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Applied Materials Announces Third Quarter 2023 Results

Applied Materials, Inc.
Applied Materials, Inc.
  • Revenue $6.43 billion, down 1 percent year over year

  • GAAP operating margin 28.0 percent and non-GAAP operating margin 28.3 percent, down 1.5 points and 1.7 points year over year, respectively

  • GAAP EPS $1.85 and non-GAAP EPS $1.90, flat and down 2 percent year over year, respectively

  • Generated $2.58 billion in cash from operations

SANTA CLARA, Calif., Aug. 17, 2023 (GLOBE NEWSWIRE) --  Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its third quarter ended July 30, 2023.

Third Quarter Results

Applied generated revenue of $6.43 billion. On a GAAP basis, the company reported gross margin of 46.3 percent, operating income of $1.80 billion or 28.0 percent of net sales, and earnings per share (EPS) of $1.85.

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On a non-GAAP adjusted basis, the company reported gross margin of 46.4 percent, operating income of $1.82 billion or 28.3 percent of net sales, and EPS of $1.90.

The company generated $2.58 billion in cash from operations and distributed $707 million to shareholders including $439 million in share repurchases and $268 million in dividends.

“Applied Materials executed well in our fiscal third quarter, with revenue and earnings at the high end of our guidance range,” said Gary Dickerson, President and CEO. “Over the past several years, we have focused our strategy and investments on key technologies to accelerate the Internet of Things and AI era, enabling us to consistently deliver strong results in 2023 and positioning Applied Materials for sustainable outperformance.”

Results Summary

 

Q3 FY2023

 

Q3 FY2022

 

Change

 

(In millions, except per share amounts and percentages)

Net sales

$

6,425

 

 

$

6,520

 

 

(1

)%

Gross margin

 

46.3

%

 

 

46.1

%

 

0.2 points

Operating margin

 

28.0

%

 

 

29.5

%

 

(1.5) points

Net income

$

1,560

 

 

$

1,606

 

 

(3

)%

Diluted earnings per share

$

1.85

 

 

$

1.85

 

 

 

Non-GAAP Adjusted Results

 

 

 

 

 

Non-GAAP adjusted gross margin

 

46.4

%

 

 

46.2

%

 

0.2 points

Non-GAAP adjusted operating margin

 

28.3

%

 

 

30.0

%

 

(1.7) points

Non-GAAP adjusted net income

$

1,600

 

 

$

1,683

 

 

(5

)%

Non-GAAP adjusted diluted EPS

$

1.90

 

 

$

1.94

 

 

(2

)%


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 fourth quarter of fiscal 2023, Applied expects net sales to be approximately $6.51 billion, plus or minus $400 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.82 to $2.18.

This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share, includes the normalized tax benefit of share-based compensation of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers 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.

Third Quarter Reportable Segment Information

Semiconductor Systems

Q3 FY2023

 

Q3 FY2022

 

(In millions, except percentages)

Net sales

$

4,676

 

 

$

4,734

 

Foundry, logic and other

 

79

%

 

 

66

%

DRAM

 

17

%

 

 

15

%

Flash memory

 

4

%

 

 

19

%

Operating income

$

1,618

 

 

$

1,701

 

Operating margin

 

34.6

%

 

 

35.9

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

1,628

 

 

$

1,708

 

Non-GAAP adjusted operating margin

 

34.8

%

 

 

36.1

%


Applied Global Services

Q3 FY2023

 

Q3 FY2022

 

(In millions, except percentages)

Net sales

$

1,464

 

 

$

1,420

 

Operating income

$

429

 

 

$

434

 

Operating margin

 

29.3

%

 

 

30.6

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

429

 

 

$

434

 

Non-GAAP adjusted operating margin

 

29.3

%

 

 

30.6

%


Display and Adjacent Markets

Q3 FY2023

 

Q3 FY2022

 

(In millions, except percentages)

Net sales

$

235

 

 

$

333

 

Operating income

$

37

 

 

$

69

 

Operating margin

 

15.7

%

 

 

20.7

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

37

 

 

$

70

 

Non-GAAP adjusted operating margin

 

15.7

%

 

 

21.0

%


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 and severance charges and any associated adjustments; impairments of assets; gain or loss, dividends and impairments on strategic investments; 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. 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.

