Filed by Applied Materials, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Applied Materials, Inc.; Tokyo Electron Limited
Commission File No.: 000-06920
Date: September 24, 2013
 Creating a
New Global Innovator |
 All
stock transaction
with
new
company
valued at approximately $29B
2
Applied Materials and Tokyo Electron combining
in a merger of equals
With synergies and
share repurchase,
combination to be accretive exiting 1
st
full fiscal year
Today’s Announcement
Creates a new global innovator in
Precision
Materials
Engineering
and
Patterning
expect |
 Combination
creates value
for our
shareholders
Company structure to enable
higher
cash
returns
to
investors
Brings
together
complementary
leading technologies and
products
in
semiconductor
and display
Mutual commitment to
improve profitability
3 |
 4
4
New company’s capabilities and structure
Addressing our customers’
needs
Positioned for growth at market inflections
Transaction
and
shareholder
value
Financial model |
 5
Joined TEL in 1977
Held a variety of senior
management positions, in
sales, product management
General Manager of a
major division
Appointed President and
CEO in 1996
Elected Chairman in 2003
Chairman of the
Semiconductor Equipment
Association of Japan
between 2005 and 2011,
currently serves as
Vice Chairman
Long-serving member of the
board of directors at SEMI
SEMI’s Chairman in 2004
and 2005
Tetsuro (Terry) Higashi
Tokyo Electron Chairman and CEO
35 years with TEL
Industry Champion |
 1.
LTM
=
Last
Twelve
Months
through
June
2013
for
TEL
and
July
2013
for
Applied
2.
TEL revenue of $5.4B assumes average yearly exchange rate of 0.86 JPY / USD
FOUNDED:
November, 1967
November, 1963
HEADQUARTERS:
Santa Clara, California, USA
Tokyo, Japan
EMPLOYEES:
~15,000 worldwide
~12,000 worldwide
PATENTS:
~10,500 issued
~16,000 issued
LTM
REVENUE
:
$7.2 Billion
$5.4
Billion
TECHNOLOGY
EXCELLENCE:
CVD, PVD, Epi, Implant, CMP,
Anneal, Conductor Etch,
Defect Review, Display CVD,
Display PVD
Track, Furnace, Wet Clean,
Dielectric Etch, ALD,
Wafer Prober, Display Etch,
Display Track
INSTALLED BASE:
33,000 tools
54,000 tools
6
1
2 |
 New
Company Structure Headquarters
and
Listings
Dual headquarters in Santa Clara and Tokyo
Dual listing on Nasdaq and Tokyo Stock Exchange
Incorporated in the Netherlands
Leadership
Team
Chairman: Tetsuro Higashi
Vice Chairmen: Mike Splinter and Tetsuo Tsuneishi
CEO: Gary Dickerson
CFO: Bob Halliday
Board of
Directors
Single Board structure with eleven directors
(seven independent)
Five Applied Materials nominated directors
(three independent)
Five Tokyo Electron nominated directors
(three independent)
One additional independent director to be
mutually agreed
7 |
 Transistor
Interconnect
Memory
Patterning
Packaging
Display
DRIVING MAJOR
INFLECTIONS
8
Functions and
features
Battery life
Interface
experience
Form factors
At the right cost
WAR FOR
MOBILITY
ENABLED BY OUR
TECHNOLOGY
Precision
Materials
Engineering
and Patterning
innovation
Device
Performance
and Yield
solutions
8 |
 GENERATIONAL INCREASES IN NEW MATERIALS
3D memory transition
shifts spending to
Materials Deposition
and Etch
3Xnm
1Xnm
1Ynm
3D NAND
Materials Complexity
is increasing in Logic
THERMAL
&
IMPLANT
CVD
ETCH
LITHO
Source: Customer Presentations
9
130nm
90nm
65nm
45nm
32nm
22nm
3X 1X 1Y3D
3X 1X 1Y3D
3X 1X 1Y3D
3X 1X 1Y3D |
 Precision
Materials
Engineering
and
Patterning
Precision films
Precision materials removal
Materials modification
Interface engineering
Scaling engineering
High-k
films
Selective Epitaxy
Reflow PVD
Semi-batch ALD
Integrated ALD
Millisecond anneal
Porous low-k films
Multi-patterning
Conformal doping
Co-implants
Film Treatments
Staircase etch
