Applied Materials Announces Results for Fourth Fiscal Quarter 2005.

SANTA CLARA, Calif. -- Applied Materials, Inc. (Nasdaq:AMAT):

--Net Sales: $1.72 billion (5% increase quarter over quarter; 22% decrease year over year)

--Net Income: $247 million (33% decrease quarter over quarter; 46% decrease year over year)

--EPS: $0.15 ($0.08 decrease quarter over quarter; $0.12 decrease year over year)

--New Orders: $1.69 billion (15% increase quarter over quarter; 35% decrease year over year)

Applied Materials, Inc., the world's largest supplier of wafer fabrication solutions to the global semiconductor industry, reported results for its fourth fiscal quarter ended October 30, 2005. Net sales were $1.72 billion, up 5 percent from $1.63 billion for the third fiscal quarter of 2005, and down 22 percent from $2.20 billion for the fourth fiscal quarter of 2004. Gross margin for the fourth fiscal quarter of 2005 was 44.2 percent, compared to 43.9 percent for the third fiscal quarter of 2005, and down from 46.6 percent for the fourth quarter of 2004. Net income for the fourth fiscal quarter of 2005 was $247 million, or $0.15 per share, down from net income of $370 million, or $0.23 per share, for the third fiscal quarter of 2005, and down from net income of $455 million, or $0.27 per share, for the fourth fiscal quarter of 2004. The results for the fourth fiscal quarter of 2005 included an increase in taxes of $32 million, which reduced earnings per share by $0.02, principally related to the distribution of foreign earnings under the American Jobs Creation Act of 2004. Applied's results for the previous quarter included a tax adjustment that increased earnings per share by $0.08.

New orders of $1.69 billion for the fourth fiscal quarter of 2005 increased 15 percent from $1.47 billion for the third fiscal quarter of 2005, and decreased 35 percent from $2.62 billion for the fourth fiscal quarter of 2004. Regional distribution of new orders for the fourth fiscal quarter of 2005 was: Taiwan 31 percent, North America 23 percent, Japan 17 percent, Europe 14 percent, Korea 8 percent, and Southeast Asia and China 7 percent. Backlog at the end of the fourth fiscal quarter of 2005 was $2.57 billion, compared to $2.61 billion at the end of the third fiscal quarter of 2005.

During the fourth fiscal quarter of 2005, the company repurchased approximately 26 million shares of common stock at an average price of $17.37 per share for an aggregate purchase price of $450 million. In addition, the company declared a quarterly cash dividend of $0.03 per share, payable on December 8, 2005 to stockholders of record on November 17, 2005.

"We closed fiscal 2005 on a positive note as customers began increasing orders and investing in new capacity and next-generation nanotechnology to prepare for further industry growth," said Mike Splinter, president and chief executive officer. "Throughout the year, Applied continued to advance our technology leadership, improve operational efficiency and execute on our growth strategy. In addition, our strong cash flow enabled us to return significant value to stockholders by the repurchase of more than 100 million shares for $1.7 billion and the payment of nearly $100 million in dividends."

The company also announced its results for the fiscal year ended October 30, 2005. Fiscal 2005 new orders were $6.39 billion, a 29 percent decrease from $8.98 billion for fiscal 2004. Net sales for fiscal 2005 were $6.99 billion, a 13 percent decrease from $8.01 billion for fiscal 2004. Net income for fiscal 2005 was $1.21 billion, or $0.73 per share, down from $1.35 billion, or $0.78 per share, for fiscal 2004.

"We are committed to providing customers with innovative technology solutions that will help them rapidly bring their most advanced products to market. By enabling more powerful, portable and affordable electronic products, Applied Materials is helping our customers around the world apply new technology to improve the way people live," concluded Splinter.

This press release contains forward-looking statements, including statements regarding the company's leadership, operational efficiency, growth strategy, cash generation and cash deployment strategies, product capabilities, and strategic position; customers' orders and investments; and industry growth. 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 semiconductor and semiconductor equipment industries, which is 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 technology, such as 300mm and sub-100 nanometer applications; 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 ability to maintain effective cost controls and to timely align the company's cost structure with business conditions; the successful integration and performance of acquired businesses; changes in management; and other risks described in Applied Materials' Securities and Exchange Commission filings, including its reports on Form 10-K, Form 10-Q and Form 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 will discuss its fourth fiscal quarter and fiscal 2005 results, along with its outlook for the first fiscal quarter of 2006, on a conference call today beginning at 1:30 p.m. Pacific Time. A webcast of the conference call will be available on Applied Materials' web site under the "Investors" section.

