Applied Materials Announces Record Results For Third Fiscal Quarter 2000; Record New Orders, Net Sales and Net Income.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 9, 2000

Applied Materials, Inc., the world's largest supplier of wafer fabrication solutions to the semiconductor industry, reported record results for its third fiscal quarter ended July 30, 2000. Record net sales were $2.73 billion, up 25 percent from $2.19 billion for the second fiscal quarter of 2000, and up 83 percent from $1.49 billion for the third fiscal quarter of 1999. Record ongoing net income (net income, excluding one-time items) for the third fiscal quarter of 2000 was $604 million, or $0.70 per diluted share, up 32 percent from $459 million, or $0.53 per diluted share, for the second fiscal quarter of 2000, and up 136 percent from $256 million, or $0.31 per diluted share, for the third fiscal quarter of 1999.

Record new orders of $3.28 billion for the third fiscal quarter of 2000 exceeded the $3 billion level for the first time in the Company's history, increasing 12 percent from $2.93 billion for the second fiscal quarter of 2000, and increasing 116 percent from $1.51 billion for the third fiscal quarter of 1999. Regional distribution of new orders for the third fiscal quarter of 2000 was: North America 30 percent, Japan 24 percent, Taiwan 15 percent, Europe 15 percent, Southeast Asia and China 9 percent and Korea 7 percent. Backlog at the end of the third fiscal quarter of 2000 increased to $3.69 billion, from $3.18 billion at the end of the second fiscal quarter of 2000.

Gross margin for the third fiscal quarter of 2000 was 50.9 percent, up from 50.1 percent for the second fiscal quarter of 2000, and up from 48.0 percent for the third fiscal quarter of 1999. Record ongoing net income as a percentage of net sales was 22.1 percent for the third fiscal quarter of 2000, compared to 21.0 percent for the second fiscal quarter of 2000 and 17.2 percent for the third fiscal quarter of 1999.

"Our record results reflect customers' investments in expanded capacity to meet increasing semiconductor demand and in advanced technologies to provide more powerful, portable and affordable semiconductors. Our product portfolio is the strongest in the history of the Company, enabling us to improve our competitive position in all regions," said James C. Morgan, chairman and chief executive officer.

During the quarter, Applied Materials announced the largest rollout of new products in the history of the semiconductor equipment industry, introducing 22 new 300mm systems supporting over 80 process applications. The new line of 300mm systems includes factory efficiency technologies that leverage the Company's strengths in process equipment, defect detection and process control software and enhance customers' manufacturing capabilities. The Company received its first significant orders for 300mm products during the quarter.

"The industry outlook continues to be positive. There are significant capital investment requirements in 0.18 micron capacity for Internet, communications and digital devices," said Morgan. "The emerging industry transition to 300mm wafer processing, combined with continued growth of 200mm applications, provides a tremendous opportunity for Applied Materials to supply technologies that will enable our customers to deliver on the promise of the Information Age," concluded Morgan.

This press release contains certain forward-looking statements, including, but not limited to, those relating to customers' continued investments in expanded capacity and advanced technologies and the transition to 300mm products. These forward-looking 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. Such risks and uncertainties include, but are not limited to: changes in customer capacity requirements and demand for semiconductors; the ability of the Company to maintain its technology leadership and product position; the transition to 300mm systems; changes in global economic conditions; and those risks and uncertainties described in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this press release.

Applied Materials (Nasdaq:AMAT) is a leader of the Information Age and the world's largest supplier of products and services to the global semiconductor industry. Applied Materials' web site is http://www.appliedmaterials.com.

                        APPLIED MATERIALS, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (UNAUDITED)

                        Three Months Ended       Nine Months Ended
---------------------------------------------------------------------
(In thousands, except   August 1,   July 30,     August 1,   July 30,
 per share amounts)       1999        2000         1999        2000
---------------------------------------------------------------------

Net sales             $1,490,695  $2,732,028   $3,482,732  $6,644,249
Cost of
 products sold           775,025   1,340,126    1,863,973   3,297,428
                      ----------  ----------   ----------  ----------
Gross margin             715,670   1,391,902    1,618,759   3,346,821

Operating expenses:
 Research, development
  and engineering        185,796     303,946      523,991     780,509
 Marketing and
  selling                 91,561     128,426      247,597     340,718
 General and
  administrative         105,689     133,291      258,105     343,998
 Non-recurring items       2,515          --        7,515      40,000
                      ----------  ----------   ----------  ----------
Income from
 operations              330,109     826,239      581,551   1,841,596