Hard mask films
Metal CMP
OPPORTUNITIES
TO COMBINE COMPLEMENTARY COMPETENCIES FOR CUSTOMERS
Deposition, etch and clean •
No queue time •
No vacuum break
HARC etch
Flowable CVD
10
A New Global Innovator in |
 High Speed,
Low Leakage
TRANSISTORS
Low Resistance
and Reliable
INTERCONNECT
3D NAND
Memory
LOW-COST
SCALING
Enabled by Patterning
Anneal
CMP
CVD
Epi
Furnace
Implant
PVD
Track
Wet Clean
CMP
CVD
Dielectric Etch
PVD
Wet Clean
Spin-on Dielectric
ALD
CMP
Conductor Etch
Dielectric Etch
CVD
Furnace
Selective Material
Removal
Wet Clean
Gas Chemical
Etch
ALD
Brightfield
Inspection
CVD
Defect Review
Dielectric Etch
Track
Wet Clean
Field Support, Spare Parts and Device Performance and Yield Services
Broadest
Portfolio
to
Address
Customers’
Challenges
11
KEY: Tokyo Electron, Applied Materials |
 Combined Expertise in
Etch E-chucks
Chamber
matching
Chemistry
Source Technology
Chamber design
Heaters
Integrated metrology
Best Known Methods
Chemical delivery
Selective
Material Removal
New $1B Opportunity²
Dielectric Etch
(Tokyo Electron)
>$1.5B Market¹
Conductor Etch
(Applied Materials)
>$2.2B Market
1: Source -
Dataquest 2012, 2 Source -
Applied Analyst Meeting 2013
12 |
 Combination increases value for shareholders and
customers,
and
more
opportunities
for
employees
13
Major mobility inflections are enabled by
materials
innovation
and
low-cost
scaling
Accelerating
Profitable Growth
Expanded capabilities in precision materials
engineering
and
patterning
will
solve
customers’
high-value problems better, faster
and at lower cost |
 Transaction Terms
14
Exchange Ratio
and
Ownership
Applied Materials shareholders to receive 1.0 share
in new company for each share of AMAT
Tokyo Electron shareholders to receive 3.25
shares in new company for each share of TEL
Applied Materials shareholders: ~68%
Tokyo Electron shareholders: ~32%
Transaction
Structure
Applied Materials and Tokyo Electron to
combine into a new company incorporated
in the Netherlands
Conditions
and
Timing
Applied Materials and Tokyo Electron shareholder
approval, regulatory approvals and other
customary conditions
Expected close in mid-
to second half 2014 |
 15
Combined portfolio
of strong products
and ability to
invest in highly
differentiated
products
Significant
opportunities to
grow services
business
Expanded
Opportunity
Mutual commitment
to improve
profitability
Accretive to
non-GAAP EPS
exiting first full fiscal
year following close
$500M of pre-tax
operating synergies
in 3 full fiscal year
Profitable
Growth
$3B share
repurchase
post-closing, with
intent to execute
within 12 months
Company structure
enhances ability to
increase cash
returns to investors
Value Creation for Customers and Shareholders
rd
Cash
Returns |
 Extensive
Integration Experience
16
Tried and tested
integration practices
Dual headquarters and
CEO to relocate to Tokyo
Integrated Board of Directors
Combine best practices to
achieve ‘faster, better and at
lower cost’
Process
Shared Values
Global perspectives
and cultures
Strong heritage of
customer service and
technical innovation
Strong commitment to
driving improved profitability
Commitment to recruit,
develop and retain industry’s
best and brightest employees |
 Run-rate
savings
$250M
exiting 1 full
fiscal year
$500M
realized in 3 full
fiscal year
Supply chain efficiencies
Manufacturing efficiencies
Regional Sales and
Service office
enhancement and
optimization
IT spending and corporate
functions efficiencies
17
Operating Synergies
st
rd |
 2017
Target
Operating
Model
at
$37B
WFE
*
18
revenue
25%
operating
margin
earnings per share
$4.6B
operating
income
* Reflects Semiconductor & Display Equipment and Services Businesses.
