Q2 FY2021 Earnings Call

GAAP to non-GAAP Reconciliations

May 20, 2021

APPLIED MATERIALS EXTERNAL

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

Six Months Ended

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions, except percentages and per share amounts)

Non-GAAP Adjusted Gross Profit

Reported gross profit - GAAP basis

$

Certain items associated with acquisitions1

Certain incremental expenses related to COVID-192

Other charges

Non-GAAP adjusted gross profit

$

Non-GAAP adjusted gross margin

Non-GAAP Adjusted Operating Income

Reported operating income - GAAP basis

$

Certain items associated with acquisitions1

Acquisition integration and deal costs

Certain incremental expenses related to COVID-192

Severance and related charges3

Deal termination fee

Other charges

Non-GAAP adjusted operating income

$

Non-GAAP adjusted operating margin

Non-GAAP Adjusted Net Income

Reported net income - GAAP basis

$

Certain items associated with acquisitions1

Acquisition integration and deal costs

Certain incremental expenses related to COVID-192

Severance and related charges3

Deal termination fee

Realized loss (gain) on strategic investments, net

Unrealized loss (gain) on strategic investments, net

Other charges

Income tax effect of share-based compensation4

Income tax effects related to intra-entity intangible asset transfers

Resolution of prior years' income tax filings and other tax items

Income tax effect of non-GAAP adjustments5

Non-GAAP adjusted net income

$

2,653

$

1,749

$

7

8

-

8

2

-

2,662

$

1,765

$

47.7%

44.6%

1,579

$

932

$

12

13

11

21

-

10

6

-

154

-

6

-

1,768

$

976

$

31.7%

24.7%

1,330

$

755

$

12

13

12

21

-

10

6

-

154

-

6

5

(26)

2

6

-

6

8

17

16

(10)

(3)

(4)

(10)

1,509

$

817

$

5,002

$

3,607

15

17

12

8

2

-

5,031

$

3,632

46.8%

44.7%

2,862

$

1,974

25

26

35

34

24

10

158

-

154

-

6

-

3,264

$

2,044

30.4%

25.2%

2,460

$

1,647

25

26

36

34

24

10

158

-

154

-

4

7

(32)

4

6

-

  1. (25)

37

37

(13)

(4)

  1. (15)
    2,791 $ 1,721
  1. These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
  2. Temporary incremental employee compensation during the COVID-19 pandemic.
  3. The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees.
  4. GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
  5. 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

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions, except percentages and per share amounts)

Non-GAAP Adjusted Earnings Per Diluted Share

Reported earnings per diluted share - GAAP basis

$

Certain items associated with acquisitions

Acquisition integration and deal costs

Certain incremental expenses related to COVID-19

Severance and related charges

Deal termination fee

Realized loss (gain) on strategic investments, net

Unrealized loss (gain) on strategic investments, net

Income tax effect of share-based compensation

Income tax effects related to amortization of intra-entity intangible

asset transfers

Resolution of prior year's income tax filings and other tax items

Non-GAAP adjusted earnings per diluted share

$

Weighted average number of diluted shares

  1. $
    -

(0.03)

0.01

0.02

(0.01)

1.63 $

927

  1. $
    -
    -
    -

0.02

(0.01)

0.89 $

923

2.66 $ 1.78

0.020.02

0.030.04

0.020.01

0.13-

0.17-

  • 0.01
    (0.02)-

(0.02)(0.03)

0.040.04

(0.01)

(0.01)

3.02

$

1.86

926

925

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED

SEMICONDUCTOR SYSTEMS OPERATING RESULTS

Three Months Ended

Six Months Ended

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions, except percentages)

Reported operating income (GAAP basis)

$

1,542

$

782

$

2,803

$

1,697

Certain items associated with acquisitions1

10

10

20

20

Acquisition integration and deal costs

-

-

(2)

-

Certain incremental expenses related to COVID-192

-

6

12

6

Other charges

3

-

3

-

Non-GAAP adjusted operating income

$

1,555

$

798

$

2,836

$

1,723

Non-GAAP adjusted operating margin (% of net sales)

39.1%

31.1%

37.7%

32.0%

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED

AGS OPERATING RESULTS

Three Months Ended

Six Months Ended

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions, except percentages)

Reported operating income (GAAP basis)

$

358

$

256

$

690

$

534

Certain incremental expenses related to COVID-192

-

4

8

4

Other charges

1

-

1

-

Non-GAAP adjusted operating income

$

359

$

260

$

699

$

538

Non-GAAP adjusted operating margin (% of net sales)

29.8%

25.5%

29.6%

26.7%

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED

DISPLAY AND ADJACENT MARKETS OPERATING RESULTS

Three Months Ended

Six Months Ended

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions, except percentages)

Reported operating income (GAAP basis)

$

65

$

75

$

130

$

113

Certain items associated with acquisitions1

1

3

2

6

Certain incremental expenses related to COVID-192

-

-

1

-

Severance and related charges3

-

-

8

-

Non-GAAP adjusted operating income

$

66

$

78

$

141

$

119

Non-GAAP adjusted operating margin (% of net sales)

17.6%

21.4%

17.9%

17.1%

1 - These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. 2 - Temporary incremental employee compensation during the COVID-19 pandemic.

3 - The severance and related charges related to workforce reduction actions globally across the Display and Adjacent Markets business.

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED

OPERATING EXPENSES

Three Months Ended

Six Months Ended

May 2,

April 26,

May 2,

April 26,

2021

2020

2021

2020

(In millions)

Operating expenses (GAAP basis)

$

1,074

$

817

$

2,140

$

1,633

Certain items associated with acquisitions

(5)

(5)

(10)

(9)

Acquisition integration and deal costs

(11)

(21)

(35)

(34)

Certain incremental expenses related to COVID-19

-

(2)

(12)

(2)

Severance and related charges

(6)

-

(158)

-

Deal termination fee

(154)

-

(154)

-

Other charges

(4)

-

(4)

-

Non-GAAP adjusted operating expenses

$

894

$

789

$

1,767

$

1,588

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Applied Materials Inc. published this content on 20 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2021 20:12:06 UTC.