Forward-Looking Statement

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 fourth quarter of fiscal 2023 and beyond, 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, our ability to meet customer demand, and our suppliers' ability to meet our demand requirements; global economic, political and industry conditions, including rising inflation and interest rates; the implementation and interpretation of new export regulations and license requirements, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies; our ability to obtain licenses or authorizations on a timely basis, if at all; 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 effects of regional or global health epidemics, including COVID-19; acquisitions, investments and divestitures; changes in income tax laws; 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; our ability to ensure compliance with applicable law, rules and regulations; 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 a better 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

 

Nine Months Ended

(In millions, except per share amounts)

July 30,
2023

 

July 31,
2022

 

July 30,
2023

 

July 31,
2022

Net sales

$

6,425

 

$

6,520

 

 

$

19,794

 

$

19,036

 

Cost of products sold

 

3,449

 

 

3,514

 

 

 

10,579

 

 

10,144

 

Gross profit

 

2,976

 

 

3,006

 

 

 

9,215

 

 

8,892

 

Operating expenses:

 

 

 

 

 

 

 

Research, development and engineering

 

767

 

 

705

 

 

 

2,313

 

 

2,045

 

Marketing and selling

 

193

 

 

180

 

 

 

584

 

 

520

 

General and administrative

 

214

 

 

197

 

 

 

635

 

 

537

 

Severance and related charges

 

 

 

 

 

 

 

 

(4

)

Total operating expenses

 

1,174

 

 

1,082

 

 

 

3,532

 

 

3,098

 

Income from operations

 

1,802

 

 

1,924

 

 

 

5,683

 

 

5,794

 

Interest expense

 

60

 

 

56

 

 

 

180

 

 

171

 

Interest and other income (expense), net

 

64

 

 

(7

)

 

 

41

 

 

27

 

Income before income taxes

 

1,806

 

 

1,861

 

 

 

5,544

 

 

5,650

 

Provision for income taxes

 

246

 

 

255

 

 

 

692

 

 

716

 

Net income

$

1,560

 

$

1,606

 

 

$

4,852

 

$

4,934

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.86

 

$

1.86

 

 

$

5.76

 

$

5.63

 

Diluted

$

1.85

 

$

1.85

 

 

$

5.73

 

$

5.59

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

838

 

 

864

 

 

 

842

 

 

877

 

Diluted

 

843

 

 

869

 

 

 

846

 

 

883

 


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions)

July 30,
2023

 

October 30,
2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

6,025

 

$

1,995

Short-term investments

 

510

 

 

586

Accounts receivable, net

 

5,230

 

 

6,068

Inventories

 

5,809

 

 

5,932

Other current assets

 

1,305

 

 

1,344

Total current assets

 

18,879

 

 

15,925

Long-term investments

 

2,177

 

 

1,980

Property, plant and equipment, net

 

2,604

 

 

2,307

Goodwill

 

3,732

 

 

3,700

Purchased technology and other intangible assets, net

 

305

 

 

339

Deferred income taxes and other assets

 

2,713

 

 

2,475

Total assets

$

30,410

 

$

26,726

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

199

 

$

Accounts payable and accrued expenses

 

4,528

 

 

4,237

Contract liabilities

 

3,497

 

 

3,142

Total current liabilities

 

8,224

 

 

7,379

Long-term debt

 

5,460

 

 

5,457

Income taxes payable

 

818

 

 

964

Other liabilities

 

815

 

 

732

Total liabilities

 

15,317

 

 

14,532

Total stockholders’ equity

 

15,093

 

 

12,194

Total liabilities and stockholders’ equity

$

30,410

 

$

26,726


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

(In millions)

Three Months Ended

 

Nine Months Ended

July 30,
2023

 

