Applied Materials Announces Results for Fourth Quarter of Fiscal 2006

• Net Sales: $2.52 billion (1% decrease quarter over quarter;
  47% increase year over year)
• EPS: $0.30 ($0.03 decrease quarter over quarter; $0.15
  increase year over year), including charges for equity-based
  compensation
• New Orders: $2.69 billion (1% increase quarter over quarter;
  59% increase year over year)

Business Editors

SANTA CLARA, Calif.--(BUSINESS WIRE)--Nov. 15, 2006--Applied
Materials, Inc. (Nasdaq:AMAT) reported results for its fourth fiscal
quarter ended October 29, 2006. Net sales were $2.52 billion, down 1
percent from $2.54 billion for the third quarter of fiscal 2006, and
up 47 percent from $1.72 billion for the fourth quarter of fiscal
2005. Gross margin for the fourth quarter of fiscal 2006 was 47.1
percent, down from 48.1 percent for the third quarter of fiscal 2006,
and up from 44.2 percent for the fourth quarter of fiscal 2005. Net
income for the fourth quarter of fiscal 2006 was $449 million, or
$0.30 per share, down from net income of $512 million, or $0.33 per
share, for the third quarter of fiscal 2006, and up from net income of
$247 million, or $0.15 per share, for the fourth quarter of fiscal
2005.

Non-GAAP net income was $482 million, or $0.33 per share, for the
fourth quarter of fiscal 2006. Non-GAAP adjustments consisted
principally of: $56 million, or $0.03 per diluted share, of
equity-based compensation charges, and $18 million, or $0.01 per
diluted share, of certain costs associated with acquisitions, which
were partially offset by a $20 million tax benefit, or $0.01 per
diluted share, primarily from the resolution of audits of prior years'
income tax filings.

New orders of $2.69 billion for the fourth quarter of fiscal 2006
increased 1 percent from $2.67 billion for the third quarter of fiscal
2006, and increased 59 percent from $1.69 billion for the fourth
quarter of fiscal 2005. Regional distribution of new orders for the
fourth quarter of fiscal 2006 was: Japan 22 percent, Taiwan 21
percent, North America 19 percent, Korea 15 percent, Southeast Asia
and China 13 percent, and Europe 10 percent. Backlog at the end of the
fourth quarter of fiscal 2006 was $3.40 billion, compared to $3.32
billion at the end of the third quarter of fiscal 2006.

"Applied Materials delivered a strong quarter with healthy cash
flow," said Mike Splinter, president and CEO. "We expanded our product
offerings, extending our flat panel display systems for Generation 8.5
manufacturing and launching our strategy for solar technology. We also
returned value to stockholders by reducing outstanding shares by 10
percent, primarily through our accelerated stock buyback."

After the acquisition of Applied Films, Applied made certain
changes to its internal financial reporting structure during the
fourth quarter and, as a result, is reporting four segments: Silicon,
Fab Solutions, Display, and Adjacent Technologies. The Silicon segment
manufactures and sells equipment to fabricate semiconductor chips. The
Fab Solutions segment offers a broad range of products to maintain,
service and optimize customers' semiconductor fabs, including total
parts management, spare parts, remanufactured equipment, maintenance
agreements, total support programs, and environmental and software
solutions. The Display segment manufactures, sells and services
equipment used to make flat panel displays. The Adjacent Technologies
segment manufactures, sells and services equipment used to fabricate
solar photovoltaic cells, flexible electronics and energy-efficient
glass. Net sales by reportable segment for the fourth quarter of
fiscal 2006 were: Silicon, $1.61 billion; Fab Solutions, $590 million;
Display, $296 million; and Adjacent Technologies, $20 million.

During the fourth quarter of fiscal 2006, the company repurchased
154 million shares of common stock at an average price of $17.15 per
share for an aggregate purchase price of $2.64 billion, and paid $77
million in dividends.

The company also announced its results for the fiscal year ended
October 29, 2006. Fiscal 2006 new orders were $9.89 billion, a 55
percent increase from $6.39 billion for fiscal 2005. Net sales for
fiscal 2006 were $9.17 billion, a 31 percent increase from $6.99
billion for fiscal 2005. Net income for fiscal 2006 was $1.52 billion,
or $0.97 per diluted share, up from $1.21 billion, or $0.73 per
diluted share, for fiscal 2005.

Applied Materials will discuss its fiscal 2006 fourth quarter and
annual results, along with its outlook for the first quarter of fiscal
2007, on a conference call today beginning at 1:30 p.m. Pacific
Standard Time. A webcast of the conference call will be available on
Applied Materials' web site.

