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amat-20201112
0000006951FALSEAPPLIED MATERIALS INC /DE00000069512020-11-122020-11-12



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________
FORM 8-K
 ____________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 2020
____________________________________________________________________
 Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
Delaware000-0692094-1655526
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
3050 Bowers Avenue
P.O. Box 58039
Santa Clara, CA 95052-8039
(Address of principal executive offices)

Registrant’s telephone number, including area code: (408) 727-5555
N/A
(Former name or former address, if changed since last report.)
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $.01 per shareAMATThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).   ☐




Item 2.02 Results of Operations and Financial Condition.
On November 12, 2020, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its fourth quarter and fiscal year ended October 25, 2020. A copy of Applied Materials’ press release is attached hereto as Exhibit 99.1.
The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Applied Materials, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.Description
99.1
104Cover Page Interactive Data File (formatted as inline XBRL)
 




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Applied Materials, Inc.
(Registrant)
 
Date:November 12, 2020By:
/s/ Teri A. Little
Teri A. Little
Senior Vice President, Chief Legal Officer and Corporate Secretary
 
Document

Exhibit 99.1
https://cdn.kscope.io/50f933d555d28e8ae9f1fe773335090c-image11.jpg

APPLIED MATERIALS ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2020 RESULTS

•Record quarterly revenue of $4.69 billion, up 25 percent year over year
•Record quarterly GAAP EPS of $1.23 and non-GAAP EPS of $1.25, up 64 percent and 56 percent year over year, respectively
•Generated record annual cash from operations of $3.80 billion

SANTA CLARA, Calif., Nov. 12, 2020 — Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its fourth quarter and fiscal year ended Oct. 25, 2020.
Fourth Quarter Results
Applied generated revenue of $4.69 billion. On a GAAP basis, the company recorded gross margin of 45.4 percent, operating income of $1.28 billion or 27.4 percent of net sales, and earnings per share (EPS) of $1.23.
On a non-GAAP adjusted basis, the company reported gross margin of 45.7 percent, operating income of $1.33 billion or 28.3 percent of net sales, and EPS of $1.25.
The company generated $1.32 billion in cash from operations and returned $250 million to shareholders including $200 million in dividends and $50 million in share repurchases.
Full Year Results
In fiscal 2020, Applied generated revenue of $17.20 billion. On a GAAP basis, the company recorded gross margin of 44.7 percent, operating income of $4.37 billion or 25.4 percent of net sales, and EPS of $3.92.
On a non-GAAP adjusted basis, the company reported gross margin of 45.1 percent, operating income of $4.53 billion or 26.3 percent of net sales, and EPS of $4.17.
The company generated a record $3.80 billion in cash from operations, paid dividends of $787 million and used $649 million to repurchase 12 million shares of common stock.
“Applied Materials closed fiscal 2020 with record quarterly performance as demand for our semiconductor systems and services remains very strong,” said Gary Dickerson, president and CEO. “Our future opportunities have never looked better and, as powerful technology trends take shape, we are uniquely positioned to accelerate our customers’ roadmaps and outperform our markets.”


Applied Materials, Inc.
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Results Summary
Change
Q4 FY2020 Q4 FY2019FY2020FY2019Q4 FY2020
vs.
Q4 FY2019		FY2020
vs.
FY2019
(In millions, except per share amounts and percentages)
Net sales$4,688 $3,754 $17,202 $14,608 25%18%
Gross margin45.4 %43.5 %44.7 %43.7 %1.9 points1.0 points
Operating margin27.4 %23.0 %25.4 %22.9 %4.4 points2.5 points
Net income$1,131 $698 $3,619 $2,706 62%34%
Diluted earnings per share$1.23 $0.75 $3.92 $2.86 64%37%
Non-GAAP Adjusted Results
Non-GAAP adjusted gross margin45.7 %43.8 %45.1 %44.0 %1.9 points1.1 points
Non-GAAP adjusted operating margin28.3 %23.7 %26.3 %23.5 %4.6 points2.8 points
Non-GAAP adjusted net income$1,148 $744 $3,845 $2,875 54%34%
Non-GAAP adjusted diluted EPS$1.25 $0.80 $4.17 $3.04 56%37%

A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Adjusted Financial Measures” section.