July 31,
2022

July 30,
2023

 

July 31,
2022

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

1,560

 

 

$

1,606

 

 

$

4,852

 

 

$

4,934

 

Adjustments required to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

136

 

 

 

108

 

 

 

385

 

 

 

321

 

Severance and related charges

 

 

 

 

 

 

 

 

 

 

(4

)

Share-based compensation

 

114

 

 

 

95

 

 

 

375

 

 

 

314

 

Deferred income taxes

 

(38

)

 

 

47

 

 

 

(174

)

 

 

(209

)

Other

 

15

 

 

 

22

 

 

 

189

 

 

 

14

 

Net change in operating assets and liabilities

 

796

 

 

 

(409

)

 

 

1,518

 

 

 

(828

)

Cash provided by operating activities

 

2,583

 

 

 

1,469

 

 

 

7,145

 

 

 

4,542

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(255

)

 

 

(210

)

 

 

(797

)

 

 

(564

)

Cash paid for acquisitions, net of cash acquired

 

(7

)

 

 

(441

)

 

 

(25

)

 

 

(441

)

Proceeds from sales and maturities of investments

 

302

 

 

 

374

 

 

 

971

 

 

 

1,013

 

Purchases of investments

 

(465

)

 

 

(339

)

 

 

(1,195

)

 

 

(1,175

)

Cash used in investing activities

 

(425

)

 

 

(616

)

 

 

(1,046

)

 

 

(1,167

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from commercial paper

 

297

 

 

 

 

 

 

892

 

 

 

 

Repayments of commercial paper

 

(300

)

 

 

 

 

 

(700

)

 

 

 

Proceeds from common stock issuances

 

 

 

 

 

 

 

111

 

 

 

96

 

Common stock repurchases

 

(439

)

 

 

(1,000

)

 

 

(1,489

)

 

 

(4,603

)

Tax withholding payments for vested equity awards

 

(11

)

 

 

(3

)

 

 

(165

)

 

 

(259

)

Payments of dividends to stockholders

 

(268

)

 

 

(225

)

 

 

(707

)

 

 

(650

)

Repayments of principal on finance leases

 

1

 

 

 

 

 

 

(8

)

 

 

 

Cash used in financing activities

 

(720

)

 

 

(1,228

)

 

 

(2,066

)

 

 

(5,416

)

Increase (decrease) in cash, cash equivalents and restricted cash equivalents

 

1,438

 

 

 

(375

)

 

 

4,033

 

 

 

(2,041

)

Cash, cash equivalents and restricted cash equivalents—beginning of period

 

4,695

 

 

 

3,435

 

 

 

2,100

 

 

 

5,101

 

Cash, cash equivalents and restricted cash equivalents — end of period

$

6,133

 

 

$

3,060

 

 

$

6,133

 

 

$

3,060

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash equivalents

 

 

 

 

 

 

 

Cash and cash equivalents

$

6,025

 

 

$

2,956

 

 

$

6,025

 

 

$

2,956

 

Restricted cash equivalents included in deferred income taxes and other assets

 

108

 

 

 

104

 

 

 

108

 

 

 

104

 

Total cash, cash equivalents, and restricted cash equivalents

$

6,133

 

 

$

3,060

 

 

$

6,133

 

 

$

3,060

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash payments for income taxes

$

197

 

 

$

592

 

 

$

418

 

 

$

1,623

 

Cash refunds from income taxes

$

 

 

$

5

 

 

$

51

 

 

$

133

 

Cash payments for interest

$

35

 

 

$

35

 

 

$

137

 

 

$

137

 


APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other

(In millions)

Q3 FY2023

 

Q3 FY2022

Unallocated net sales

$

50

 

 

$

33

 

Unallocated cost of products sold and expenses

 

(218

)

 

 

(218

)

Share-based compensation

 

(114

)

 

 

(95

)

Total

$

(282

)

 

$

(280

)


Additional Information

 

Q3 FY2023

 

