Applied Materials (AMAT) 10-Q 9 Jun 10 2010 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	6 Months Ended May. 02, 2010
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	2010-05-02
Amendment Flag	false
Document Fiscal Year Focus	2,010
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)	1,342,979,263

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended May. 02, 2010	3 Months Ended Apr. 26, 2009	6 Months Ended May. 02, 2010	6 Months Ended 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

Consolidated Condensed Balance Sheets (USD $)
In Thousands	May. 02, 2010		Oct. 25, 2009
Current assets:
Cash and cash equivalents	$1,596,429	[1]	$1,576,381	[1]
Short-term investments	738,433	[1]	638,349	[1]
Accounts receivable, net	1,437,746	[1]	1,041,495	[1]
Inventories	1,690,445	[1]	1,627,457	[1]
Deferred income taxes, net	432,735	[1]	356,336	[1]
Income taxes receivable	0	[1]	184,760	[1]
Other current assets	277,506	[1]	264,169	[1]
Total current assets	6,173,294	[1]	5,688,947	[1]
Long-term investments	1,230,214	[1]	1,052,165	[1]
Property, plant and equipment, net	1,083,525	[1]	1,090,433	[1]
Goodwill	1,336,426	[1]	1,170,932	[1]
Purchased technology and other intangible assets, net	346,228	[1]	306,416	[1]
Deferred income taxes and other assets	280,062	[1]	265,350	[1]
Total assets	10,449,749	[1]	9,574,243	[1]
Current liabilities:
Current portion of long-term debt	1,803	[1]	1,240	[1]
Accounts payable and accrued expenses	1,440,225	[1]	1,061,502	[1]
Customer deposits and deferred revenue	980,658	[1]	864,280	[1]
Income taxes payable	153,134	[1]	12,435	[1]
Total current liabilities	2,575,820	[1]	1,939,457	[1]
Long-term debt	204,847	[1]	200,654	[1]
Employee benefits and other liabilities	348,001	[1]	339,524	[1]
Total liabilities	3,128,668	[1]	2,479,635	[1]
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	13,430	[1]	13,409	[1]
Additional paid-in capital	5,348,780	[1]	5,195,437	[1]
Retained earnings	11,106,136	[1]	10,934,004	[1]
Treasury stock: 515,885 and 508,254 shares at May 2, 2010 and October 25, 2009, respectively, net	(9,146,562)	[1]	(9,046,562)	[1]
Accumulated other comprehensive loss	(703)	[1]	(1,680)	[1]
Total stockholders' equity	7,321,081	[1]	7,094,608	[1]
Total liabilities and stockholders' equity	$10,449,749	[1]	$9,574,243	[1]
[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.

1_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)
Share data in Thousands, except Per Share data	May. 02, 2010		Oct. 25, 2009
Stockholders' equity:
Common stock, par value	0.01	[1]	0.01	[1]
Common stock, shares authorized	2,500,000	[1]	2,500,000	[1]
Common stock, shares outstanding	1,342,979	[1]	1,340,917	[1]
Treasury stock, shares	515,885	[1]	508,254	[1]
[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.

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Stockholders Equity and Comprehensive Income (Loss) (Unaudited) (USD $)
In Thousands, except Share data	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total
Beginning Balance, shares at Oct. 25, 2009	1,340,917
Beginning Balance at Oct. 25, 2009	$13,409	$5,195,437	$10,934,004	($9,046,562)	($1,680)	$7,094,608	[1]
Components of comprehensive income, net of tax:
Net income			346,755			346,755
Change in unrealized net gain on investments					2,013	2,013
Change in unrealized net gain on derivative instruments					515	515
Change in defined and postretirement benefit plans liability					74	74
Translation adjustments					(1,625)	(1,625)
Comprehensive income						347,732
Dividends			(174,623)			(174,623)
Equity-based compensation		62,330				62,330
Issuance under stock plans, net of a tax detriment of $1,897 and other	97	91,013				91,110
Issuance under stock plans, net of a tax detriment of $1,897 and other, shares	9,693
Treasury stock repurchases	(76)			(100,000)		(100,076)
Treasury stock repurchases, shares	(7,631)
Ending Balance at May. 02, 2010	$13,430	$5,348,780	$11,106,136	($9,146,562)	($703)	$7,321,081	[1]
Ending Balance, shares at May. 02, 2010	1,342,979
[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.

