576,381

Short-term investments

^[1]

738,433

638,349

Accounts receivable, net

^[1]

1,437,746

1,041,495

Inventories

^[1]

1,690,445

1,627,457

Deferred income taxes, net

^[1]

432,735

356,336

Income taxes receivable

^[1]

184,760

Other current assets

^[1]

277,506

264,169

Total current assets

^[1]

6,173,294

5,688,947

Long-term investments

^[1]

1,230,214

1,052,165

Property, plant and equipment, net

^[1]

1,083,525

1,090,433

Goodwill

^[1]

1,336,426

1,170,932

Purchased technology and other intangible assets, net

^[1]

346,228

306,416

Deferred income taxes and other assets

^[1]

280,062

265,350

Total assets

^[1]

10,449,749

9,574,243

Current liabilities:

Current portion of long-term debt

^[1]

1,803

1,240

Accounts payable and accrued expenses

^[1]

1,440,225

1,061,502

Customer deposits and deferred revenue

^[1]

980,658

864,280

Income taxes payable

^[1]

153,134

12,435

Total current liabilities

^[1]

2,575,820

1,939,457

Long-term debt

^[1]

204,847

200,654

Employee benefits and other liabilities

^[1]

348,001

339,524

Total liabilities

^[1]

3,128,668

2,479,635

Stockholders' equity:

Common stock: $.01 par value per share; 2,500,000 shares authorized; 1,342,979 and 1,340,917 shares outstanding at May 2, 2010 and October 25, 2009, respectively

^[1]

13,430

13,409

Additional paid-in capital

^[1]

5,348,780

5,195,437

Retained earnings

^[1]

11,106,136

10,934,004

Treasury stock: 515,885 and 508,254 shares at May 2, 2010 and October 25, 2009, respectively, net

^[1]

(9,146,562)

(9,046,562)

Accumulated other comprehensive loss

^[1]

(703)

(1,680)

Total stockholders' equity

^[1]

7,321,081

7,094,608

Total liabilities and stockholders' equity

^[1]

$ 10,449,749

$ 9,574,243

[1]	Amounts as of May 2, 2010 are unaudited. Amounts as of October 25, 2009 are derived from the October 25, 2009 audited consolidated financial statements.

Consolidated Condensed Statements of Stockholders Equity and Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

May 02, 2010

Statement [Line Items]

Beginning Balance

^[1]

$ 7,094,608

Components of comprehensive income, net of tax:

Net income

$ 264,004

346,755

Change in unrealized net gain on investments

2,013

Change in unrealized net gain on derivative instruments

515

Change in defined and postretirement benefit plans liability

Translation adjustments

(1,625)

Comprehensive income

347,732

Dividends

(174,623)

Equity-based compensation

62,330

Issuance under stock plans, net of a tax detriment of $1,897 and other

91,110

Treasury stock repurchases

(100,076)

Ending Balance

^[1]

7,321,081

Common Stock

Statement [Line Items]

Beginning Balance

$ 13,409

Beginning Balance, shares

1,340,917

Components of comprehensive income, net of tax:

Issuance under stock plans, net of a tax detriment of $1,897 and other

$ 97

Issuance under stock plans, net of a tax detriment of $1,897 and other, shares

9,693

Treasury stock repurchases

$ (76)

Treasury stock repurchases, shares

(7,631)

Ending Balance

$ 13,430

Ending Balance, shares

1,342,979

Additional Paid-In Capital

Statement [Line Items]

Beginning Balance

$ 5,195,437

Components of comprehensive income, net of tax:

Equity-based compensation

62,330

Issuance under stock plans, net of a tax detriment of $1,897 and other

91,013

Ending Balance

$ 5,348,780

5,348,780

Retained Earnings

Statement [Line Items]

Beginning Balance

10,934,004

Components of comprehensive income, net of tax:

346,755

(174,623)

11,106,136

Statement [Line Items]

Beginning Balance

(9,046,562)

Components of comprehensive income, net of tax:

Treasury stock repurchases

(100,000)

Ending Balance

(9,146,562)

Accumulated Other Comprehensive Loss

Statement [Line Items]

Beginning Balance

(1,680)

Components of comprehensive income, net of tax:

Change in unrealized net gain on investments

2,013

Change in unrealized net gain on derivative instruments

515

Change in defined and postretirement benefit plans liability

Translation adjustments

(1,625)

Ending Balance

$ (703)

[1]	Amounts as of May 2, 2010 are unaudited. Amounts as of October 25, 2009 are derived from the October 25, 2009 audited consolidated financial statements.

Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands

6 Months Ended

May 02, 2010

Apr. 26, 2009

Cash flows from operating activities:

Net income (loss)

$ 346,755

$ (388,324)

Adjustments required to reconcile net income (loss) to cash provided by (used in) operating activities:

Depreciation and amortization

163,178

146,108

Loss on fixed asset retirements

11,658

7,002

Provision for bad debts

6,000

62,539

Restructuring and asset impairments

112,812

159,481

Deferred income taxes

(74,546)

35,927

Net recognized loss on investments

9,247

10,915

Pre-tax loss of equity method investment

34,983

Impairment of investments

4,861

77,081

Equity-based compensation

62,330

72,780

Changes in operating assets and liabilities, net of amounts acquired:

Accounts receivable

(364,631)

714,096

Inventories

(909)

85,993

Income taxes receivable

184,760

(174,796)

Other current assets

(673)

13,411

Other assets

(9,521)

(1,144)

Accounts payable and accrued expenses

211,009

(649,976)

Customer deposits and deferred revenue

110,519

(262,760)

Income taxes payable

138,109

(71,943)

Employee benefits and other liabilities

(12,125)

27,710

Cash provided by (used in) operating activities

898,833

(100,917)

Cash flows from investing activities:

Capital expenditures

(97,874)

(128,099)

Cash paid for acquisition, net of cash acquired

(322,599)

Proceeds from sales and maturities of investments

539,515

925,485

Purchases of investments

(828,582)

(486,527)

Cash provided by (used in) investing activities

(709,540)

310,859

Cash flows from financing activities:

Debt repayments, net

(5,320)

(323)

Proceeds from common stock issuances

97,217

27,633

Common stock repurchases

(100,076)

(22,906)

Payment of dividends to stockholders

(161,069)

(159,736)

Cash used in financing activities

(169,248)

(155,332)

Effect of exchange rate changes on cash and cash equivalents

742

Increase in cash and cash equivalents

20,048

55,352

Cash and cash equivalents - beginning of period

1,576,381

^[1]

1,411,624

Cash and cash equivalents - end of period

1,596,429

^[1]

1,466,976

Supplemental cash flow information:

Cash payments for income taxes

98,385

133,250

Cash refunds for income taxes

196,149

50,122

Cash payments for interest

$ 7,195

$ 7,211

[1]	Amounts as of May 2, 2010 are unaudited. Amounts as of October 25, 2009 are derived from the October 25, 2009 audited consolidated financial statements.

Basis of Presentation

6 Months Ended

May 02, 2010

Basis of Presentation [Abstract]

Basis of Presentation


Note 1	Basis of Presentation

Basis of Presentation

In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 25, 2009 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 25, 2009 (2009 Form 10-K). Applied’s results of operations for the three and six months ended May 2, 2010 are not necessarily indicative of future operating results.

Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2010 contains 53 weeks, while fiscal 2009 contained 52 weeks, and the first six months of fiscal 2010 contained 27 weeks, while the first six months of fiscal 2009 contained 26 weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Revenue Recognition

Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment, Applied recognizes revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; (4) for arrangements initiated prior to fiscal 2010 containing multiple elements, the revenue relating to the undelivered elements is deferred at their estimated relative fair values until delivery of the deferred elements; and (5) for arrangements initiated or materially modified during fiscal 2010 containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. The completed contract method is used for SunFab^tm thin film lines. Certain SunFab thin film contracts have provisions for additional amounts to become due to Applied if the line achieves certain output criteria subsequent to factory acceptance. Any additional amounts earned under these contracts are recognized upon achievement. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided.

In the first quarter of fiscal 2010, Applied elected to early adopt amended accounting standards issued by the Financial Accounting Standards Board (FASB) for multiple deliverable revenue arrangements on a prospective basis for applicable transactions originating or materially modified after October 25, 2009. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable to be based on the relative selling price. The FASB also amended the accounting standards for revenue recognition to exclude software that is contained in a tangible product from the scope of software revenue guidance if the software is essential to the tangible product’s functionality. Implementation of this new authoritative guidance had an insignificant impact on reported net sales as compared to net sales under previous guidance, as the new guidance did not change the units of accounting within sales arrangements and the elimination of the residual method for the allocation of arrangement consideration had an inconsequential impact on the amount and timing of reported net sales. Accordingly, Applied does not believe that the effect of adopting these standards will have a material impact on future financial periods.

For fiscal 2010 and future periods, when a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue, as amended.

Business Combinations

Effective in the first quarter of fiscal 2010, Applied adopted revised authoritative guidance on business combinations that covers the measurement of acquirer shares issued as consideration for a business combination, the recognition of contingent consideration, the accounting for preacquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition-related transaction costs, and the recognition of changes in the acquirer’s income tax valuation allowance. This authoritative guidance also revised the accounting for both increases and decreases in a parent’s controlling ownership interest.

Cash, Cash Equivalents and Investments

6 Months Ended

May 02, 2010

Cash, Cash Equivalents and Investments [Abstract]

Cash, Cash Equivalents and Investments


Note 3	Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarizes Applied’s cash, cash equivalents and investments by security type:


			Gross		Gross
			Unrealized		Unrealized		Estimated
May 2, 2010	Cost		Gains		Losses		Fair Value
	(In thousands)

Cash	$	692,580	$	—	$	—	$	692,580

Cash equivalents:
Money market funds		875,234		—		—		875,234
U.S. Treasury and agency securities		24,999		—		1		24,998
Obligations of states and political subdivisions		3,641		—		24		3,617

Total Cash equivalents		903,874		—		25		903,849

Total Cash and Cash equivalents	$	1,596,454	$	—	$	25	$	1,596,429

Short-term and Long-term investments:
U.S. Treasury and agency securities	$	865,391	$	6,993	$	253	$	872,131
Obligations of states and political subdivisions		457,930		6,120		72		463,978
U.S. commercial paper, corporate bonds and medium-term notes		336,862		5,656		34		342,484
Other debt securities*		195,967		1,612		240		197,339

Total fixed income securities		1,856,150		20,381		599		1,875,932
Publicly traded equity securities		9,572		14,731		—		24,303
Equity investments in privately-held companies		68,412		—		—		68,412

Total Short-term and Long-term investments	$	1,934,134	$	35,112	$	599	$	1,968,647

Total Cash, Cash equivalents and Investments	$	3,530,588	$	35,112	$	624	$	3,565,076


			Gross		Gross
			Unrealized		Unrealized		Estimated
October 25, 2009	Cost		Gains		Losses		Fair Value
	(In thousands)

Cash	$	341,127	$	—	$	—	$	341,127

Cash equivalents:
Money market funds		1,235,254		—		—		1,235,254

Total Cash equivalents		1,235,254		—		—		1,235,254

Total Cash and Cash equivalents	$	1,576,381	$	—	$	—	$	1,576,381

Short-term and Long-term investments:
U.S. Treasury and agency securities	$	653,627	$	8,013	$	170	$	661,470
Obligations of states and political subdivisions		419,640		7,597		—		427,237
U.S. commercial paper, corporate bonds and medium-term notes		382,550		5,676		281		387,945
Other debt securities*		103,193		1,430		391		104,232

Total fixed income securities		1,559,010		22,716		842		1,580,884
Publicly traded equity securities		9,572		9,439		—		19,011
Equity investments in privately-held companies		90,619		—		—		90,619

Total Short-term and Long-term investments	$	1,659,201	$	32,155	$	842	$	1,690,514

Total Cash, Cash equivalents and Investments	$	3,235,582	$	32,155	$	842	$	3,266,895


*		Other debt securities consist primarily of investment grade asset-backed and mortgage-backed securities.

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at May 2, 2010:


			Estimated
	Cost		Fair Value
	(In thousands)

Due in one year or less	$	711,237	$	714,130
Due after one through five years		943,093		958,233
Due after five years		5,853		6,315
No single maturity date**		273,951		289,969

	$	1,934,134	$	1,968,647


**		Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

Gains and Losses on Investments

Gross realized gains and losses on sales of investments during the three and six months ended May 2, 2010 and April 26, 2009 were as follows:


	Three Months Ended				Six Months Ended
	May 2,		April 26,		May 2,		April 26,
	2010		2009		2010		2009
			(In thousands)

Gross realized gains	$	1,545	$	1,551	$	1,887	$	4,805
Gross realized losses	$	116	$	3,164	$	669	$	8,977

At May 2, 2010, Applied had a gross unrealized loss of $0.6 million due to a decrease in the fair value of certain fixed income securities. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied has determined that the gross unrealized losses on its marketable securities at May 2, 2010, are temporary in nature and therefore it did not recognize any impairment of its marketable securities for the three and six months ended May 2, 2010. At May 2, 2010, Applied determined that certain of its equity investments in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges in the amounts of $4 million and $5 million for the three and six months ended May 2, 2010, respectively. Impairment charges associated with financial assets for both the three and six months ended April 26, 2009 totaled $77 million, consisting of the following: equity method investment, $45 million; publicly-traded equity securities, $20 million; and equity investments in privately-held companies, $12 million.

The following table provides the fair market value of Applied’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired as of May 2, 2010.


	In Loss Position for				In Loss Position for
	Less Than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
					(In thousands)

U.S. Treasury and agency securities	$	371,712	$	254	$	—	$	—	$	371,712	$	254
Obligations of states and political subdivisions		32,035		96		—		—		32,035		96
U.S. commercial paper, corporate bonds and medium-term notes		32,727		34		—		—		32,727		34
Other debt securities		59,184		165		1,766		75		60,950		240

Total	$	495,658	$	549	$	1,766	$	75	$	497,424	$	624

Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations.

Fair Value Measurements

6 Months Ended

May 02, 2010

Fair Value Measurements [Abstract]

Fair Value Measurements


Note 4	Fair Value Measurements

Applied’s financial assets are measured and recorded at fair value, except for equity investments held in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicates that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred.

