APPLIED MATERIALS INC DE

Previous wording

Fiscal 2024 and 2023 each contain 52 weeks and the first three months of fiscal 2024 and 2023 each contained 13 weeks.

Current wording

Fiscal 2024 and 2023 each contain 52 weeks and the first six months of fiscal 2024 and 2023 each contained 26 weeks.

Previous wording

Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the three months ended January 28, 2024. Foundry and logic customers’ spending decreased in the three months ended January 28, 2024 compared to the same period in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three months ended January 28, 2024 was higher as compared to the same period in the prior year due to increased investments in technology transitions.

Current wording

Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the six months ended April 28, 2024. Foundry and logic customers’ spending decreased in the three and six months ended April 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and six months ended April 28, 2024 was higher as compared to the same periods in the prior year due to increased investments in technology transitions.

Previous wording

Our Applied Global Services net revenue in the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on legacy systems. Our Display and Adjacent Markets net revenue increased in the three months ended January 28, 2024 compared to the same period in the prior year primarily due to higher customer investments in display manufacturing equipment for products in the mobile market.

Current wording

Our Applied Global Services net revenue in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on 200mm generation equipment. Our Display and Adjacent Markets net revenue increased in the three and six months ended April 28, 2024 compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets.

Previous wording

For the three months ended January 28, 2024, net revenue remained relatively flat as compared to the same period in the prior year. The decrease in net revenue from customer investment in semiconductor equipment was offset by increases in net revenue associated with long-term service agreements, customer spending on legacy systems and customer investments in display manufacturing equipment for mobile products. The Semiconductor Systems segment continued to represent the largest contributor of net revenue.

Current wording

For the three and six months ended April 28, 2024, net revenue remained relatively flat as compared to the same periods in the prior year. The decrease in net revenue from customer investment in semiconductor equipment was offset by increases in net revenue associated with long-term service agreements, customer spending on 200mm generation equipment and customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets. The Semiconductor Systems segment continued to represent the largest contributor of net revenue.

Previous wording

The changes in net revenue to customers in China, Taiwan, Japan, Southeast Asia and Europe in the three months ended January 28, 2024 compared to the same period in the prior year primarily reflected changes in semiconductor manufacturing equipment spending.

Current wording

The changes in net revenue to customers in all regions in the three and six months ended April 28, 2024 compared to the same periods in the prior year primarily reflected changes in semiconductor manufacturing equipment spending.

Previous wording

Gross margin in the three months ended January 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight and logistics costs and a decrease in inventory reserves, partially offset by unfavorable changes in product mix. Gross margin during the three months ended January 28, 2024 and January 29, 2023 included $32 million and $54 million of share-based compensation expense, respectively.

Current wording

Gross margin in the three months ended April 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight and logistics costs, favorable changes in customer and product mix and a decrease in inventory reserves, partially offset by an increase in labor costs. Gross margin in the six months ended April 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight and logistics costs and a decrease in inventory reserves, partially offset by unfavorable changes in customer and product mix and an increase in labor costs. Gross margin during the three months ended April 28, 2024 and April 30, 2023 included $33 million and $42 million of share-based compensation expense, respectively. Gross margin during the six months ended April 28, 2024 and April 30, 2023 included $65 million and $96 million of share-based compensation expense, respectively.

Previous wording

The decreases in RD&E expenses during the three months ended January 28, 2024 compared to the same period in the prior year were primarily due to lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024, partially offset by an increase in expense due to additional headcount to support our ongoing investments in product development initiatives, consistent with our growth strategy. We continued to prioritize existing RD&E investments in technical capabilities and critical research and development programs in current and new markets, with a focus on semiconductor technologies. RD&E expenses during the three months ended January 28, 2024 and January 29, 2023 included $56 million and $54 million of share-based compensation expense, respectively.