Applied Materials, Inc.
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Business Outlook
In the first quarter of fiscal 2021, Applied expects net sales to be approximately $4.95 billion, plus or minus $200 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.20 to $1.32.
This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.03 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Fourth Quarter and Fiscal Year Reportable Segment Information
Semiconductor SystemsQ4 FY2020 Q4 FY2019FY2020FY2019
 (In millions, except percentages)
Net sales$3,070 $2,302 $11,367 $9,027 
Foundry, logic and other58 %58 %59 %52 %
DRAM21 %21 %20 %22 %
Flash memory21 %21 %21 %26 %
Operating income1,059 641 3,714 2,464 
Operating margin34.5 %27.8 %32.7 %27.3 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$1,073 $652 $3,778 $2,507 
Non-GAAP adjusted operating margin35.0 %28.3 %33.2 %27.8 %

Applied Global ServicesQ4 FY2020 Q4 FY2019FY2020FY2019
 (In millions, except percentages)
Net sales$1,106 $977 $4,155 $3,854 
Operating income320 274 1,127 1,101 
Operating margin28.9 %28.0 %27.1 %28.6 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$320 $274 $1,135 $1,101 
Non-GAAP adjusted operating margin28.9 %28.0 %27.3 %28.6 %

















Applied Materials, Inc.
Page 4 of 13

Display and Adjacent MarketsQ4 FY2020 Q4 FY2019FY2020FY2019
 (In millions, except percentages)
Net sales$485 $457 $1,607 $1,651 
Operating income95 96 291 294 
Operating margin19.6 %21.0 %18.1 %17.8 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$98 $99 $304 $307 
Non-GAAP adjusted operating margin20.2 %21.7 %18.9 %18.6 %


Use of Non-GAAP Adjusted Financial Measures

Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring charges and any associated adjustments; certain incremental expenses related to COVID-19; impairments of assets, or investments; gain or loss on sale of strategic investments; loss on early extinguishment of debt; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Additionally, non-GAAP results exclude estimated discrete income tax expense items associated with U.S. tax legislation. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.
Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied's ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.


Applied Materials, Inc.
Page 5 of 13

Forward-Looking Statements

This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the first quarter of fiscal 2021 and beyond, the impact of the ongoing COVID-19 pandemic and responses thereto on our operations and financial results, strategic acquisitions and investments, including the proposed acquisition of Kokusai Electric Corporation, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the severity and duration of the ongoing COVID-19 pandemic; global trade issues and changes in trade and export license policies, including the impact of the implementation and interpretation of the rules published by the U.S. Department of Commerce on April 28, 2020 and August 17, 2020 relating to certain export license requirements; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; acquisitions, investments and divestitures; changes in income tax laws; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; and other risks and uncertainties described in our SEC filings, including our recent Forms 10-Q and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.


About Applied Materials

Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible the technology shaping the future. Learn more at www.appliedmaterials.com.

Contact:
Ricky Gradwohl (editorial/media) 408.235.4676
Michael Sullivan (financial community) 408.986.7977



Applied Materials, Inc.
Page 6 of 13


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 
 Three Months EndedTwelve Months Ended
(In millions, except per share amounts)October 25,
2020		October 27,
2019		October 25,
2020		October 27,
2019
Net sales$4,688 $3,754 $17,202 $14,608 
Cost of products sold2,558 2,120 9,510 8,222 
Gross profit2,130 1,634 7,692 6,386 
Operating expenses:
Research, development and engineering560 515 2,234 2,054 
Marketing and selling131 129 526 521 
General and administrative156 126 567 461 
Total operating expenses847 770 3,327 3,036 
Income from operations1,283 864 4,365 3,350 
Interest expense59 59 240 237 
Interest and other income (loss), net19 35 41 156 
Income before income taxes1,243 840 4,166 3,269 
Provision for income taxes112 142 547 563 
Net income$1,131 $698 $3,619 $2,706 
Earnings per share:
Basic $1.24 $0.76 $3.95 $2.89 
Diluted$1.23 $0.75 $3.92 $2.86 
Weighted average number of shares:
Basic914 920 916 937 
Diluted921 931 923 945 




Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
 
(In millions)October 25,
2020		October 27,
2019
ASSETS
Current assets:
Cash and cash equivalents$5,351 $3,129 
Short-term investments387 489 
Accounts receivable, net2,963 2,533 
Inventories3,904 3,474 
Other current assets764 581 
Total current assets13,369 10,206 
Long-term investments1,538 1,703 
Property, plant and equipment, net1,604 1,529 
Goodwill3,466 3,399 
Purchased technology and other intangible assets, net153 156 
Deferred income taxes and other assets2,223 2,031 
Total assets$22,353 $19,024 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$— $600 
Accounts payable and accrued expenses3,138 2,511 
Contract liabilities1,321 1,336 
Total current liabilities4,459 4,447 
Long-term debt, net of current portion5,448 4,713 
Income taxes payable 1,206 1,275 
Other liabilities662 375 
Total liabilities11,775 10,810 
Total stockholders’ equity10,578 8,214 
Total liabilities and stockholders’ equity$22,353 $19,024 





Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
(In millions)Three Months EndedTwelve Months Ended
October 25,
2020		October 27,
2019		October 25,
2020		October 27,
2019
Cash flows from operating activities:
Net income $1,131 $698 $3,619 $2,706 
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization97 92 376 363 
Share-based compensation73 66 307 263 
Deferred income taxes(18)(8)80 49 
Other5 — 60 (19)
Net change in operating assets and liabilities27 (22)(638)(115)
Cash provided by operating activities1,315 826 3,804 3,247 
Cash flows from investing activities:
Capital expenditures (162)(97)(422)(441)
Cash paid for acquisitions, net of cash acquired— — (107)(28)
Proceeds from sales and maturities of investments366 555 1,754 1,940 
Purchases of investments(345)(544)(1,355)(1,914)
Cash used in investing activities(141)(86)(130)(443)
Cash flows from financing activities:
Debt borrowings, net of issuance costs— — 2,979 — 
Debt repayments — — (2,882)— 
Proceeds from common stock issuances83 72 174 145 
Common stock repurchases(50)(500)(649)(2,403)
Tax withholding payments for vested equity awards(6)(3)(172)(86)
Payments of dividends to stockholders(200)(194)(787)(771)
Cash used in financing activities(173)(625)(1,337)(3,115)
Increase (decrease) in cash, cash equivalents and restricted cash equivalents1,001 115 2,337 (311)
Cash, cash equivalents and restricted cash equivalents—beginning of period4,465 3,014 3,129 3,440 
Cash, cash equivalents and restricted cash equivalents — end of period$5,466 $3,129 $5,466 $3,129 
Reconciliation of cash, cash equivalents, and restricted cash equivalents
       Cash and cash equivalents$5,351 $3,129 $5,351 $3,129 
Restricted cash equivalents included in deferred income taxes and other assets115 — 115 — 
Total cash, cash equivalents, and restricted cash equivalents$5,466 $3,129 $5,466 $3,129 
Supplemental cash flow information:
Cash payments for income taxes$23 $69 $542 $522 
Cash refunds from income taxes$63 $2 $68 $22 
Cash payments for interest$68 $76 $219 $219 



Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other
(In millions)Q4 FY2020 Q4 FY2019FY2020FY2019
Unallocated net sales$27 $18 $73 $76 
Unallocated cost of products sold and expenses(145)(99)(533)(322)
Share-based compensation(73)(66)(307)(263)
Total $(191)$(147)$(767)$(509)

Additional Information
 Q4 FY2020 Q4 FY2019FY2020FY2019
Net Sales by Geography (In millions)
United States448 412 1,619 1,871 
% of Total10 %11 %10 %13 %
Europe206 147 736 820 
% of Total4 %4 %4 %6 %
Japan706 471 1,996 2,198 
% of Total15 %13 %11 %15 %
Korea719 471 3,031 1,929 
% of Total15 %13 %18 %13 %
Taiwan872 919 3,953 2,965 
% of Total19 %24 %23 %20 %
Southeast Asia161 135 411 548 
% of Total3 %3 %2 %4 %
China1,576 1,199 5,456 4,277 
% of Total34 %32 %32 %29 %
Employees (In thousands)
  