Fair Value Hierarchy

Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:


	•	Level 1 — Quoted prices in active markets for identical assets or liabilities;

	•	Level 2 — Observable inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

	•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Applied’s investments are comprised primarily of debt securities that are classified as available-for-sale and recorded at their fair value. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value.

Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of May 2, 2010, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities (excluding cash balances) measured at fair value on a recurring basis are summarized below as of May 2, 2010 and October 25, 2009:


	May 2, 2010										October 25, 2009
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
	(In thousands)										(In thousands)

Assets:
Money market funds	$	875,234	$	—		$	—	$	875,234		$	1,235,254	$	—		$	—	$	1,235,254
U.S. Treasury and agency securities		178,727		718,402			—		897,129			145,166		516,304			—		661,470
Obligations of states and political subdivisions		—		467,595			—		467,595			—		427,237			—		427,237
U.S. commercial paper, corporate bonds and medium-term notes		—		342,484			—		342,484			—		387,945			—		387,945
Other debt securities		—		197,339			—		197,339			—		104,232			—		104,232
Publicly traded equity securities		24,303		—			—		24,303			19,011		—			—		19,011
Foreign exchange derivative assets		—		3,234			—		3,234			—		2,173			—		2,173

Total	$	1,078,264	$	1,729,054		$	—	$	2,807,318		$	1,399,431	$	1,437,891		$	—	$	2,837,322

Liabilities:
Foreign exchange derivative liabilities	$	—	$	(1,161	)	$	—	$	(1,161	)	$	—	$	(1,678	)	$	—	$	(1,678	)

Total	$	—	$	(1,161	)	$	—	$	(1,161	)	$	—	$	(1,678	)	$	—	$	(1,678	)

There were no significant transfers in and out of Level 1 and Level 2 fair value measurements during the three and six months ended May 2, 2010. During the three and six months ended April 26 2009, Level 3 assets consisted of asset-backed and mortgage-backed securities, the values of which were based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data. The following table presents the activity in Level 3 instruments during the periods indicated below:


	Three Months Ended					Six Months Ended
	May 2, 2010		April 26, 2009			May 2, 2010		April 26, 2009
	Level 3		Level 3			Level 3		Level 3
	(In thousands)		(In thousands)			(In thousands)		(In thousands)

Balance, beginning of period	$	—	$	3,007		$	—	$	13,100
Total realized and unrealized losses:
Included in earnings		—		(432	)		—		(2,766	)
Included in other comprehensive loss		—		390			—		(1,125	)
Purchases, sales, and maturities		—		(852	)		—		(6,995	)
Transfers out of Level 3, net		—		172			—		71

Balance, end of period	$	—	$	2,285		$	—	$	2,285

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. Equity investments in privately-held companies totaled $68 million at May 2, 2010, of which $52 million of investments were accounted for under the cost method of accounting and $16 million of investments had been measured at fair value on a non-recurring basis due to an other-than-temporary decline in value. At April 26, 2009, equity investments in privately-held companies totaled $88 million, of which $47 million of investments were accounted for under the cost method of accounting and $41 million of investments had been measured at fair value on a non-recurring basis due to an other-than-temporary decline in value.

The following tables present the balances of equity securities at May 2, 2010 and April 26, 2009 that had been measured at fair value on a non-recurring basis, using the process described above, and the impairment charges recorded during the three and six months then ended:


							Total Impairment		Total Impairment
							For the Three		For the Six
							Months Ended		Months Ended
							May 2,		May 2,
	Level 1		Level 2		Level 3		2010		2010
	(In thousands)

Equity investments in privately-held companies measured at fair value on a non-recurring basis during fiscal 2010	$	—	$	—	$	16,499	$	3,671	$	4,861


							Total Impairment
							For the Three and
							Six Months Ended
							April 26,
	Level 1		Level 2		Level 3		2009
	(In thousands)

Equity investments in privately-held companies measured at fair value on a non-recurring basis during fiscal 2009	$	—	$	—	$	41,334	$	12,060

Other

The carrying amounts of Applied’s financial instruments, including cash and cash equivalents, accounts receivable, notes payable, and accounts payable and accrued expenses, approximate fair value due to the short maturities of these financial instruments. At May 2, 2010, the carrying amount of long-term debt was $207 million and the estimated fair value was $233 million. At October 25, 2009, the carrying amount of long-term debt was $202 million and the estimated fair value was $216 million. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues.

Derivative Instruments and Hedging Activities

6 Months Ended

May 02, 2010

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities


Note 5	Derivative Instruments and Hedging Activities

Derivative Financial Instruments

Derivative instruments and hedging activities, including foreign currency exchange contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or accounts payable and accrued expenses.

Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as Japanese yen, euro, Israeli shekel and Swiss franc. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income or loss (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to derivative instruments included in AOCI at May 2, 2010 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized promptly in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in general and administrative expenses. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for the three and six months ended May 2, 2010. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was $26 million and $25 million for the three and six months ended April 26, 2009, respectively.

Forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged.

Fair values of derivative instruments were as follows:

May 2, 2010

Asset Derivatives

Liability Derivatives

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Derivatives Designated as Hedging Instruments

Foreign exchange contracts

Other current
assets

2,457

Accounts payable
and accrued
expenses

1,047

Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts

Other current
assets

777

Accounts payable
and accrued
expenses

114

Total derivatives

3,234

1,161

October 25, 2009

Asset Derivatives

Liability Derivatives

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Derivatives Designated as Hedging Instruments

Foreign exchange contracts

Other current
assets

1,811

Accounts payable
and accrued
expenses

1,225

Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts

Other current
assets

362

Accounts payable
and accrued
expenses

453

Total derivatives

2,173

1,678

The effect of derivative instruments on the Consolidated Condensed Statement of Operations for the three and six months ended May 2, 2010 was as follows:


	Three Months Ended May 2, 2010
							Ineffective Portion and Amount
	Effective Portion						Excluded from
			Location of Gain				Effectiveness Testing
	Gain or (Loss)		or (Loss)	Gain or (Loss)			Location of Gain	Gain or (Loss)
	Recognized in		Reclassified from	Reclassified from			or (Loss)	Recognized in
	AOCI		AOCI into Income	AOCI into Income			Recognized in Income	Income
	(In thousands)

Derivatives in Cash Flow Hedging Relationships

Foreign exchange contracts	$	1,228	Cost of products sold	$	590		Cost of products sold	$	5
Foreign exchange contracts		—	General and administrative		(2,124	)	General and administrative		(378	)
Foreign exchange contracts		—	Research, development and engineering		(81	)	Research, development and engineering		—

Total	$	1,228		$	(1,615	)		$	(373	)


	Six Months Ended May 2, 2010
	Effective Portion							Ineffective Portion and Amount Excluded from
				Location of Gain				Effectiveness Testing
	Gain or (Loss)			or (Loss)	Gain or (Loss)			Location of Gain	Gain or (Loss)
	Recognized in			Reclassified from	Reclassified from			or (Loss)	Recognized in
	AOCI			AOCI into Income	AOCI into Income			Recognized in Income	Income
	(In thousands)