3_Consolidated Condensed Statem

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

4_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $)
In Thousands	6 Months Ended May. 02, 2010		6 Months Ended 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	3		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

Basis of Presentation
	6 Months Ended May. 02, 2010
Basis of Presentation [Abstract]
Basis of Presentation	Note1 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 October25, 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 Applieds Annual Report on Form10-K for the fiscal year ended October25, 2009 (2009 Form10-K). Applieds results of operations for the three and six months ended May2, 2010 are not necessarily indicative of future operating results. Applieds fiscal year ends on the last Sunday in October of each year. Fiscal 2010 contains 53weeks, while fiscal 2009 contained 52weeks, and the first six months of fiscal 2010 contained 27weeks, while the first six months of fiscal 2009 contained 26weeks. 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; sellers price to buyer is fixed or determinable; and collectability is probable. Applieds shipping terms are customarily FOB Applied shipping point or equivalent terms. Applieds 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, rev

Earnings

Earnings (Loss) Per Share
	6 Months Ended May. 02, 2010
Earnings (Loss) Per Share [Abstract]
Earnings (Loss) Per Share	Note2 Earnings (Loss) Per Share Basic earnings (loss) per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plans shares) outstanding during the period. Applieds net income (loss) has not been adjusted for any period presented for purposes of computing basic or diluted earnings (loss) per share due to the Companys non-complex capital structure. For purposes of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair market value of Applied common stock for the period as the effect would be anti-dilutive. Potential common shares have not been included in the calculation of diluted net loss per share for the three and six months ended April26, 2009 as the effect would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted net loss per share for the three and six months ended April26, 2009 are the same. Three Months Ended Six Months Ended May2, April26, May2, April26, 2010 2009 2010 2009 (In thousands, except per share amounts) Numerator: Net income (loss) $ 264,004 $ (255,390 ) $ 346,755 $ (388,324 ) Denominator: Weighted average common shares outstanding 1,344,617 1,331,729 1,343,229 1,330,476 Effect of dilutive stock options, restricted stock units and employee stock purchase plans shares 7,819 7,573 Denominator for diluted income (loss) per share 1,352,436 1,331,729 1,350,802 1,330,476 Basic net income (loss) per share $ 0.20 $ (0.19 ) $ 0.26 $ (0.29 ) Diluted net income (loss) per share $ 0.20 $ (0.19 ) $ 0.26 $ (0.29 ) Potentially dilutive securities 39,936,202 92,425,216 42,855,694 92,425,216

Cash, Cash Equivalents and Inve

Cash, Cash Equivalents and Investments
	6 Months Ended May. 02, 2010
Cash, Cash Equivalents and Investments [Abstract]
Cash, Cash Equivalents and Investments	Note3 Cash, Cash Equivalents and Investments Summary of Cash, Cash Equivalents and Investments The following tables summarizes Applieds cash, cash equivalents and investments by security type: Gross Gross Unrealized Unrealized Estimated May2, 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 October25, 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

Fair Value Measurements

Fair Value Measurements
	6 Months Ended May. 02, 2010
Fair Value Measurements [Abstract]
Fair Value Measurements	Note4 Fair Value Measurements Applieds 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. Applieds 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: Level1 Quoted prices in active markets for identical assets or liabilities; Level2 Observable inputs other than Level1 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 Level3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Applieds 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 12months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12months from the balance sheet date are classified as long-term investments. As of May2, 2010, substantially all of Applieds 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 r

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	6 Months Ended May. 02, 2010
Derivative Instruments and Hedging Activities [Abstract]
Derivative Instruments and Hedging Activities	Note5 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 Applieds 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 Applieds 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 24months. 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 May2, 2010 is expected to be reclassified into earnings within 12months. 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 May2, 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 $26million and $25million for the three and six months ended April26, 2009, respectively. Forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives ar

Accounts Receivable, Net

Accounts Receivable, Net
	6 Months Ended May. 02, 2010
Accounts Receivable, Net [Abstract]
Accounts Receivable, Net	Note6 Accounts Receivable, Net Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied also discounts letters of credit through various financial institutions. Applied sells its accounts receivable without recourse. Details of discounted letters of credit, factored accounts receivable and discounted promissory notes for the three and six months ended May2, 2010 and April26, 2009 were as follows: Three Months Ended Six Months Ended May2, April26, May2, April26, 2010 2009 2010 2009 (In thousands) Discounted letters of credit $ 26,049 $ 39,419 $ 53,262 $ 52,700 Factored accounts receivable 23,594 19,709 48,691 21,884 Discounted promissory notes 792 897 1,097 2,316 Total $ 50,435 $ 60,025 $ 103,050 $ 76,900 Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operations and were not material for all periods presented. Accounts receivable are presented net of allowance for doubtful accounts of $73million at May2, 2010 and $67million at October25, 2009. Applied sells principally to manufacturers within the semiconductor, display and solar industries. As a result of challenging economic and industry conditions, certain of these manufacturers may experience difficulties in meeting their obligations in a timely manner. While Applied believes that its allowance for doubtful accounts is adequate and represents Applieds best estimate at May2, 2010, Applied will continue to closely monitor customer liquidity and other economic conditions, which may result in changes to Applieds estimates regarding collectability.

