Applied Materials Announces Fiscal 2007 Full Year and Fourth Quarter Results.

Reports Record Annual Net Sales 

SANTA CLARA, Calif. -- Applied Materials, Inc. reported results for its fiscal year and fourth quarter ended October 28, 2007. Fiscal 2007 net sales were a record $9.73 billion, a 6 percent increase from $9.17 billion for fiscal 2006. Net income was $1.71 billion, or $1.20 per diluted share, up from $1.52 billion, or $0.97 per diluted share, for fiscal 2006. New orders were $9.68 billion, a 2 percent decrease from $9.89 billion for fiscal 2006.

"This was one of the strongest years in the history of Applied Materials as we delivered record net sales and increased profitability," said Mike Splinter, president and CEO. "During 2007, we enhanced our position in flash memory, entered the thin film solar business with strong demand for the SunFab line, and drove our operating performance to increase earnings per share. These achievements strengthen our foundation for the future.

"We met our financial targets for the fourth quarter in a softening semiconductor and a challenging display environment. We invested in new opportunities, including the HCT acquisition for precision solar wafering and the launch of our PVD product for flat panel display arrays," said Splinter.

Fourth quarter net sales were $2.37 billion, down from $2.52 billion for the fourth quarter of fiscal 2006, and down from $2.56 billion for the third quarter of fiscal 2007. Gross margin was 45.5 percent, down from 47.1 percent for the fourth quarter of fiscal 2006, and down from 47.5 percent for the third quarter of fiscal 2007. Net income was $422 million, or $0.30 per share, compared to net income of $449 million, or $0.30 per share, for the fourth quarter of fiscal 2006, and down from $474 million, or $0.34 per share, for the third quarter of fiscal 2007.

New orders of $2.21 billion for the fourth quarter of fiscal 2007 decreased 18 percent from $2.69 billion for the fourth quarter of fiscal 2006, and decreased 3 percent from $2.28 billion for the third quarter of fiscal 2007. Regional distribution of new orders for the fourth quarter of fiscal 2007 was: Taiwan 27 percent, Japan 18 percent, Southeast Asia and China 18 percent, Korea 14 percent, North America 13 percent, and Europe 10 percent. Backlog at the end of the fourth quarter of fiscal 2007 was $3.65 billion, up from $3.43 billion at the end of the third quarter of fiscal 2007.

Non-GAAP net income for fiscal 2007 was $1.90 billion, or $1.33 per share, up from non-GAAP net income of $1.80 billion, or $1.15 per share, for fiscal 2006. Non-GAAP net income for the fourth quarter of fiscal 2007 was $472 million, or $0.34 per share, compared to non-GAAP net income of $482 million, or $0.33 per share, for the fourth quarter of fiscal 2006, and down from $518 million, or $0.37 per share, for the third quarter of fiscal 2007. Non-GAAP adjustments are explained below and further detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results.

Results by reportable segment for fiscal 2007 were:

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Results by reportable segment for the fourth quarter of fiscal 2007 were:

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Non-GAAP net income and non-GAAP EPS, detailed in the accompanying Reconciliation of GAAP to Non-GAAP Results, exclude charges related to (i) equity-based compensation, (ii) asset impairment and restructuring activities, (iii) ceasing development of beamline implant products, (iv) certain items associated with acquisitions, including amortization and impairment of intangibles, inventory fair value adjustments on products sold, and in-process research and development charges, and/or (v) the resolution of income tax audits and changes in tax credits. 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. These measures are not in accordance with Generally Accepted Accounting Principles (GAAP) and may differ from non-GAAP methods of accounting and reporting used by other companies. Applied believes that these measures 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. The presentation of this additional information should not be considered a substitute for net income or EPS prepared in accordance with GAAP.

Applied Materials will discuss its fiscal 2007 full year and fourth quarter results, along with its outlook for the first quarter of fiscal 2008, on a conference call today beginning at 1:30 p.m. Pacific Standard Time. A webcast of the conference call will be available at www.appliedmaterials.com.

This press release contains forward-looking statements, including statements regarding the company's performance, strategic position, products, growth opportunities, strategic investments, technology leadership, and industry conditions. Forward-looking statements may contain words such as "expect," "believe," "may," "should," "will," "forecast" 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, including but 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 and consumer spending, demand for electronic products and semiconductors, and geopolitical uncertainties; customers' capacity requirements, including capacity utilizing the latest technology, and fab utilization; the timing, rate, amount and sustainability of capital spending for nanomanufacturing technology products; variability of operating results among the company's reportable segments caused by differing conditions in the served markets; the company's ability to (i) successfully develop, deliver and support a broad range of products and expand its markets and develop new markets, (ii) maintain effective cost controls and timely align its cost structure with business conditions, (iii) effectively manage its resources and production capability, including its supply chain, and (iv) attract, motivate and retain key employees; difficulties in production planning and execution in new businesses such as solar; the successful implementation and effectiveness of initiatives to enhance global operations and efficiencies; the successful performance of acquired businesses and joint ventures; and other risks described in Applied Materials' SEC 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 panel displays, 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.

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