Derivatives in Cash Flow Hedging Relationships

Foreign exchange contracts	$	(1,607	)	Cost of products sold	$	(1,167	)	Cost of products sold	$	(299	)
Foreign exchange contracts		—		General and administrative		(1,087	)	General and administrative		(944	)
Foreign exchange contracts		—		Research, development and engineering		(163	)	Research, development and engineering		—

Total	$	(1,607	)		$	(2,417	)		$	(1,243	)


		Three Months		Six Months
		Ended May 2, 2010		Ended May 2, 2010
	Location of Gain	Amount of Gain		Amount of Gain
	or (Loss)	or (Loss)		or (Loss)
	Recognized	Recognized		Recognized
	in Income	in Income		in Income
		(In thousands)

Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts	General and administrative	$	6,780	$	(3,680	)

Total		$	6,780	$	(3,680	)

The effect of derivative instruments on the Consolidated Condensed Statement of Operations for the three and six months ended April 26, 2009 was as follows:


	Three Months Ended April 26, 2009
	Effective Portion						Ineffective Portion and Amount Excluded from
			Location of Gain				Effectiveness Testing
	Gain or (Loss)		or (Loss)	Gain or (Loss)			Location of Gain	Gain or (Loss)
	Recognized in		Reclassified from	Reclassified from			or (Loss)	Recognized in
	AOCI		AOCI into Income	AOCI into Income			Recognized in Income	Income
	(In thousands)

Derivatives in Cash Flow Hedging Relationships

Foreign exchange contracts	$	3,403	Cost of products sold	$	2,609		Cost of products sold	$	(638	)
Foreign exchange contracts		—	General and administrative		(5,989	)	General and administrative		25,743
Foreign exchange contracts		—	Research, development and engineering		(82	)	Research, development and engineering		—

Total	$	3,403		$	(3,462	)		$	25,105


	Six Months Ended April 26, 2009
	Effective Portion							Ineffective Portion and Amount Excluded from
				Location of Gain				Effectiveness Testing
	Gain or (Loss)			or (Loss)	Gain or (Loss)			Location of Gain	Gain or (Loss)
	Recognized in			Reclassified from	Reclassified from			or (Loss)	Recognized in
	AOCI			AOCI into Income	AOCI into Income			Recognized in Income	Income
	(In thousands)

Derivatives in Cash Flow Hedging Relationships

Foreign exchange contracts	$	(8,120	)	Cost of products sold	$	(8,901	)	Cost of products sold	$	(2,858	)
Foreign exchange contracts		—		General and administrative		(12,204	)	General and administrative		24,242
Foreign exchange contracts		—		Research, development and engineering		(163	)	Research, development and engineering		—

Total	$	(8,120	)		$	(21,268	)		$	21,384


		Three Months		Six Months
		Ended		Ended
		April 26, 2009		April 26, 2009
	Location of Gain	Amount of Gain		Amount of Gain
	or (Loss)	or (Loss)		or (Loss)
	Recognized	Recognized		Recognized
	in Income	in Income		in Income
	(In thousands)

Derivatives Not Designated as Hedging Instruments

Foreign exchange contracts	General and administrative	$	19,764	$	(9,892	)

Total		$	19,764	$	(9,892	)

Credit Risk Contingent Features

If Applied’s credit rating were to fall below investment grade, it would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a liability position was immaterial as of May 2, 2010.

Entering into foreign exchange contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant.

Balance Sheet Detail

6 Months Ended

May 02, 2010

Balance Sheet Detail [Abstract]

Balance Sheet Detail


Note 7	Balance Sheet Detail

Inventories


	May 2,		October 25,
	2010		2009
	(In thousands)

Customer service spares	$	291,459	$	263,688
Raw materials		301,633		351,824
Work-in-process		670,628		667,484
Finished goods		426,725		344,461

	$	1,690,445	$	1,627,457

Inventories are stated at the lower of cost or market, with cost determined on a FIFO basis. Included in finished goods inventory is $133 million at May 2, 2010, and $133 million at October 25, 2009, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1.

Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully reserves for inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required.


	May 2,			October 25,
	2010			2009
	(In thousands)

Property, Plant and Equipment, Net
Land and improvements	$	229,322		$	228,057
Buildings and improvements		1,237,881			1,164,384
Demonstration and manufacturing equipment		686,957			654,779
Furniture, fixtures and other equipment		723,268			713,505
Construction in progress		59,843			146,232

Gross property, plant and equipment		2,937,271			2,906,957
Accumulated depreciation		(1,853,746	)		(1,816,524	)

	$	1,083,525		$	1,090,433

Accounts Payable and Accrued Expenses
Accounts payable	$	546,359		$	477,148
Compensation and employee benefits		310,052			134,949
Warranty		140,369			117,537
Dividends payable		94,009			80,455
Other accrued taxes		65,191			36,954
Restructuring reserve		93,590			31,581
Other		190,655			182,878

	$	1,440,225		$	1,061,502

Customer Deposits and Deferred Revenue
Customer deposits	$	578,020		$	564,412
Deferred revenue		402,638			299,868

	$	980,658		$	864,280

Goodwill, Purchased Technology and Other Intangible Assets

6 Months Ended

May 02, 2010

Goodwill, Purchased Technology and Other Intangible Assets [Abstract]

Goodwill, Purchased Technology and Other Intangible Assets


Note 8	Goodwill, Purchased Technology and Other Intangible Assets

Goodwill and Purchased Intangible Assets

Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the cost of the acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to a reporting unit as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.

Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. For goodwill, Applied performs a two-step impairment test. In the first step, Applied compares the estimated fair value of each reporting unit to its carrying value. Applied’s reporting units are consistent with the reportable segments identified in Note 15, based on the manner in which Applied operates its business and the nature of those operations. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. Under the income approach, Applied calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Estimated future cash flows will be impacted by a number of factors including anticipated future operating results, estimated cost of capital and/or discount rates. Under the market approach, Applied estimates the fair value based on market multiples of revenue or earnings for comparable companies. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then Applied would perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. Applied would then allocate the fair value of the reporting unit to all of the assets and liabilities of that unit, as if Applied had acquired the reporting unit in a business combination, with the fair value of the reporting unit being the “purchase price.” The excess of the “purchase price” over the carrying amounts assigned to assets and liabilities represents the implied fair value of goodwill. If Applied determined that the carrying value of a reporting unit’s goodwill exceeded its implied fair value, Applied would record an impairment equal to the difference.

Applied conducted impairment tests in the fourth quarter of fiscal 2009, and the results of the first step of the impairment test indicated that Applied’s goodwill and purchased intangible assets with indefinite useful lives for each of its reporting units were not impaired. During the second quarter of fiscal 2010, Applied tested goodwill of the Energy and Environmental Solutions reporting unit for potential impairment and the result of the first step of the impairment test indicated that there was no impairment. Applied tested goodwill of the Energy and Environmental Solutions reporting unit for impairment in light of second quarter developments that included the insolvency of a thin film solar customer, inability of other thin film solar customers to secure financing, weaker outlooks for certain customers that in turn reduced their spending plans resulting in the delay or cancellation of thin film production lines, and other adverse operating conditions affecting the solar industry.