Applied Materials, Inc. (Nasdaq:AMAT), headquartered in Santa Clara, California, is the largest supplier of equipment and services to the global semiconductor industry. Applied Materials' web site is www.appliedmaterials.com.

APPLIED MATERIALS, INC.
            CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                         Three Months Ended   Twelve Months Ended
----------------------------------------------------------------------
(In thousands, except October 31, October 30,  October 31, October 30,
 per share amounts)       2004        2005         2004        2005
----------------------------------------------------------------------
Net sales              $2,203,348  $1,718,120   $8,013,053  $6,991,823
Cost of products sold   1,176,145     957,990    4,311,808   3,905,949
                       ----------  ----------   ----------  ----------
Gross margin            1,027,203     760,130    3,701,245   3,085,874

Operating expenses:
   Research,
    development and
    engineering           248,272     236,708      991,873     940,507
   Marketing and
    selling               108,490      89,880      394,376     358,524
   General and
    administrative        106,100      82,002      357,245     338,878
   Restructuring,
    asset impairments
    and other charges           -           -      167,459           -
   Litigation
    settlements, net       26,627           -       26,627           -
                       ----------  ----------   ----------  ----------
Income from operations    537,714     351,540    1,763,665   1,447,965

Interest expense           15,906       9,394       52,877      37,819
Interest income            36,100      48,368      118,462     171,423
                       ----------  ----------   ----------  ----------
Income before income
 taxes                    557,908     390,514    1,829,250   1,581,569

Provision for income
 taxes                    102,900     143,800      477,947     371,669
                       ----------  ----------   ----------  ----------
Net income             $  455,008  $  246,714   $1,351,303  $1,209,900
                       ----------  ----------   ----------  ----------

Earnings per share:
   Basic               $     0.27  $     0.15   $     0.80  $     0.74
   Diluted             $     0.27  $     0.15   $     0.78  $     0.73

Weighted average
 number of shares:
   Basic                1,683,671   1,617,809    1,688,121   1,645,531
   Diluted              1,703,331   1,628,655    1,721,645   1,657,493
----------------------------------------------------------------------


                        APPLIED MATERIALS, INC.
                 CONSOLIDATED CONDENSED BALANCE SHEETS

----------------------------------------------------------------------
                                              October 31,  October 30,
(In thousands)                                   2004(1)      2005
----------------------------------------------------------------------
ASSETS

Current assets:
   Cash and cash equivalents                 $ 1,493,292  $   990,342
   Short-term investments                      5,084,704    4,944,999
   Accounts receivable, net                    1,670,153    1,615,504
   Inventories                                 1,139,368    1,034,093
   Deferred income taxes                         610,095      567,263
   Other current assets                          283,907      301,230
                                             -----------  -----------
Total current assets                          10,281,519    9,453,431

Property, plant and equipment                  2,953,130    3,011,110
Less: accumulated depreciation and
 amortization                                 (1,607,602)  (1,736,086)
                                             -----------  -----------
   Net property, plant and equipment           1,345,528    1,275,024

Goodwill, net                                    257,321      338,982
Purchased technology and other intangible
 assets, net                                      50,291       81,093
Deferred income taxes and other assets           158,786      150,854
                                             -----------  -----------
Total assets                                 $12,093,445  $11,299,384
                                             -----------  -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt         $    45,864  $     7,574
   Accounts payable and accrued expenses       1,895,061    1,600,032
   Income taxes payable                          347,056      139,798
                                             -----------  -----------
Total current liabilities                      2,287,981    1,747,404

Long-term debt                                   410,436      407,380
Other liabilities                                133,001      167,814
                                             -----------  -----------
Total liabilities                              2,831,418    2,322,598
                                             -----------  -----------

Stockholders' equity:
   Common stock                                   16,803       16,067
   Additional paid-in capital                  2,070,733      723,191
   Deferred stock compensation, net                  (96)      (1,255)
   Retained earnings                           7,164,170    8,276,031
   Accumulated other comprehensive
    income/(loss)                                 10,417      (37,248)
                                             -----------  -----------
Total stockholders' equity                     9,262,027    8,976,786
                                             -----------  -----------

Total liabilities and stockholders' equity   $12,093,445  $11,299,384
----------------------------------------------------------------------

(1) Certain amounts in the October 31, 2004 consolidated condensed
balance sheet have been reclassified to conform to the 2005
presentation.