Balance Sheet Detail

Balance Sheet Detail
	6 Months Ended May. 02, 2010
Balance Sheet Detail [Abstract]
Balance Sheet Detail	Note7 Balance Sheet Detail Inventories May2, October25, 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 $133million at May2, 2010, and $133million at October25, 2009, of newly-introduced systems at customer locations where the sales transaction did not meet Applieds revenue recognition criteria as set forth in Note1. 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. May2, October25, 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

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	Note8 Goodwill, Purchased Technology and Other Intangible Assets Goodwill and Purchased Intangible Assets Applieds 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. Applieds reporting units are consistent with the reportable segments identified in Note15, 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 units 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

Warranty, Guarantees and Contin

Warranty, Guarantees and Contingencies
	6 Months Ended May. 02, 2010
Warranty, Guarantees and Contingencies [Abstract]
Warranty, Guarantees and Contingencies	Note9 Warranty, Guarantees and Contingencies Warranty Changes in the warranty reserves during the three and six months ended May2, 2010 and April26, 2009 were as follows: Three Months Ended Six Months Ended May2, April26, May2, April26, 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 quarters 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 May2, 2010, the maximum potential amount of future payments that Applied could be required to make under these guarantee arrangements was $88million. 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 May2, 2010, Applied Materials, Inc. has provided parent guarantees to banks for approximately $173million to cover these arrangements. Legal matters Semitool Shareholder Litigation On November17, 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, Semitools directors, Applied and Applieds acquisition subsidiary. The actions seek certification of a class of all holders of Semitool common stock,

Restructuring and Asset Impairm

Restructuring and Asset Impairments
	6 Months Ended May. 02, 2010
Restructuring and Asset Impairments [Abstract]
Restructuring and Asset Impairments	Note10 Restructuring and Asset Impairments On November11, 2009, Applied announced a restructuring program to reduce its global workforce as of October25, 2009 by approximately 1,300 to 1,500 positions, or 10 to 12percent, over a period of 18months. During the first quarter of fiscal 2010, Applied recorded restructuring charges of $104million associated with this program. Changes in restructuring reserves related to the program described above for the six months ended May2, 2010 were as follows: Severance (In thousands) Provision for restructuring reserves $ 103,780 Consumption of reserves (16,688 ) Balance, January31, 2010 87,092 Consumption of reserves (6,710 ) Balance, May2, 2010 $ 80,382 Changes in restructuring reserves for the six months ended May2, 2010 related to other restructuring plans and facilities realignment programs initiated in prior periods were as follows: Severance Facilities Total (In thousands) Balance, October25, 2009 $ 26,353 $ 5,228 $ 31,581 Provision for restructuring reserves 64 64 Consumption of reserves (11,915 ) (227 ) (12,142 ) Foreign currency changes 3 3 Balance, January31, 2010 14,438 5,068 19,506 Provision for restructuring reserves 57 57 Consumption of reserves (6,167 ) (29 ) (6,196 ) Adjustment of restructuring reserves 2 (160 ) (158 ) Foreign currency changes (1 ) (1 ) Balance, May2, 2010 $ 8,273 $ 4,935 $ 13,208 During the second quarter of fiscal 2010, Applied recorded an asset impairment charge of $9million to write down a facility to its estimated fair value based on prices for comparable local properties. The facility was reclassified as an asset held for sale within other current assets.

Stockholders Equity, Comprehens

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	Note11 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 May2, April26, May2, April26, 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: May2, October25, 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 March8, 2010, Applieds Board of Directors approved a new stock repurchase program authorizing up to $2billion 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 May2, 2010, Applied repurchased 7,631,000shares of its common stock at an average price of $13.10 per share for a total cash outlay of $100million. Applied did not repurchase any shares of its common stock during the three months ended April26, 2009. During the six months ended April26, 2009, Applied repurchased 1,942,000shares of its common stock at an average price of $11.80 per share for a total cash outlay of $23million. Dividends On March8, 2010, Applieds Board of Directors approved an increase in the quarterly cash dividend to $0.07 per share, payable on June16, 2010 to stockholders of record as of May26, 2010. In December 2009, Applieds Board of Directors declared a quarterly cash dividend in the amount of $0.06 per share that was paid on March17, 2010 to stockholders of record as of February24, 201