This press release includes financial measures that are not in
accordance with Generally Accepted Accounting Principles (GAAP),
consisting of non-GAAP net income and non-GAAP earnings per share
(EPS). Management uses non-GAAP net income and non-GAAP EPS to
evaluate the company's operating and financial performance in light of
business objectives and for planning purposes. Applied believes that
these measures are useful to investors because they enhance 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. These non-GAAP measures exclude charges
related to (i) equity-based compensation, (ii) inventory fair value
adjustments on products sold and amortization of purchased intangible
assets associated with acquisitions, (iii) in-process research and
development charges associated with the Applied Films acquisition,
(iv) asset impairment and restructuring activities, and (v) resolution
of income tax audits. These financial measures are not in accordance
with GAAP and may be different from non-GAAP methods of accounting and
reporting used by other companies. The presentation of this additional
information should not be considered a substitute for net income or
EPS prepared in accordance with GAAP. Reconciliations of reported net
income and reported EPS to non-GAAP net income and non-GAAP EPS,
respectively, are included at the end of this press release.

This press release contains forward-looking statements, including
statements regarding the company's performance, technology leadership,
opportunities, and return of stockholder value. Forward-looking
statements may contain words such as "expect," "anticipate,"
"believe," "may," "should," "will," "estimate," "forecast," "continue"
or similar expressions, and include the assumptions that underlie such
statements. These statements are subject to known and unknown risks
and uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements. Risks and
uncertainties include, but are not limited to: the sustainability of
demand in the nanomanufacturing technology industry and broadening of
demand for emerging applications such as solar, which are subject to
many factors, including global economic conditions, business spending,
consumer confidence, demand for electronic products and integrated
circuits, and geopolitical uncertainties; customers' capacity
requirements, including capacity utilizing the latest technology; the
timing, rate, amount and sustainability of capital spending for new
nanomanufacturing technology; the company's ability to successfully
develop, deliver and support a broad range of products and to expand
its markets and develop new markets; the successful integration and
performance of acquired businesses; the effectiveness of joint
ventures; retention of key employees; the company's ability to
maintain effective cost controls and to timely align its cost
structure with business conditions; the company's ability to
effectively manage its resources and production capability, including
its supply chain; and other risks described in Applied Materials'
Securities and Exchange Commission filings, including its reports on
Forms 10-K, 10-Q and 8-K. All forward-looking statements are based on
management's estimates, projections and assumptions as of the date
hereof. The company undertakes no obligation to update any
forward-looking statements.

Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in
Nanomanufacturing Technology(TM) solutions with a broad portfolio of
innovative equipment, services and software products for the
fabrication of semiconductor chips, flat panels, solar photovoltaic
cells, flexible electronics and energy-efficient glass. At Applied
Materials, we apply Nanomanufacturing Technology to improve the way
people live. Learn more at www.appliedmaterials.com.

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended Twelve Months Ended
----------------------------------------------------------------------
(In thousands, except October 30, October 29, October 30, October 29,
per share amounts) 2005 2006 2005 2006
----------------------------------------------------------------------

Net sales $1,718,120 $2,518,293 $6,991,823 $9,167,014
Cost of products sold 957,990 1,332,169 3,905,949 4,875,212
----------- ----------- ----------- -----------
Gross margin 760,130 1,186,124 3,085,874 4,291,802

Operating expenses:
Research,
development and
engineering 236,708 299,240 940,507 1,152,326
Marketing and
selling 89,880 116,365 358,524 438,654
General and
administrative 82,002 134,199 338,878 468,088
Restructuring and
asset impairments - 1,490 - 212,113
----------- ----------- ----------- -----------
Income from operations 351,540 634,830 1,447,965 2,020,621

Pre-tax loss of
unconsolidated
equity-method
investment - 2,849 - 2,849
Interest expense 9,394 9,308 37,819 36,096
Interest income 48,368 37,396 171,423 185,295
----------- ----------- ----------- -----------
Income before income
taxes 390,514 660,069 1,581,569 2,166,971

Provision for income
taxes 143,800 211,040 371,669 650,308
----------- ----------- ----------- -----------
Net income $ 246,714 $ 449,029 $1,209,900 $1,516,663
----------- ----------- ----------- -----------

Earnings per share:
Basic $ 0.15 $ 0.31 $ 0.74 $ 0.98
Diluted $ 0.15 $ 0.30 $ 0.73 $ 0.97

Weighted average
number of shares:
Basic 1,617,809 1,469,975 1,645,531 1,551,339
Diluted 1,628,655 1,482,132 1,657,493 1,565,072
----------------------------------------------------------------------

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

----------------------------------------------------------------------
October 30, October 29,
(In thousands) 2005(1) 2006
----------------------------------------------------------------------

