-- Record quarterly revenue of $4.57 billion, up 29 percent year over year -- Record EPS of $1.09 and non-GAAP EPS of $1.22, up 43 percent and 54 percent year over year, respectively -- $2.6 billion returned to shareholders including buybacks equivalent to 4 percent of shares outstanding

SANTA CLARA, Calif., May 17, 2018 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ:AMAT) today reported record revenue, operating profit and earnings per share in its second quarter ended April 29, 2018.

Second Quarter Results

Compared to the second quarter of fiscal 2017, Applied grew net sales by 29 percent to $4.57 billion. On a GAAP basis, the company increased gross margin by 0.7 points to 45.8 percent, and grew operating income by 41 percent to $1.33 billion or 29.1 percent of net sales. GAAP earnings per share (EPS) grew 43 percent to $1.09.

On a non-GAAP adjusted basis, over the same period, the company increased gross margin by 0.4 points to 46.7 percent, grew operating income by 40 percent to $1.38 billion or 30.2 percent of net sales, and increased EPS by 54 percent to $1.22.

The company generated $611 million in cash from operations and returned $2.6 billion to shareholders through $2.5 billion in share repurchases and dividends of $105 million.

“Applied’s performance in the second fiscal quarter was another all-time record for the company, which demonstrates strong execution and customer pull for materials solutions that help accelerate roadmaps and bring new devices to market faster,” said Gary Dickerson, president and CEO. “Applied has the broadest opportunity across major technology trends, and our markets are strong, with long-term growth drivers firmly in place.”

Quarterly Results Summary

Q2 FY2018 Q2 FY2017 Chang e --------- --------- ---- (In millions, except per share amounts and percentages) Net sales $ 4,567 $ 3,546 29 % 0.7 Gross margin 45.8 % 45.1 % point s 2.6 Operating margin 29.1 % 26.5 % point s Net income $ 1,129 $ 824 37 % Diluted earnings per share $ 1.09 $ 0.76 43 % Non-GAAP Adjusted Results ---------------------------------- 0.4 Non-GAAP adjusted gross margin 46.7 % 46.3 % point s 2.4 Non-GAAP adjusted operating margin 30.2 % 27.8 % point s Non-GAAP adjusted net income $ 1,273 $ 861 48 % Non-GAAP adjusted diluted EPS $ 1.22 $ 0.79 54 %

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.

Business Outlook

In the third quarter of fiscal 2018, Applied expects net sales to be in the range of $4.33 billion to $4.53 billion; the midpoint of the range would be an increase of approximately 18 percent, year over year. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.13 to $1.21; the midpoint of the range would be an increase of approximately 36 percent, year over year.

This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.05 per share and includes the normalized tax benefit of share-based compensation of $0.01 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.

Second Quarter Reportable Segment Information

Semiconductor Systems Q2 FY2018 Q2 FY2017 --------- --------- (In millions, except percentages) Net sales $ 2,999 $ 2,404 Foundry 21 % 41 % DRAM 31 % 19 % Flash 37 % 33 % Logic and other 11 % 7 % Operating income 1,071 808 Operating margin 35.7 % 33.6 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 1,117 $ 854 Non-GAAP adjusted operating margin 37.2 % 35.5 %

Applied Global Services Q2 Q2 FY2018 FY2017 ------- ------- (In millions, except percentages) Net sales $ 943 $ 724 Operating income 278 194 Operating margin 29.5 % 26.8 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 278 $ 195 Non-GAAP adjusted operating margin 29.5 % 26.9 %

Display and Adjacent Markets Q2 Q2 FY2018 FY2017 ------- ------- (In millions, except percentages) Net sales $ 600 $ 391 Operating income 162 84 Operating margin 27.0 % 21.5 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 166 $ 84 Non-GAAP adjusted operating margin 27.7 % 21.5 %

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; impairments of assets, or investments; gain or loss on sale of strategic investments; tax effect of share-based compensation; certain income tax items and other discrete adjustments. Additionally, the second quarter and first half of fiscal 2018 non-GAAP results exclude estimated discrete income tax expense items associated with changes to recent 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 our 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 we do not believe are indicative of our 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 will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.

