Applied Materials Delivers Strong Year-On-Year Growth in

Applied Materials Delivers Strong Year-On-Year Growth in Quarterly Revenue and Earnings Per Share

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

2	Applied adopted the accounting standard related to share-based compensation (ASU 2016-09) in the first 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
(In millions, except per share amounts)	April 29, 2018		April 30, 2017			April 29, 2018			April 30, 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
(In millions, except percentages)	April 29, 2018			April 30, 2017			April 29, 2018			April 30, 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 acquisitions ¹	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		%