Applied utilized the discounted cash flow method of the income approach to estimate the fair value of the Energy and Environmental Solutions reporting unit. Although considered, the market approach was not used as comparable enterprises, market-based growth rates, and gross margins were not considered to be representative of the Energy and Environmental Solutions reporting unit. While the results of the first step of the impairment test indicated that goodwill and intangible assets within the Energy and Environmental Solutions reporting unit were not impaired, the estimated fair value in excess of carrying value declined significantly from the fourth quarter of fiscal 2009 to the end of the second quarter of fiscal 2010 to approximately $200 million (or 19 percent over the carrying value of the reporting unit). The estimates used in the impairment testing were consistent with the discrete forecasts that Applied uses to manage its business, and considered the significant developments that occurred during the quarter. Cash flows beyond the discrete forecasts were estimated using a terminal value rate, which considered the long-term earnings growth rate specific to the Energy and Environmental Solutions reporting unit. The estimated future cash flows were discounted to present value using a discount rate that was the value-weighted average of Applied’s estimated cost of equity and debt derived using both known and estimated market metrics, and was adjusted to reflect risk factors that considered both the timing and risks associated with the estimated cash flows. In the event of future adverse business conditions in the market in which the Energy and Environmental Solutions reporting unit operates, Applied will reassess and update its forecasts and estimates used in a future impairment analysis. If the results of this analysis are lower than current estimates, a material impairment charge may result at that time.

Details of indefinite-lived intangible assets were as follows:


	May 2, 2010						October 25, 2009
			Other						Other
			Intangible						Intangible
	Goodwill		Assets		Total		Goodwill		Assets		Total
	(In thousands)

Carrying amount	$	1,336,426	$	17,400	$	1,353,826	$	1,170,932	$	17,860	$	1,188,792

From October 25, 2009 to May 2, 2010, goodwill increased by $158 million due to the acquisition of Semitool, Inc. (Semitool), and by $7 million due to an asset purchase from Advent Solar, Inc. (Advent Solar), both during the first quarter of fiscal 2010 (see Note 16). Other intangible assets that are not subject to amortization consist primarily of a trade name. As of May 2, 2010, indefinite-lived intangible assets by reportable segment were: Energy and Environmental Solutions, $661 million; Silicon, $382 million; Applied Global Services, $195 million; and Display, $116 million.

Finite-Lived Purchased Intangible Assets

Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years.

Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach.

Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environment, technological advances, and changes in cost structure.

Details of amortized intangible assets were as follows:


	May 2, 2010									October 25, 2009
				Other									Other
	Purchased			Intangible						Purchased			Intangible
	Technology			Assets			Total			Technology			Assets			Total
	(In thousands)

Gross carrying amount	$	612,980		$	350,929		$	963,909		$	554,920		$	329,629		$	884,549
Accumulated amortization		(412,593	)		(222,488	)		(635,081	)		(400,093	)		(195,900	)		(595,993	)

	$	200,387		$	128,441		$	328,828		$	154,827		$	133,729		$	288,556

From October 25, 2009 to May 2, 2010, the change in gross carrying amount of the amortized intangible assets was approximately $79 million, primarily due to the acquisition of Semitool during the first quarter of fiscal 2010. Aggregate amortization expense was $28 million and $23 million for the three months ended May 2, 2010 and April 26, 2009, respectively, and $53 million and $44 million for the six months ended May 2, 2010 and April 26, 2009, respectively. As of May 2, 2010, future estimated amortization expense is expected to be $33 million for the remainder of fiscal 2010, $61 million for fiscal 2011, $57 million for fiscal 2012, $53 million for fiscal 2013, $49 million for fiscal 2014, and $76 million thereafter. As of May 2, 2010, amortized intangible assets by reportable segment were: Energy and Environmental Solutions, $184 million; Silicon, $87 million; Applied Global Services, $33 million; and Display, $25 million.

Warranty, Guarantees and Contingencies

6 Months Ended

May 02, 2010

Warranty, Guarantees and Contingencies [Abstract]

Warranty, Guarantees and Contingencies


Note 9	Warranty, Guarantees and Contingencies

Warranty

Changes in the warranty reserves during the three and six months ended May 2, 2010 and April 26, 2009 were as follows:


	Three Months Ended						Six Months Ended
	May 2,			April 26,			May 2,			April 26,
	2010			2009			2010			2009
	(In thousands)

Beginning balance	$	137,430		$	143,723		$	117,537		$	142,846
Provisions for warranty		31,471			22,174			65,946			45,720
Consumption of reserves		(28,532	)		(34,026	)		(43,114	)		(56,695	)

Ending balance	$	140,369		$	131,871		$	140,369		$	131,871

Applied products are generally sold with a 12-month warranty period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales.

Guarantees

During the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to certain parties as required for certain transactions initiated by either Applied or its subsidiaries. As of May 2, 2010, the maximum potential amount of future payments that Applied could be required to make under these guarantee arrangements was $88 million. Applied has not recorded any liability in connection with these guarantee arrangements beyond that required to account for the underlying transaction being guaranteed. Applied does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee arrangements.

Applied also has agreements with various global banks to facilitate subsidiary banking operations world-wide, including overdraft arrangements, bank guarantees and letters of credit. As of May 2, 2010, Applied Materials, Inc. has provided parent guarantees to banks for approximately $173 million to cover these arrangements.

Legal matters

Semitool Shareholder Litigation

On November 17, 2009, Applied announced that it was making a tender offer to acquire all of the outstanding shares of Semitool in accordance with an Agreement and Plan of Merger entered into with Semitool. Following this announcement, three lawsuits were filed by Semitool shareholders in the District Court of the Eleventh Judicial District Court for the State of Montana, County of Flathead, against Semitool, Semitool’s directors, Applied and Applied’s acquisition subsidiary. The actions seek certification of a class of all holders of Semitool common stock, except the defendants and their affiliates. The complaints allege that Semitool’s directors breached their fiduciary duties by, among other things, failing to maximize shareholder value and failing to disclose material information, and that Applied aided and abetted such alleged breaches. The actions seek injunctive relief, damages and attorneys’ fees.

On December 14, 2009, all parties in these cases reached an agreement in principle to settle the matters and the plaintiffs withdrew their motion to enjoin consummation of the transaction. Without admitting any wrongdoing or fault, Semitool disclosed certain additional information in its Schedule 14D-9 filed with the Securities and Exchange Commission on December 14, 2009. Following the tender of shares representing over 95 percent of the outstanding shares of Semitool common stock, the merger of Semitool into Applied’s acquisition subsidiary was completed on December 21, 2009. Pursuant to a memorandum of understanding between the parties, plaintiffs are conducting discovery to confirm the fairness and reasonableness of the settlement, and defendants will not object to an application by plaintiffs’ counsel for an award of attorneys’ fees and expenses in an amount up to $200,000. A class of Semitool’s public shareholders will be certified solely for purposes of settlement, which, if approved by the Court, will result in a complete and final discharge of all claims on behalf of the class.

Jusung

Applied has been engaged in several lawsuits and patent and administrative proceedings in Taiwan and South Korea since 2003, and more recently in China, with Jusung Engineering Co., Ltd. (Jusung Engineering) and/or Jusung Pacific Co., Ltd. (Jusung Pacific, referred to together with Jusung Engineering as Jusung) involving technology used in manufacturing LCDs. Applied believes that it has meritorious claims and defenses against Jusung that it intends to pursue vigorously.