Employee Benefit Plans

Employee Benefit Plans
	6 Months Ended May. 02, 2010
Employee Benefit Plans [Abstract]
Employee Benefit Plans	Note12 Employee Benefit Plans Applied sponsors a number of employee benefit plans, including defined benefit plans of certain foreign subsidiaries, and a plan that provides certain health benefits to eligible retirees. A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three and six months ended May2, 2010 and April26, 2009 is presented below: Three Months Ended Six Months Ended May2, April26, May2, April26, 2010 2009 2010 2009 (In thousands) (In thousands) Service cost $ 3,350 $ 3,290 $ 6,700 $ 6,580 Interest cost 3,444 3,007 6,888 6,014 Expected return on plan assets (1,913 ) (1,863 ) (3,826 ) (3,726 ) Amortization of actuarial loss 286 174 572 348 Amortization of prior service credit (63 ) (70 ) (126 ) (140 ) Amortization of transition obligation 14 19 28 38 Net periodic pension cost $ 5,118 $ 4,557 $ 10,236 $ 9,114

Borrowing Facilities

Borrowing Facilities
	6 Months Ended May. 02, 2010
Borrowing Facilities [Abstract]
Borrowing Facilities	Note13 Borrowing Facilities Applied has credit facilities for unsecured borrowings in various currencies of up to $1.1billion, of which $1.0billion is comprised of a 5-year revolving credit agreement with a group of banks that is scheduled to expire in January 2012. This agreement provides for borrowings in United States dollars at interest rates keyed to one of the two rates selected by Applied for each advance and includes financial and other covenants with which Applied was in compliance at May2, 2010. Remaining credit facilities in the amount of approximately $85million are with Japanese banks. Applieds ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks prime reference rate denominated in Japanese yen. No amounts were outstanding under any of these facilities at May2, 2010.

Income Taxes

Income Taxes
	6 Months Ended May. 02, 2010
Income Taxes [Abstract]
Income Taxes	Note14 Income Taxes Applieds effective income tax rate for the second quarter of fiscal 2010 was a provision of 31.8percent, and the income tax rate for the second quarter of fiscal 2009 was a benefit of 33.3percent. Both periods included the impact of restructuring charges. The income tax rate for the second quarter of fiscal 2009 also included a tax benefit of $9million from the settlement of certain tax matters with the state of California and a tax benefit of $12million relating to impairments of certain strategic investments. Applieds future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of Applieds pre-tax income, and the tax rate on equity compensation. Management carefully monitors these factors and timely adjusts the interim income tax rate accordingly. During the second quarter of fiscal 2010, Applied received a cash refund of approximately $130million due to the carryback of the fiscal year 2009net operating loss to fiscal year 2005. During fiscal 2009, the Internal Revenue Service began an examination of Applieds federal income tax returns for fiscal years 2007 and 2006. Applied believes it has adequately reserved for any income tax uncertainties that may arise as a result of this examination. A number of Applieds tax returns remain subject to examination by taxing authorities. These include U.S.federal returns for fiscal 2005 and later years, California returns for fiscal 2006 and later years, tax returns for certain states for fiscal 2002 and later years, and tax returns in certain jurisdictions outside of the United States for fiscal 2003 and later years. The timing of the resolution of income tax examinations is highly uncertain as well as the amounts and timing of various tax payments that may be part of the settlement process. This could cause large fluctuations in the balance sheet classification of current assets and non-current assets and liabilities. The Company does not expect a material change in unrecognized tax benefits in the next 12months.

Industry Segment Operations

Industry Segment Operations
	6 Months Ended May. 02, 2010
Industry Segment Operations [Abstract]
Industry Segment Operations	Note15 Industry Segment Operations Applieds four reportable segments are: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Applieds 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 Applieds management organization structure as of May2, 2010 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the Companys reportable segments. Each reportable segment is separately managed and has separate financial results that are reviewed by Applieds 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 Applieds 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 April26, 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 segments 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 pro

Business Combinations

Business Combinations
	6 Months Ended May. 02, 2010
Business Combinations [Abstract]
Business Combinations	Note16 Business Combinations On December21, 2009, Applied acquired Semitool, a public company based in the state of Montana, for a purchase price of $323million 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. Applieds 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 Applieds portfolio of solar PV technologies and enhanced Applieds 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 Pronouncement

Recent Accounting Pronouncements
	6 Months Ended May. 02, 2010
Recent Accounting Pronouncements [Abstract]
Recent Accounting Pronouncements	Note17 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 enterprises 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 entitys 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 entitys 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 June15, 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 t