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, our investment and growth strategies, our development of new products and technologies, our business outlook for the third quarter of fiscal 2018, 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; 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; 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; changes in U.S. tax laws and regulation, and our interpretations of them; and other risks and uncertainties described in our SEC filings, including our most 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.UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended (In millions, except per share amounts) April 29, April 30, April 29, April 30, 2018 2017 2018 2017 --------- --------- --------- --------- Net sales $ 4,567 $ 3,546 $ 8,771 $ 6,824 Cost of products sold 2,477 1,946 4,761 3,779 ------- - ------- - ------- - ------- - Gross profit 2,090 1,600 4,010 3,045 Operating expenses: Research, development and engineering 509 437 997 854 Marketing and selling 130 116 256 234 General and administrative 124 107 234 210 Total operating expenses 763 660 1,487 1,298 ------- - ------- - ------- - ------- - Income from operations 1,327 940 2,523 1,747 Interest expense 56 44 115 82 Interest and other income, net 24 12 49 14 ------- - ------- - ------- - ------- - Income before income taxes 1,295 908 2,457 1,679 Provision for income taxes 166 84 1,193 152 ------- - ------- - ------- - ------- - Net income $ 1,129 $ 824 $ 1,264 $ 1,527 - ----- - - ----- - - ----- - - ----- - Earnings per share: Basic $ 1.10 $ 0.76 $ 1.21 $ 1.42 Diluted $ 1.09 $ 0.76 $ 1.20 $ 1.40 Weighted average number of shares: Basic 1,029 1,078 1,042 1,078 Diluted 1,040 1,087 1,056 1,088

APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions) April 29, October 29, 2018 2017 --------- ----------- ASSETS Current assets: Cash and cash equivalents $ 4,870 $ 5,010 Short-term investments 482 2,266 Accounts receivable, net 2,665 2,338 Inventories 3,494 2,930 Other current assets 380 374 -------- Total current assets 11,891 12,918 Long-term investments 1,214 1,143 Property, plant and equipment, net 1,257 1,066 Goodwill 3,368 3,368 Purchased technology and other intangible assets, net 313 412 Deferred income taxes and other assets 455 512 -------- -------- -- Total assets $ 18,498 $ 19,419 - ------ - ------ -- LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,619 $ 2,450 Customer deposits and deferred revenue 1,961 1,665 -------- Total current liabilities 4,580 4,115 Income taxes payable 1,282 392 Long-term debt 5,306 5,304 Other liabilities 288 259 -------- -------- -- Total liabilities 11,456 10,070 -------- -------- -- Total stockholders’ equity 7,042 9,349 -------- -------- -- Total liabilities and stockholders’ equity $ 18,498 $ 19,419 - ------ - ------ --

APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended Six Months Ended (In millions) April 29, April 30, April April 2018 2017 29, 30, 2018 2017 --------- --------- -------- -------- Cash flows from operating activities: Net income $ 1,129 $ 824 $ 1,264 $ 1,527 Adjustments required to reconcile net income to cash provided by operating activities: Depreciation and amortization 108 103 227 200 Share-based compensation 64 53 129 107 Deferred income taxes 45 (16 ) 86 9 Other 11 — 11 9 Net change in operating assets and liabilities (746 ) (53 ) 360 (149 ) ------- - ------- - ------- - ------- - Cash provided by operating activities 611 911 2,077 1,703 ------- - ------- - ------- - ------- - Cash flows from investing activities: Capital expenditures (121 ) (77 ) (324 ) (141 ) Cash paid for acquisitions, net of cash acquired — (26 ) (5 ) (26 ) Proceeds from sales and maturities of investments 488 601 2,432 887 Purchases of investments (345 ) (1,779 ) (729 ) (2,368 ) ------- - ------- - ------- - ------- - Cash provided by (used in) investing activities 22 (1,281 ) 1,374 (1,648 ) ------- - ------- - ------- - ------- - Cash flows from financing activities: Debt borrowings, net of issuance costs — 2,176 — 2,176 Proceeds from common stock issuances and others 56 46 56 46 Common stock repurchases (2,500 ) (282 ) (3,282 ) (412 ) Tax withholding payments for vested equity awards (13 ) (9 ) (154 ) (111 ) Payments of dividends to stockholders (105 ) (108 ) (211 ) (216 ) ------- - ------- - ------- - ------- - Cash provided by (used in) financing activities (2,562 ) 1,823 (3,591 ) 1,483 ------- - ------- - ------- - ------- - Increase (decrease) in cash and cash equivalents (1,929 ) 1,453 (140 ) 1,538 Cash and cash equivalents — beginning of period 6,799 3,491 5,010 3,406 ------- - ------- - ------- - ------- - Cash and cash equivalents — end of period $ 4,870 $ 4,944 $ 4,870 $ 4,944 - ----- - - ----- - - ----- - - ----- - Supplemental cash flow information: Cash payments for income taxes $ 139 $ 30 $ 217 $ 65 Cash refunds from income taxes $ 1 $ 6 $ 41 $ 8 Cash payments for interest $ 76 $ 41 $ 110 $ 75

APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other

(In millions) Q2 Q2 FY2018 FY2017 -------- -------- Unallocated net sales $ 25 $ 27 Unallocated cost of products sold and expenses (145 ) (120 ) Share-based compensation (64 ) (53 ) Total $ (184 ) $ (146 ) - ---- - - ---- -

Additional Information

Q2 Q2 FY2018 FY2017 ------- ------ Net Sales by Geography (In millions) United States 394 383 % of Total 9 % 11 % Europe 312 189 % of Total 7 % 5 % Japan 503 332 % of Total 11 % 9 % Korea 1,248 942 % of Total 27 % 27 % Taiwan 727 863 % of Total 16 % 24 % Southeast Asia 243 109 % of Total 5 % 3 % China 1,140 728 % of Total 25 % 21 % Employees(In thousands) Regular Full Time 19.8 16.6

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

Three Months Ended Six Months Ended (In millions, except percentages) April 29, April 30, April 29, April 30, 2018 2017 2018 2017 --------- --------- --------- --------- Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis $ 2,090 $ 1,600 $ 4,010 $ 3,045 Certain items associated with acquisitions1 44 41 89 83 Non-GAAP adjusted gross profit $ 2,134 $ 1,641 $ 4,099 $ 3,128 - ----- - - ----- - - ----- - - ----- - Non-GAAP adjusted gross margin 46.7 % 46.3 % 46.7 % 45.8 % Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,327 $ 940 $ 2,523 $ 1,747 Certain items associated with acquisitions1 49 46 98 93 Acquisition integration costs 1 1 2 2 Other gains, losses or charges, net — — — (3 ) ------- - Non-GAAP adjusted operating income $ 1,377 $ 987 $ 2,623 $ 1,839 - ----- - - ----- - - ----- - - ----- - Non-GAAP adjusted operating margin 30.2 % 27.8 % 29.9 % 26.9 % Non-GAAP Adjusted Net Income Reported net income - GAAP basis $ 1,129 $ 824 $ 1,264 $ 1,527 Certain items associated with acquisitions1 49 46 98 93 Acquisition integration costs 1 1 2 2 Impairment (gain on sale) of strategic investments, net 5 — 4 5 Other gains, losses or charges, net — — — (3 ) Income tax effect of share-based compensation2 13 — (26 ) — Income tax effect of changes in applicable U.S. tax laws3 71 — 1,077 — Resolution of prior years’ income tax filings and other tax items 10 (6 ) (3 ) (22 ) Income tax effect of non-GAAP adjustments4 (5 ) (4 ) (8 ) (9 ) ------- - ------- - ------- - ------- - Non-GAAP adjusted net income $ 1,273 $ 861 $ 2,408 $ 1,593 - ----- - - ----- - - ----- - - ----- -