Regular Full Time24.0 22.0 





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

 Three Months EndedTwelve Months Ended
(In millions, except percentages)October 25,
2020		October 27,
2019		October 25,
2020		October 27,
2019
Non-GAAP Adjusted Gross Profit
Reported gross profit - GAAP basis$2,130 $1,634 $7,692 $6,386 
Certain items associated with acquisitions1
12 9 37 37 
Certain incremental expenses related to COVID-195
— — 23 — 
Non-GAAP adjusted gross profit$2,142 $1,643 $7,752 $6,423 
Non-GAAP adjusted gross margin45.7 %43.8 %45.1 %44.0 %
Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$1,283 $864 $4,365 $3,350 
Certain items associated with acquisitions1
16 14 54 55 
Acquisition integration and deal costs26 10 80 22 
Certain incremental expenses related to COVID-195
— — 30 — 
Non-GAAP adjusted operating income$1,325 $888 $4,529 $3,427 
Non-GAAP adjusted operating margin28.3 %23.7 %26.3 %23.5 %
Non-GAAP Adjusted Net Income
Reported net income - GAAP basis$1,131 $698 $3,619 $2,706 
Certain items associated with acquisitions1
16 14 54 55 
Acquisition integration and deal costs26 10 80 22 
Certain incremental expenses related to COVID-195
— — 30 — 
Realized loss (gain) on strategic investments, net— — (1)(6)
Unrealized loss (gain) on strategic investments, net(7)(5)(8)(30)
Loss on early extinguishment of debt— — 33 — 
Income tax effect of share-based compensation2
13 4 — — 
Income tax effect of changes in applicable U.S. tax laws3
— — — (24)
Income tax effects related to intra-entity intangible asset transfers10 6 114 62 
Resolution of prior years’ income tax filings and other tax items(36)20 (41)95 
Income tax effect of non-GAAP adjustments4
(5)(3)(35)(5)
Non-GAAP adjusted net income$1,148 $744 $3,845 $2,875 


1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
3Charges to income tax provision related to a one-time transition tax as a result of U.S. tax legislation.
4Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.
5Temporary incremental employee compensation during the COVID-19 pandemic.




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

 Three Months EndedTwelve Months Ended
(In millions, except per share amounts)October 25,
2020		October 27,
2019		October 25,
2020		October 27,
2019
Non-GAAP Adjusted Earnings Per Diluted Share
Reported earnings per diluted share - GAAP basis$1.23 $0.75 $3.92 $2.86 
Certain items associated with acquisitions 0.02 0.01 0.05 0.05 
Acquisition integration and deal costs0.02 0.01 0.07 0.02 
Certain incremental expenses related to COVID-19— — 0.03 — 
Loss on early extinguishment of debt
— — 0.03 — 
Unrealized loss (gain) on strategic investments, net(0.01)— (0.01)(0.03)
Income tax effect of share-based compensation0.02 — — — 
Income tax effect of changes in applicable U.S. tax laws— — — (0.03)
Income tax effects related to intra-entity intangible asset transfers0.01 0.01 0.12 0.07 
Resolution of prior years’ income tax filings and other tax items(0.04)0.02 (0.04)0.10 
Non-GAAP adjusted earnings per diluted share$1.25 $0.80 $4.17 $3.04 
Weighted average number of diluted shares921 931 923 945 





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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
 
 Three Months EndedTwelve Months Ended
(In millions, except percentages)October 25,
2020		October 27,
2019		October 25,
2020		October 27,
2019
Semiconductor Systems Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$1,059 $641 $3,714 $2,464 
Certain items associated with acquisitions1
12 11 41 43 
Acquisition integration costs2 — 3 — 
Certain incremental expenses related to COVID-192
— — 20 — 
Non-GAAP adjusted operating income$1,073 $652 $3,778 $2,507 
Non-GAAP adjusted operating margin35.0 %28.3 %33.2 %27.8 %
AGS Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$320 $274 $1,127 $1,101 
Certain incremental expenses related to COVID-192
— — 8 — 
Non-GAAP adjusted operating income$320 $274 $1,135 $1,101 
Non-GAAP adjusted operating margin28.9 %28.0 %27.3 %28.6 %
Display and Adjacent Markets Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$95 $96 $291 $294 
Certain items associated with acquisitions1
3 3 12 12 
Acquisition integration costs— — — 1 
Certain incremental expenses related to COVID-192
— — 1 — 
Non-GAAP adjusted operating income$98 $99 $304 $307 
Non-GAAP adjusted operating margin20.2 %21.7 %18.9 %18.6 %
 
1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2Temporary incremental employee compensation during the COVID-19 pandemic.

Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.



Applied Materials, Inc.
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UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
 
Three Months Ended
(In millions, except percentages)October 25, 2020
Provision for income taxes - GAAP basis (a)
$112 
Income tax effect of share-based compensation(13)
Income tax effects related to intra-entity intangible asset transfers(10)
Resolutions of prior years’ income tax filings and other tax items36 
Income tax effect of non-GAAP adjustments5 
Non-GAAP adjusted provision for income taxes (b)
$130 
Income before income taxes - GAAP basis (c)
$1,243 
Certain items associated with acquisitions16 
Acquisition integration and deal costs26 
Unrealized loss (gain) on strategic investments, net(7)
Non-GAAP adjusted income before income taxes (d)
$1,278 
Effective income tax rate - GAAP basis (a/c)
9.0 %
Non-GAAP adjusted effective income tax rate (b/d)
10.2 %