Q3 FY2022

Net Sales by Geography (In millions)

 

United States

$

1,039

 

 

$

725

 

% of Total

 

16

%

 

 

11

%

Europe

$

661

 

 

$

529

 

% of Total

 

10

%

 

 

8

%

Japan

$

478

 

 

$

438

 

% of Total

 

8

%

 

 

7

%

Korea

$

988

 

 

$

1,224

 

% of Total

 

15

%

 

 

19

%

Taiwan

$

1,345

 

 

$

1,537

 

% of Total

 

21

%

 

 

24

%

Southeast Asia

$

180

 

 

$

270

 

% of Total

 

3

%

 

 

4

%

China

$

1,734

 

 

$

1,797

 

% of Total

 

27

%

 

 

27

%

 

 

 

 

Employees(In thousands)

 

 

 

Regular Full Time

 

34.5

 

 

 

31.9

 


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

 

Three Months Ended

 

Nine Months Ended

(In millions, except percentages)

July 30,
2023

 

July 31,
2022

 

July 30,
2023

 

July 31,
2022

Non-GAAP Adjusted Gross Profit

 

 

 

 

 

 

 

Reported gross profit - GAAP basis

$

2,976

 

 

$

3,006

 

 

$

9,215

 

 

$

8,892

 

Certain items associated with acquisitions1

 

7

 

 

 

7

 

 

 

21

 

 

 

20

 

Non-GAAP adjusted gross profit

$

2,983

 

 

$

3,013

 

 

$

9,236

 

 

$

8,912

 

Non-GAAP adjusted gross margin

 

46.4

%

 

 

46.2

%

 

 

46.7

%

 

 

46.8

%

Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income - GAAP basis

$

1,802

 

 

$

1,924

 

 

$

5,683

 

 

$

5,794

 

Certain items associated with acquisitions1

 

10

 

 

 

10

 

 

 

32

 

 

 

29

 

Acquisition integration and deal costs

 

6

 

 

 

19

 

 

 

20

 

 

 

32

 

Severance and related charges2

 

 

 

 

 

 

 

 

 

 

(4

)

Non-GAAP adjusted operating income

$

1,818

 

 

$

1,953

 

 

$

5,735

 

 

$

5,851

 

Non-GAAP adjusted operating margin

 

28.3

%

 

 

30.0

%

 

 

29.0

%

 

 

30.7

%

Non-GAAP Adjusted Net Income

 

 

 

 

 

 

 

Reported net income - GAAP basis

$

1,560

 

 

$

1,606

 

 

$

4,852

 

 

$

4,934

 

Certain items associated with acquisitions1

 

10

 

 

 

10

 

 

 

32

 

 

 

29

 

Acquisition integration and deal costs

 

6

 

 

 

12

 

 

 

20

 

 

 

28

 

Severance and related charges2

 

 

 

 

 

 

 

 

 

 

(4

)

Realized loss (gain), dividends and impairments on strategic investments, net

 

(4

)

 

 

(1

)

 

 

109

 

 

 

(1

)

Unrealized loss (gain) on strategic investments, net

 

6

 

 

 

18

 

 

 

13

 

 

 

(15

)

Income tax effect of share-based compensation3

 

5

 

 

 

22

 

 

 

(6

)

 

 

(22

)

Income tax effects related to intra-entity intangible asset transfers

 

9

 

 

 

21

 

 

 

25

 

 

 

120

 

Resolution of prior years’ income tax filings and other tax items

 

10

 

 

 

1

 

 

 

(22

)

 

 

(54

)

Income tax effect of non-GAAP adjustments4

 

(2

)

 

 

(6

)

 

 

(7

)

 

 

 

Non-GAAP adjusted net income

$

1,600

 

 

$

1,683

 

 

$

5,016

 

 

$

5,015

 


1

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

 

 

2

The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees.

 

 

3

GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.