1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. Applied adopted the accounting standard related to share-based compensation (ASU 2016-09) in the first 2 quarter of fiscal 2018, which resulted in $53 million tax benefit on a GAAP basis for the six months ended April 29, 2018; this benefit is being recognized ratably over the fiscal year on a non-GAAP basis. 3 Charges to income tax provision related to a one-time transition tax and a decrease in U.S. deferred tax assets as a result of the recent U.S. tax legislation. 4 Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.

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

Three Months Ended Six Months Ended April 29, April April April (In millions, except per share amounts) 2018 30, 29, 30, 2017 2018 2017 --------- -------- -------- -------- Non-GAAP Adjusted Earnings Per Diluted Share Reported earnings per diluted share - GAAP basis $ 1.09 $ 0.76 $ 1.20 $ 1.40 Certain items associated with acquisitions 0.04 0.04 0.09 0.08 Income tax effect of share-based compensation 0.01 — (0.03 ) — Income tax effect of changes in applicable U.S. tax laws 0.07 — 1.02 — Resolution of prior years’ income tax filings and other tax items 0.01 (0.01 ) — (0.02 ) Non-GAAP adjusted earnings per diluted share $ 1.22 $ 0.79 $ 2.28 $ 1.46 - ---- -- - ---- - - ---- - - ---- - Weighted average number of diluted shares 1,040 1,087 1,056 1,088

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

Three Months Ended Six Months Ended April 29, April April 29, April 30, (In millions, except percentages) 2018 30, 2018 2017 2017 --------- ------- --------- --------- Semiconductor Systems Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,071 $ 808 $ 2,066 $ 1,498 Certain items associated with acquisitions1 46 46 92 92 ------- - ----- - Non-GAAP adjusted operating income $ 1,117 $ 854 $ 2,158 $ 1,590 - ----- - - --- - - ----- - - ----- - Non-GAAP adjusted operating margin 37.2 % 35.5 % 36.9 % 34.9 % AGS Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 278 $ 194 $ 532 $ 372 Acquisition integration costs — 1 1 2 Non-GAAP adjusted operating income $ 278 $ 195 $ 533 $ 374 - ----- - - --- - - ----- - - ----- - Non-GAAP adjusted operating margin 29.5 % 26.9 % 29.2 % 26.7 % Display and Adjacent Markets Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 162 $ 84 $ 263 $ 199 Certain items associated with acquisitions1 3 — 6 — Acquisition integration costs 1 — 1 — ------- - ----- - ------- - ------- - Non-GAAP adjusted operating income $ 166 $ 84 $ 270 $ 199 - ----- - - --- - - ----- - - ----- - Non-GAAP adjusted operating margin 27.7 % 21.5 % 25.6 % 24.5 %

1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

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.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

Three Months Ended (In millions, except percentages) April 29, 2018 --------- Provision for income taxes - GAAP basis(a) $ 166 Income tax effect of share-based compensation (13 ) Income tax effect of changes in applicable U.S. tax laws (71 ) Resolutions of prior years’ income tax filings and other tax items (10 ) Income tax effect of non-GAAP adjustments 5 ------- - Non-GAAP adjusted provision for income taxes (b) $ 77 - ----- - Income before income taxes - GAAP basis(c) $ 1,295 Certain items associated with acquisitions 49 Acquisition integration costs 1 Impairment (gain on sale) of strategic investments, net 5 Non-GAAP adjusted income before income taxes(d) $ 1,350 - ----- - Effective income tax rate - GAAP basis(a/c) 12.8 % ------- - Non-GAAP adjusted effective income tax rate(b/d) 5.7 % ------- -