In 2004, Applied filed a complaint for patent infringement against Jusung in the Hsinchu District Court in Taiwan seeking damages and a permanent injunction for infringement of a patent related to chemical vapor deposition (CVD) equipment, and this case remains pending. Jusung Pacific unsuccessfully sought invalidation of Applied’s CVD patent in the Taiwanese Intellectual Property Office (TIPO). Jusung Pacific’s initial appeal of the TIPO’s decision was denied, and it has filed a further appeal to the Taipei High Supreme Administrative Court. In 2009, Jusung filed a second action with the TIPO seeking invalidation of Applied’s CVD patent.

In 2006, Applied filed an action in the TIPO challenging the validity of a patent owned by Jusung Engineering related to severability of the transfer chamber on a CVD tool. Jusung Engineering sued Applied and AKT America in Hsinchu District Court in Taiwan alleging infringement of the same patent. The TIPO granted Applied’s request for invalidation and revoked Jusung Engineering’s patent. In March 2009, the Hsinchu District Court dismissed Jusung Engineering’s lawsuit, and in April 2009, the Ministry of Economic Affairs overruled Jusung Engineering’s administrative appeal of the decision revoking its patent. On January 7, 2010, the Taiwan Intellectual Property Court granted Jusung’s appeal of the decision revoking its patent and remanded the matter to the TIPO for reconsideration of validity. In November 2009, Applied filed an action in China with the Patent Reexamination Board of the State Intellectual Property Office seeking to invalidate this patent.

In 2006, Jusung Engineering filed a complaint of private prosecution in the Taipei District Court of Taiwan alleging that Applied’s outside counsel received from the Court and used a copy of an expert report that Jusung had filed in the ongoing patent infringement lawsuits that Jusung had intended to remain confidential. The complaint names as defendants Applied’s outside counsel in Taiwan, as well as Michael R. Splinter, Applied’s Chairman, President and Chief Executive Officer, as the statutory representative of Applied. The Taipei District Court dismissed the private prosecution complaint, and the matter was transferred to the Taipei District Attorney’s Office. The Taipei District Attorney’s Office has issued four successive rulings not to prosecute, each of which Jusung Engineering has appealed. In each instance, the Taiwan High Court District Attorney has returned the matter to the Taipei District Attorney’s Office for further consideration, where it remains pending.

Korea Criminal Proceedings

In February 2010, the Seoul Prosecutor’s Office for the Eastern District of Korea (the Prosecutor’s Office) indicted employees of several companies for the alleged improper receipt and use of confidential information belonging to a major Applied customer based in Korea. The Prosecutor’s Office did not name Applied or any of its subsidiaries as a party to the criminal action. The individuals charged included the former head of Applied Materials Korea (AMK), who at the time of the indictment was a vice president of Applied Materials, Inc., and certain other AMK employees. Hearings on these matters are ongoing in the Seoul Eastern District Court. There is a risk that these matters may lead to other legal actions. Applied is investigating the allegations and surrounding circumstances. Applied currently is unable to determine what impact these matters may have on Applied’s business. The nature and magnitude of the impact, if any, on Applied’s business will depend on many factors, including the outcome of the proceedings and Applied’s customer relationships.

From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business.

Although the outcome of the above-described matters or these claims and proceedings cannot be predicted with certainty, Applied does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition or results of operations.

Stockholders Equity, Comprehensive Income and Equity-Based Compensation

6 Months Ended

May 02, 2010

Stockholders' Equity, Comprehensive Income and Equity-Based Compensation [Abstract]

Stockholders' Equity, Comprehensive Income and Equity-Based Compensation


Note 11	Stockholders’ Equity, Comprehensive Income and Equity-Based Compensation

Comprehensive Income

Components of comprehensive income (loss), on an after-tax basis where applicable, were as follows:


	Three Months Ended						Six Months Ended
	May 2,			April 26,			May 2,			April 26,
	2010			2009			2010			2009
	(In thousands)

Net income (loss)	$	264,004		$	(255,390	)	$	346,755		$	(388,324	)
Pension liability adjustment		—			—			74			112
Change in unrealized net gain on investments		(108	)		14,862			2,013			31,336
Change in unrealized net gain (loss) on derivative instruments qualifying as cash flow hedges		1,814			(8,093	)		515			(8,303	)
Foreign currency translation adjustments		(1,898	)		1,207			(1,625	)		(103	)

Comprehensive income (loss)	$	263,812		$	(247,414	)	$	347,732		$	(365,282	)

Components of accumulated other comprehensive loss, on an after-tax basis where applicable, were as follows:


	May 2,			October 25,
	2010			2009
	(In thousands)

Pension liability and post retirement benefits	$	(32,075	)	$	(32,149	)
Unrealized gain on investments net		21,985			19,972
Unrealized gain on derivative instruments qualifying as cash flow hedges		825			310
Cumulative translation adjustments		8,562			10,187

	$	(703	)	$	(1,680	)

Stock Repurchase Program

On March 8, 2010, Applied’s Board of Directors approved a new stock repurchase program authorizing up to $2 billion in repurchases over the next three years ending in March 2013. Under this authorization, Applied renewed its systematic stock repurchase program and may also make supplemental stock repurchases from time to time, depending on market conditions, stock price and other factors. During the three and six months ended May 2, 2010, Applied repurchased 7,631,000 shares of its common stock at an average price of $13.10 per share for a total cash outlay of $100 million. Applied did not repurchase any shares of its common stock during the three months ended April 26, 2009. During the six months ended April 26, 2009, Applied repurchased 1,942,000 shares of its common stock at an average price of $11.80 per share for a total cash outlay of $23 million.

Dividends

On March 8, 2010, Applied’s Board of Directors approved an increase in the quarterly cash dividend to $0.07 per share, payable on June 16, 2010 to stockholders of record as of May 26, 2010. In December 2009, Applied’s Board of Directors declared a quarterly cash dividend in the amount of $0.06 per share that was paid on March 17, 2010 to stockholders of record as of February 24, 2010. The declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on Applied’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interest of Applied’s stockholders.

Equity-Based Compensation

Applied has adopted stock plans that permit grants to employees of equity-based awards, including stock options, restricted stock and restricted stock units (also referred to as “performance shares” under Applied’s principal equity compensation plan, the Employee Stock Incentive Plan). In addition, the Employee Stock Incentive Plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of equity-based awards to consultants. Applied also has two Employee Stock Purchase Plans, one for United States employees and a second for international employees (collectively, ESPP), which enable eligible employees to purchase Applied common stock.

During the three and six months ended May 2, 2010 and April 26, 2009, Applied recognized equity-based compensation expense related to stock options, ESPP shares, restricted stock units and restricted stock. Total equity-based compensation and related tax benefits were as follows:


	Three Months Ended				Six Months Ended
	May 2,		April 26,		May 2,		April 26,
	2010		2009		2010		2009
	(In thousands)				(In thousands)

Equity-based compensation	$	28,641	$	39,172	$	62,330	$	72,780
Tax benefit recognized	$	8,592	$	11,968	$	18,025	$	20,378

The cost associated with equity awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards is recognized for each tranche over the service period, based on an assessment of the achievement of performance goals.