Non-recurring income          --          --       20,000      68,158

Interest expense          11,952      12,665       35,328      38,154
Interest income           26,736      48,970       77,440     127,962
                      ----------  ----------   ----------  ----------
Income before taxes
 and equity in net
 income/(loss) of
 joint venture           344,893     862,544      643,663   1,999,562

Provision for
 income taxes            106,637     258,763      199,761     599,807
                      ----------  ----------   ----------  ----------
Income before equity
 in net income/(loss)
 of joint venture        238,256     603,781      443,902   1,399,755

Equity in net
 income/(loss)
 of joint venture          9,773          --       12,048          --
                      ----------  ----------   ----------  ----------
Income from continuing
 operations              248,029     603,781      455,950   1,399,755

Provision for
 discontinuance of
 joint venture            (9,773)         --      (12,048)         --
                      ----------  ----------   ----------  ----------
Net income            $  238,256  $  603,781   $  443,902  $1,399,755
                      ----------  ----------   ----------  ----------
Earnings per share:
 Basic - continuing
  operations          $     0.31  $     0.75   $     0.59  $     1.74
 Basic - discontinued
  operations               (0.01)         --        (0.02)         --
                      ----------  ----------   ----------  ----------
   Total basic        $     0.30  $     0.75   $     0.57  $     1.74
                      ----------  ----------   ----------  ----------
 Diluted - continuing
  operations          $     0.30  $     0.70   $     0.56  $     1.63
 Diluted -
  discontinued
  operations               (0.01)         --        (0.02)         --
                      ----------  ----------   ----------  ----------
   Total diluted      $     0.29  $     0.70   $     0.54  $     1.63
                      ----------  ----------   ----------  ----------

Weighted average number of shares:
 Basic                   781,554     809,345      775,444     804,532
 Diluted                 824,248     862,071      816,946     858,585
---------------------------------------------------------------------

Historical amounts have been restated to reflect a two-for-one stock
split in the form of a 100 percent stock dividend, effective March 15,
2000, and the acquisition of Etec, which was completed on March 29,
2000 and accounted for as a pooling-of-interests.


                        APPLIED MATERIALS, INC.
               CONSOLIDATED CONDENSED BALANCE SHEETS(a)

----------------------------------------------------------------
                                        October 31,    July 30,
(In thousands)                             1999          2000
----------------------------------------------------------------
ASSETS

Current assets:
 Cash and cash equivalents             $   868,121   $ 1,342,835
 Short-term investments                  1,951,254     2,404,493
 Accounts receivable, net                1,268,146     2,162,251
 Inventories                               727,107     1,132,625
 Deferred income taxes                     341,668       330,889
 Other current assets                      154,424       179,270
                                       -----------   -----------
Total current assets                     5,310,720     7,552,363

Property, plant
 and equipment, net                      1,278,269     1,280,137
Other assets                               425,521       386,323
                                       -----------   -----------
Total assets                           $ 7,014,510   $ 9,218,823
                                       -----------   -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Notes payable                         $     5,789   $    40,409
 Current portion of
  long-term debt                            36,484        41,512
 Accounts payable
  and accrued expenses                   1,442,718     1,899,550
 Income taxes payable                      246,506       397,153
                                       -----------   -----------
Total current liabilities                1,731,497     2,378,624

Long-term debt                             584,357       574,336
Deferred income taxes
 and other liabilities                     123,398       135,879
                                       -----------   -----------
Total liabilities                        2,439,252     3,088,839
                                       -----------   -----------

Stockholders' equity:
 Common stock                                7,932         8,111
 Additional paid-in capital              1,443,723     1,614,615
 Retained earnings                       3,122,337     4,521,384
 Accumulated other
  comprehensive income/(loss)                1,266       (14,126)
                                       -----------   -----------
Total stockholders' equity               4,575,258     6,129,984
                                       -----------   -----------

Total liabilities and
 stockholders' equity                  $ 7,014,510   $ 9,218,823
----------------------------------------------------------------

Historical amounts have been restated to reflect a two-for-one stock
split in the form of a 100 percent stock dividend, effective March 15,
2000, and the acquisition of Etec, which was completed on March 29,
2000 and accounted for as a pooling-of-interests.

(a) Amounts as of July 30, 2000 are unaudited. Amounts as of October
31, 1999 are audited.