CY2017, all numbers are non-GAAP
$18.2B
$2.40 |
 19
Q
A |
 |
 Side-by-Side Financials
21
Trailing Twelve Months
$B, Non-GAAP
Applied
Materials
Tokyo
Electron
Combined
Revenue
$7.2
$5.4
$12.6
Gross Profit
$3.0
$1.7
$4.7
GM %
41.3%
31.1%
36.9%
Opex
$2.1
$1.7
$3.8
Opex %
29.8%
31.5%
30.5%
Operating Income
$0.8
$(0.0)
$0.8
Operating Margin %
11.5%
-0.5%
6.3%
Net Income
$0.6
$(0.0)
$0.6
1
2
1 Based on trailing twelve months ending July, 2013 See GAAP to Non-GAAP reconciliation at
the end of the slides. 2 Based on trailing twelve months ending June, 2013. See GAAP to
Non-GAAP reconciliation at the end of the slides. |
 Non-GAAP Pro Forma Reconciliation
22
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Twelve months ended
Twelve months ended
($B, Trailing twelve months)
July 28, 2013
June 30, 2013
US GAAP
Japan GAAP
Reported gross margin
2,782
$
1,686
$
4,468
$
Certain items
associated with acquisitions 172
1
173
Acquisition integration and deal costs
3
-
3
Non-GAAP adjusted gross margin
2,957
$
1,687
$
4,645
$
Non-GAAP
Adjusted Operating Income Reported operating income (loss)
(278)
$
(65)
$
(343)
$
Impairment of goodwill an intangible assets
699
-
699
Certain items associated with acquisitions
209
40
249
Acquisition integration and deal costs
40
-
40
Restructuring charges and asset impairments
157
-
157
Loss (gain) on sale of assets
(4)
-
(4)
Non-GAAP adjusted operating income
823
$
(25)
$
798
$
Non-GAAP Adjusted Net Income
Reported net income (loss)
(442)
$
(34)
$
(476)
$
Impairment of goodwill an intangible assets
699
-
699
Certain items associated with acquisitions
209
40
249
Acquisition and deal related costs
40
-
40
Restructuring charges and asset impairments
157
2
159
Impairment of strategic investments
19
-
19
Loss (gain) on sale of assets
(4)
(11)
(15)
Reversal of allowance for doubtful accounts
-
(6)
(6)
Loss on liquidation of subsidiaries
-
2
2
Reinstatement of federal R&D tax credit
(13)
-
(13)
Resolution of prior years' income tax filings
(19)
-
(19)
Income tax effect of non-GAAP adjustments
(85)
(2)
(87)
Non-GAAP adjusted net income
561
$
(10)
$
551
$
APPLIED
MATERIALS, INC.