Stock Options

The exercise price of each stock option equals the fair market value of Applied common stock on the date of grant. Most options are scheduled to vest over four years, subject to the grantee’s continued service with Applied, and expire no later than seven years from the grant date. The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. Applied’s employee stock options have characteristics significantly different from those of publicly traded options. The weighted average assumptions used in the model are outlined in the following table:


	Three Months Ended					Six Months Ended
	May 2,		April 26,			May 2,		April 26,
	2010		2009			2010		2009

Stock Options:
Dividend yield		—		2.80	%		—		2.80	%
Expected volatility		—		50	%		—		50	%
Risk-free interest rate		—		1.3	%		—		1.3	%
Expected life (in years)		—		3.0			—		3.0

The computation of the expected volatility assumption used in the Black-Scholes calculations for new grants is based on a combination of historical and implied volatilities. When establishing the expected life assumption, Applied periodically reviews historical employee exercise behavior with respect to option grants. There were no stock options granted in the three and six months ended May 2, 2010. The weighted average grant date fair value of options granted during the three and six months ended April 26, 2009 was $2.52.

Stock option activity for the six months ended May 2, 2010 was as follows:


				Weighted
				Average
				Exercise
	Shares			Price
	(In thousands, except per share amounts)

Outstanding at October 25, 2009		73,101		$	14.72
Granted		—		$	—
Exercised		(6,533	)	$	11.09
Canceled/forfeited		(5,805	)	$	15.87

Outstanding at May 2, 2010		60,763		$	15.04

Exercisable at May 2, 2010		46,197		$	17.06

Restricted Stock Units and Restricted Stock

Restricted stock units are converted into shares of Applied common stock upon vesting on a one-for-one basis. Restricted stock has the same rights as other issued and outstanding shares of Applied common stock except these shares have no right to dividends and are held in escrow until the award vests. Restricted stock units and awards of restricted stock typically vest over three to four years. Vesting of restricted stock units and restricted stock usually is subject to the grantee’s continued service with Applied and, in some cases, achievement of specified performance goals. The compensation expense related to these awards is determined using the fair market value of Applied common stock on the date of the grant, and the compensation expense is recognized over the vesting period. At May 2, 2010, Applied had $196 million total unrecognized compensation expense, net of estimated forfeitures, related to restricted stock unit and restricted stock grants, which will be recognized over a weighted average period of 1.5 years. Beginning in fiscal 2007, Applied initiated a performance-based equity award program for named executive officers and other key employees. Awards of restricted stock units or restricted stock granted under this program vest only if specific performance goals set by the Human Resources and Compensation Committee of Applied’s Board of Directors (the Committee) are achieved and if the grantee remains employed by Applied through the applicable vesting date. The performance goals require the achievement of targeted relative annual operating profit margin levels as compared to Applied’s peer companies in at least one of the four fiscal years beginning with the fiscal year of the grant. The fair value of these performance-based awards is estimated using the fair market value of Applied common stock on the date of the grant and assumes that the specified performance goals will be achieved. If achieved, these awards vest over a specified remaining service period. If the performance goals are not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost of each award is reflected over the service period and is reduced for estimated forfeitures. The Committee approved the grant of 1,775,000 performance-based restricted stock units and 50,000 performance-based shares of restricted stock under this program in the six months ended May 2, 2010. There were no performance-based awards granted in the six months ended April 26, 2009. With respect to the performance-based awards granted in fiscal 2008, as of May 2, 2010, 70 percent of the performance goals associated with these awards had been achieved. The performance goals associated with the remaining 30 percent may still be achieved during fiscal 2010 and fiscal 2011.

Restricted stock unit and restricted stock activity for the six months ended May 2, 2010 was as follows:


				Weighted		Weighted
				Average		Average
				Grant Date		Remaining
	Shares			Fair Value		Contractual Term
	(In thousands, except per share amounts)

Non-vested restricted stock units and restricted stock at October 25, 2009		12,105		$	14.37		2.4 Years
Granted		11,993		$	12.42
Vested		(1,120	)	$	17.15
Canceled		(878	)	$	16.12

Non-vested restricted stock units and restricted stock at May 2, 2010		22,100		$	13.10		2.9 Years

Employee Stock Purchase Plans

Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, for an aggregate price of up to $6,500 per purchase period per employee. Based on the Black-Scholes option pricing model, the weighted average estimated fair value of purchase rights under the ESPP was $3.00 and $2.99 for the three and six months ended May 2, 2010 and April 26, 2009, respectively. The number of shares issued under the ESPP during the three and six months ended May 2, 2010 and April 26, 2009 was 2,440,000 and 3,536,000, respectively. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:


	Three Months Ended						Six Months Ended
	May 2,			April 26,			May 2,			April 26,
	2010			2009			2010			2009

ESPP:
Dividend yield		2.24	%		2.71	%		2.24	%		2.71	%
Expected volatility		33	%		69	%		33	%		69	%
Risk-free interest rate		0.18	%		0.41	%		0.18	%		0.41	%
Expected life (in years)		0.5			0.5			0.5			0.5

Industry Segment Operations

6 Months Ended

May 02, 2010

Industry Segment Operations [Abstract]

Industry Segment Operations


Note 15	Industry Segment Operations

Applied’s four reportable segments are: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Applied’s chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of May 2, 2010 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the Company’s reportable segments.

Each reportable segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker.

Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Effective in the first quarter of fiscal 2010, Applied changed its methodology for allocating certain expenses to its reportable segments. Applied has reclassified segment operating results for the three and six months ended April 26, 2009 to conform to the fiscal 2010 presentation. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level, which include costs related to equity-based compensation and certain corporate functions (certain management, finance, legal, human resources, and research, development and engineering), and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions. Segment operating income excludes interest income/expense and other financial charges and income taxes according to how a particular reportable segment’s management is measured. Management does not consider the unallocated costs in measuring the performance of the reportable segments.

The Silicon segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, and wafer packaging.

The Applied Global Services segment includes technically differentiated products and services to improve operating efficiency, reduce operating costs and lessen the environmental impact of semiconductor, display and solar customers’ factories. Applied Global Services’ products consist of spares, services, certain earlier generation products, and remanufactured equipment. Customer demand for these products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites.

The Display segment encompasses products for manufacturing LCDs for TVs, personal computers and other video-enabled devices. The Display segment also includes the design and manufacture of differentiated stand-alone equipment for the Applied SunFab thin film line.

The Energy and Environmental Solutions segment includes products for fabricating solar photovoltaic cells and modules, high throughput roll-to-roll coating systems for flexible electronics and web products, and systems used in the manufacture of energy-efficient glass.