ASSETS
Current assets:
Cash and cash equivalents $ 990,342 $ 861,463
Short-term investments 2,342,952 1,035,875
Accounts receivable, net 1,615,504 2,026,199
Inventories 1,034,093 1,406,777
Deferred income taxes 581,183 455,473
Assets held for sale - 37,211
Other current assets 271,003 258,021
------------ ------------
Total current assets 6,835,077 6,081,019

Long-term investments 2,651,927 1,314,861

Property, plant and equipment 3,011,110 2,753,883
Less: accumulated depreciation and
amortization (1,736,086) (1,729,589)
------------ ------------
Net property, plant and equipment 1,275,024 1,024,294

Goodwill, net 338,982 572,558
Purchased technology and other intangible
assets, net 81,093 201,066
Unconsolidated equity-method investment - 144,431
Deferred income taxes and other assets 87,054 142,608
------------ ------------
Total assets $11,269,157 $ 9,480,837
------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 7,574 $ 202,535
Accounts payable and accrued expenses 1,618,042 2,023,651
Income taxes payable 139,798 209,859
------------ ------------
Total current liabilities 1,765,414 2,436,045

Long-term debt 407,380 204,708
Other liabilities 167,814 188,684
------------ ------------
Total liabilities 2,340,608 2,829,437
------------ ------------

Stockholders' equity:
Common stock 16,067 13,917
Additional paid-in capital 721,937 -
Retained earnings 8,227,793 6,656,493
Accumulated other comprehensive loss (37,248) (19,010)
------------ ------------
Total stockholders' equity 8,928,549 6,651,400
------------ ------------

Total liabilities and stockholders' equity $11,269,157 $ 9,480,837
----------------------------------------------------------------------
(1) Certain amounts in the October 30, 2005 consolidated condensed
balance sheet have been reclassified to conform to the 2006
presentation.

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

Three Months Ended Twelve Months Ended
----------------------------------------------------------------------
(In thousands, except October 30, October 29, October 30, October 29,
per share amounts) 2005 2006 2005 2006
----------------------------------------------------------------------

Non-GAAP Net Income

Reported net income
(GAAP basis) $ 246,714 $ 449,029 $1,209,900 $1,516,663
Equity-based
compensation expense
(1) - 55,553 - 216,269
Restructuring and
asset impairments (2) - 1,490 - 212,113
In-process research
and development (3) - - - 14,000
Impact of certain
items associated with
acquisitions (4) 5,615 18,456 18,151 35,157
Resolution of audits
of prior years'
income tax filings 32,000 (20,000) (99,761) (53,915)
Income tax effect of
non-GAAP adjustments (2,049) (22,268) (6,625) (142,712)
----------- ----------- ----------- -----------

Non-GAAP net income $ 282,280 $ 482,260 $1,121,665 $1,797,575
----------- ----------- ----------- -----------

Non-GAAP Net Income
Per Diluted Share

Reported net income
per diluted share
(GAAP basis) $ 0.15 $ 0.30 $ 0.73 $ 0.97
Equity-based
compensation expense - 0.03 - 0.11
Restructuring and
asset impairments - - - 0.08
In-process research
and development - - - 0.01
Impact of certain
items associated with
acquisitions - 0.01 0.01 0.01
Resolution of audits
of prior years'
income tax filings 0.02 (0.01) (0.06) (0.03)

Non-GAAP net income -
per diluted share $ 0.17 $ 0.33 $ 0.68 $ 1.15

Shares used in diluted
shares calculation 1,628,655 1,482,132 1,657,493 1,565,072
----------------------------------------------------------------------
(1) Applied began expensing stock options in the first quarter of
fiscal 2006.

(2) Results for the twelve months ended October 29, 2006, included
asset impairment and restructuring charges of $212 million, or $0.08
per diluted share, associated primarily with the facilities
disinvestment program initiated in the first quarter of fiscal 2006.
Results for the fourth fiscal quarter ended October 29, 2006 included
a net charge of $1 million consisting of additional impairment
charges on assets held for sale of $10 million, partially offset by
$9 million of adjustments associated with prior years' realignment
programs and the settlement of the Hayward lease obligation.

(3) In-process research and development charge associated with the
acquisition of Applied Films Corporation in the third quarter of
fiscal 2006. The in-process research and development charge was
included in research, development and engineering expense on the
Consolidated Condensed Statement of Operations.

(4) Impact of incremental charges attributable to acquisitions
consisting of inventory fair value adjustments on products sold and
amortization of purchased intangible assets.

CONTACT: Applied Materials, Inc.

Randy Bane, 408-986-7977 (investment community)

David Miller, 408-563-9582 (editorial/media)

SOURCE: Applied Materials, Inc.