 

 

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

 

Nine Months Ended

(In millions, except per share amounts)

July 30,
2023

 

July 31,
2022

 

July 30,
2023

 

July 31,
2022

Non-GAAP Adjusted Earnings Per Diluted Share

 

 

 

 

 

 

 

Reported earnings per diluted share - GAAP basis

$

1.85

 

$

1.85

 

$

5.73

 

 

$

5.59

 

Certain items associated with acquisitions

 

0.01

 

 

0.01

 

 

0.04

 

 

 

0.03

 

Acquisition integration and deal costs

 

0.01

 

 

0.01

 

 

0.02

 

 

 

0.03

 

Realized loss (gain), dividends and impairments on strategic investments, net

 

 

 

 

 

0.13

 

 

 

 

Unrealized loss (gain) on strategic investments, net

 

 

 

0.02

 

 

0.01

 

 

 

(0.02

)

Income tax effect of share-based compensation

 

0.01

 

 

0.03

 

 

(0.01

)

 

 

(0.03

)

Income tax effects related to intra-entity intangible asset transfers

 

0.01

 

 

0.02

 

 

0.03

 

 

 

0.14

 

Resolution of prior years’ income tax filings and other tax items

 

0.01

 

 

 

 

(0.02

)

 

 

(0.06

)

Non-GAAP adjusted earnings per diluted share

$

1.90

 

$

1.94

 

$

5.93

 

 

$

5.68

 

Weighted average number of diluted shares

 

843

 

 

869

 

 

846

 

 

 

883

 



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

 

Three Months Ended

 

Nine Months Ended

(In millions, except percentages)

July 30,
2023

 

July 31,
2022

 

July 30,
2023

 

July 31,
2022

Semiconductor Systems Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income - GAAP basis

$

1,618

 

 

$

1,701

 

 

$

5,299

 

 

$

5,120

 

Certain items associated with acquisitions1

 

10

 

 

 

7

 

 

 

29

 

 

 

22

 

Non-GAAP adjusted operating income

$

1,628

 

 

$

1,708

 

 

$

5,328

 

 

$

5,142

 

Non-GAAP adjusted operating margin

 

34.8

%

 

 

36.1

%

 

 

36.0

%

 

 

37.4

%

AGS Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income - GAAP basis

$

429

 

 

$

434

 

 

$

1,226

 

 

$

1,259

 

Non-GAAP adjusted operating income

$

429

 

 

$

434

 

 

$

1,226

 

 

$

1,259

 

Non-GAAP adjusted operating margin

 

29.3

%

 

 

30.6

%

 

 

28.8

%

 

 

30.5

%

Display and Adjacent Markets Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income - GAAP basis

$

37

 

 

$

69

 

 

$

66

 

 

$

226

 

Certain items associated with acquisitions1

 

 

 

 

1

 

 

 

 

 

 

3

 

Non-GAAP adjusted operating income

$

37

 

 

$

70

 

 

$

66

 

 

$

229

 

Non-GAAP adjusted operating margin

 

15.7

%

 

 

21.0

%

 

 

11.6

%

 

 

21.2

%


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.


APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

 

Three Months
Ended

(In millions, except percentages)

July 30, 2023

 

 

Provision for income taxes - GAAP basis(a)

$

246

 

Income tax effect of share-based compensation

 

(5

)

Income tax effects related to intra-entity intangible asset transfers

 

(9

)

Resolutions of prior years’ income tax filings and other tax items

 

(10

)

Income tax effect of non-GAAP adjustments

 

2

 

Non-GAAP adjusted provision for income taxes(b)

$

224

 

 

 

Income before income taxes - GAAP basis(c)

$

1,806

 

Certain items associated with acquisitions

 

10

 

Acquisition integration and deal costs

 

6

 

Realized loss (gain), dividends and impairments on strategic investments, net

 

(4

)

Unrealized loss (gain) on strategic investments, net

 

6

 

Non-GAAP adjusted income before income taxes(d)

$

1,824

 

 

 

Effective income tax rate - GAAP basis(a/c)

 

13.6

%

 

 

Non-GAAP adjusted effective income tax rate(b/d)

 

12.3

%