TOKYO
ELECTRON
Combined
Pro Forma
Non-GAAP Adjusted Gross Margin |
 23
Forward-Looking Statements This
communication contains forward-looking statements, including but not limited to those regarding the proposed business
combination between Applied Materials, Inc. (“Applied Materials”), and Tokyo Electron Limited
(“Tokyo Electron”) (the “Business Combination”) and the transactions related
thereto. These statements may discuss the anticipated manner, terms and conditions upon
which the Business Combination will be consummated, the persons to be appointed officers and
directors of a to-be-formed holding company (“HoldCo”), trends and the future
performance of their businesses, the synergies of Applied Materials and Tokyo Electron, and
similar things. Forward-looking statements may contain words such as
“expect,” “believe,” “may,” “can,” “should,” “will,” “forecast,” “anticipate” 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, including but not limited to: the ability of the
parties to consummate the Business Combination in a timely manner or at all; satisfaction of the
conditions precedent to consummation of the Business Combination, including the ability to secure
regulatory approvals in a timely manner or at all, and approval by Applied Materials’ and
Tokyo Electron’s stockholders; the possibility of litigation (including related to the
transaction itself); Applied Materials’ and Tokyo Electron’s ability to successfully integrate their
operations, product lines, technology and employees and realize synergies, growth and tax assets from
the Business Combination; unknown, underestimated or undisclosed commitments or liabilities;
the potential impact of the announcement or consummation of the proposed transactions on the
parties’ relationships with third parties; the level of demand for the combined
companies’ products, which is subject to many factors, including uncertain global economic and industry
conditions, demand for electronic products and semiconductors, and customers’ new technology and
capacity requirements; Applied Materials’ and Tokyo Electron’s ability to (i)
develop, deliver and support a broad range of products, expand their markets and develop new
markets, (ii) timely align their cost structures with business conditions, and (iii) attract, motivate
and retain key employees; and other risks described in the Applied Materials’ filings with the
Securities & Exchange Commission (the “SEC”). Tokyo Electron’s filings with
the Financial Services Agency of Japan and the S-4 registration statement to be filed by
HoldCo. All forward-looking statements are based on management’s estimates, projections and
assumptions as of the date hereof. Except as required under applicable law, none of Applied
Materials, Tokyo Electron or HoldCo undertakes any obligation to update any forward-looking
statements. |
 24
No Offer or
Solicitation
This announcement is for informational purposes only and is neither an offer to purchase, nor a
solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any
vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be
any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended, and applicable regulations in the Netherlands
and Japan. |
 25
Additional Information and Where to Find It Applied Materials
and Tokyo Electron intend to cause HoldCo to file with the SEC a registration statement on Form S-4
(the “Registration Statement”), which will include a prospectus with respect to HoldCo’s
ordinary shares to be issued in the Business Combination and a proxy statement of Applied
Materials in connection with the Business Combination between Applied Materials and Tokyo
Electron. The definitive Registration Statement will contain important information about
the proposed Business Combination and related matters. SECURITY HOLDERS ARE URGED AND ADVISED TO
READ THE REGISTRATION STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE. The Registration Statement
and other relevant materials (when they become available) and any other documents filed by
Applied Materials, HoldCo or Tokyo Electron with the SEC may be obtained free of charge at the
SEC’s web site at www.sec.gov. In addition, security holders will be able to obtain
free copies of the Registration Statement from Applied Materials or Tokyo Electron by
contacting either (1) Investor Relations by mail at Applied Materials, 3050 Bowers Avenue M/S 1261, P.O. Box 58039,
Santa Clara, CA 95054-3299, Attn: Investor Relations Department, by telephone at
408-748-5227, or by going to Applied Materials’ Investor Relations page on its
corporate web site at www.appliedmaterials.com or (2) Tokyo Electron's Public Relations Group,
by mail at Tokyo Electron, Akasaka Biz Tower, 3-1 Akasaka 5-chome, Minato-ku, Tokyo 107-6325, by
telephone at 512-424-1757, or by email at telpr@tel.com, or by going to Tokyo Electron's
Investor Relations page on its corporate web site at www.tel.com. |
 26
Participants in the Solicitation
Applied Materials, Tokyo Electron, HoldCo and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from Applied Materials’
stockholders in connection with the proposed Business Combination. Information about
Applied Materials’ directors and executive officers is set forth in Applied Materials’
Proxy Statement on Schedule 14A for its 2013 Annual Meeting of Stockholders, which was filed with the
SEC on January 22, 2013, and its Annual Report on Form 10-K for the fiscal year ended
October 28, 2012, which was filed with the SEC on December 5, 2012. These documents are
available free of charge at the SEC’s web site at www.sec.gov, and from Applied Materials
by contacting Investor Relations by mail at Applied Materials, 3050 Bowers Avenue M/S 1261,
P.O. Box 58039, Santa Clara, CA 95054-3299, Attn: Investor Relations Department, or by going to Applied
Materials’ Investor Relations page on its corporate web site at www.appliedmaterials.com.
Additional information regarding the interests of participants in the solicitation of proxies
in connection with the proposed Business Combination will be included in the Registration
Statement that Applied Materials and Tokyo Electron intend to cause HoldCo to file with the
SEC. |