Net sales and operating income (loss) for each reportable segment for the three and six months ended May 2, 2010 and April 26, 2009 were as follows:


	Three Months Ended					Six Months Ended
			Operating					Operating
	Net Sales		Income (Loss)			Net Sales		Income (Loss)
	(In thousands)					(In thousands)

2010:
Silicon	$	1,404,275	$	497,679		$	2,374,439	$	803,674
Applied Global Services		455,766		89,580			881,318		152,738
Display		269,502		89,867			401,610		114,794
Energy and Environmental Solutions		165,997		(144,950	)		487,075		(181,217	)

Total Segment	$	2,295,540	$	532,176		$	4,144,442	$	889,989

2009:
Silicon	$	260,231	$	(82,361	)	$	806,242	$	(36,122	)
Applied Global Services		319,315		(1,124	)		664,409		24,780
Display		83,526		(2,744	)		232,535		18,383
Energy and Environmental Solutions		357,005		(90,591	)		650,287		(154,234	)

Total Segment	$	1,020,077	$	(176,820	)	$	2,353,473	$	(147,193	)

Reconciliations of total segment operating income to Applied’s consolidated operating income (loss) for the three and six months ended May 2, 2010 and April 26, 2009 were as follows:


	Three Months Ended						Six Months Ended
	May 2,			April 26,			May 2,			April 26,
	2010			2009			2010			2009
	(In thousands)						(In thousands)

Total segment operating income (loss)	$	532,176		$	(176,820	)	$	889,989		$	(147,193	)
Corporate and unallocated costs		(137,411	)		(89,754	)		(275,037	)		(182,701	)
Restructuring and asset impairment charges		(8,968	)		(26,709	)		(112,812	)		(159,481	)

Income (loss) from operations	$	385,797		$	(293,283	)	$	502,140		$	(489,375	)

During the six months ended May 2 2010, Samsung Electronics Co., Ltd. accounted for 18 percent of Applied’s net sales and Taiwan Semiconductor Manufacturing Company Limited accounted for 14 percent. These two customers accounted for 30 percent of the accounts receivable balance as of May 2, 2010.

Business Combinations

6 Months Ended

May 02, 2010

Business Combinations [Abstract]

Business Combinations


Note 16	Business Combinations

On December 21, 2009, Applied acquired Semitool, a public company based in the state of Montana, for a purchase price of $323 million in cash, net of cash acquired, pursuant to a tender offer and subsequent short-form merger. The acquired business is a leading supplier of electrochemical plating and wafer surface preparation equipment used by semiconductor packaging and manufacturing companies globally. Applied’s primary reasons for this acquisition were to complement its existing product offerings and to provide opportunities for future growth. The acquired business is included in results for the Silicon segment.

In November 2009, Applied acquired substantially all the assets, including the intellectual property, of Advent Solar, a developer of advanced technology for crystalline silicon (c-Si) solar photovoltaic cells and modules (PVs). This acquisition complemented Applied’s portfolio of solar PV technologies and enhanced Applied’s opportunities in the c-Si equipment market. The acquisition is included in results for the Energy and Environmental Solutions segment.

Applied allocated the purchase price of each of these acquisitions to tangible assets, liabilities and identifiable intangible assets acquired, based on their estimated fair values. The excess of purchase price over the aggregate fair values was recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. These estimates were determined through established and generally accepted calculation techniques. Applied calculated the fair value of the tangible and intangible assets acquired to allocate the purchase prices at the respective acquisition dates. Based upon these calculations, the purchase prices for the above acquisitions were allocated as follows:


	Acquisitions
Fair Market Values	2010
	(In thousands)

Cash and cash equivalents	$	38,744
Accounts receivable, net		37,961
Inventories		61,838
Other current assets		3,837
Property and equipment, net		45,578
Goodwill		165,495
Purchased intangible assets		93,376

Total assets acquired		446,829
Accounts payable and accrued expenses		(46,246	)
Other liabilities		(25,240	)

Total liabilities assumed		(71,486	)

Purchase price allocated	$	375,343


	Useful	Acquisitions
	Life	2010
	(In years)	(In thousands)

Developed technology	6-10	$	65,700
Customer relationships	8		10,900
Trade names	3-10		5,700
Patents and trademarks	7-10		5,462
Backlog	1		4,100
Other	5		1,514

		$	93,376

Recent Accounting Pronouncements

6 Months Ended

May 02, 2010

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements


Note 17	Recent Accounting Pronouncements

In March 2010, the FASB issued updated authoritative guidance that amends the requirements for evaluating whether a decision maker or service provider has a variable interest, to clarify that a quantitative approach should not be the sole consideration in assessing the criteria for variable interest entity determination. The guidance also clarifies that related parties should be considered in applying all of the decision maker and service provider criteria. This is in addition to the authoritative guidance the FASB issued in June 2009 that applies to determining whether an entity is a variable interest entity and requiring an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. Under this guidance, an enterprise has such a controlling financial interest when it has (1) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. The guidance also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. The guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. This guidance is effective for Applied beginning in the first quarter of fiscal 2011. Applied is evaluating the potential impact of the implementation of this authoritative guidance on its consolidated financial statements.

In March 2010, the FASB ratified a consensus of the FASB Emerging Issues Task Force that recognizes the milestone method as an acceptable revenue recognition method for substantive milestones in research or development arrangements. This consensus would require its provisions be met in order for an entity to recognize consideration that is contingent upon achievement of a substantive milestone as revenue in its entirety in the period in which the milestone is achieved. In addition, this consensus would require disclosure of certain information with respect to arrangements that contain milestones. This authoritative guidance is effective for interim and annual reporting periods on or after June 15, 2010 and will be effective for Applied in the third quarter of fiscal 2010. Applied is evaluating the potential impact of the implementation of this authoritative guidance on its consolidated financial statements.

In January 2010, the FASB issued authoritative guidance for fair value measurements, which requires additional disclosures and clarifications to existing disclosures. This authoritative guidance requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and also to describe the reasons for these transfers. This authoritative guidance also requires enhanced disclosure of activity in Level 3 fair value measurements. The new disclosures and clarifications of existing disclosures for Level 1 and Level 2 fair value measurements becomes effective the first interim reporting period after December 15, 2009 and became effective for Applied in the second quarter of fiscal 2010. Disclosures regarding activity within Level 3 fair value measurements becomes effective the first interim reporting period after December 15, 2010 and will be effective for Applied in the second quarter of fiscal 2011. Applied is evaluating the potential impact of the implementation of this authoritative guidance on its consolidated financial statements. See Note 4 for information and related disclosures regarding Applied’s fair value measurements.

In June 2009, the FASB issued authoritative guidance on variable interest entities, which requires revised evaluations of whether entities represent variable interest entities, ongoing assessments of control over such entities, and additional disclosures for variable interests. In December 2009, the FASB issued authoritative guidance on the financial reporting by entities involved with variable interest entities which amends previously issued guidance on variable interest entities. The amendments in this authoritative guidance replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. This authoritative guidance becomes effective the first annual reporting period after November 15, 2009 and will be effective for Applied in fiscal 2011. Applied is evaluating the potential impact of the implementation of this authoritative guidance on its consolidated financial statements.

Consolidated Condensed Statements of Stockholders Equity and Comprehensive Income (Loss) (Unaudited) (Parenthetical) $ in Thousands	6 Months Ended
	May 02, 2010 USD ($)
Common Stock
Statement [Line Items]
Tax benefits (detriment) included in issuance under stock plans	$ 1,897
Additional Paid-In Capital
Statement [Line Items]
Tax benefits (detriment) included in issuance under stock plans	$ 1,897