Current wording

The changes in RD&E expenses during the three and six months ended April 28, 2024 compared to the same periods in the prior year were primarily due to additional headcount to support our ongoing investments in product development initiatives, consistent with our growth strategy, offset by lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024 and lower impairment of fixed assets in fiscal 2024. We continued to prioritize existing RD&E investments in technical capabilities and critical research and development programs in current and new markets, with a focus on semiconductor technologies. RD&E expenses during the three months ended April 28, 2024 and April 30, 2023 included $54 million and $41 million of share-based compensation expense, respectively. RD&E expense during the six months ended April 28, 2024 and April 30, 2023 included $110 million and $95 million of share-based compensation expense, respectively.

Previous wording

Marketing and selling expenses for the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to additional headcount and higher travel related expenses. Marketing and selling expenses during the three months ended January 28, 2024 and January 29, 2023 included $18 million and $17 million of share-based compensation expense, respectively.

Current wording

Marketing and selling expenses for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to additional headcount. Marketing and selling expenses during the three months ended April 28, 2024 and April 30, 2023 included $18 million and $12 million of share-based compensation expense, respectively. Marketing and selling expenses during the six months ended April 28, 2024 and April 30, 2023 included $36 million and $29 million of share-based compensation expense, respectively.

Previous wording

G&A expenses in the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to higher professional fees and an increase in share-based compensation expense. G&A expenses during the three months ended January 28, 2024 and January 29, 2023 included $64 million and $23 million of share-based compensation expense, respectively.

Current wording

G&A expenses in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to the increases in labor costs and share-based compensation expense. G&A expenses during the three months ended April 28, 2024 and April 30, 2023 included $29 million and $18 million of share-based compensation expense, respectively. G&A expenses during the six months ended April 28, 2024 and April 30, 2023 included $93 million and $41 million of share-based compensation expense, respectively.

Previous wording

Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three months ended January 28, 2024 remained relatively flat compared to the same period in the prior year.

Current wording

Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three and six months ended April 28, 2024 remained relatively flat compared to the same periods in the prior year.

Previous wording

Interest and other income (expense), net in the three months ended January 28, 2024 increased compared to the same period in the prior year, primarily driven by higher net gain on equity investments and higher interest income as a result of an increase in market rates of interest, compared to the prior year.

Current wording

Interest and other income (expense), net in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year, primarily driven by higher net gain and lower impairment on equity investments and higher interest income as a result of an increase in market rates of interest, compared to the prior year.

Previous wording

Our effective tax rates for the first quarter of fiscal 2024 and 2023 were 12.3 percent and 12.4 percent, respectively. The effective tax rate for the first three months of fiscal 2024 was slightly lower than the same period in the prior fiscal year primarily due to larger excess tax benefits from share-based compensation, partially offset by lower tax credits in fiscal 2024.

Current wording

Our effective tax rates for the first six months of fiscal 2024 and 2023 were 12.9 percent and 11.9 percent, respectively. The effective tax rate for the first six months of fiscal 2024 was higher than the same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024, partially offset by larger excess tax benefits from share-based compensation in fiscal 2024.

Previous wording

Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the first three months of fiscal 2024. Foundry and logic customers’ spending decreased in the three months ended January 28, 2024 compared to the same period in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three months ended January 28, 2024 was higher as compared to the same period in the prior year primarily due to increased investments in DRAM technology transitions.

Current wording

Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the first six months of fiscal 2024. Foundry and logic customers’ spending decreased in the three and six months ended April 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and six months ended April 28, 2024 was higher as compared to the same periods in the prior year primarily due to increased investments in DRAM technology transitions.

Previous wording

Operating margin for the three months ended January 28, 2024 decreased compared to the same period in the prior year, primarily driven by lower net revenue and increased RD&E expenses, partially offset by lower material, freight and logistics costs and lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024. In the three months ended January 28, 2024, two customers each accounted for at least 10 percent of this segment’s net revenue.

Current wording

Operating margin for the three and six months ended April 28, 2024 remained relatively flat compared to the same periods in the prior year primarily driven by lower net revenue and increased RD&E expenses, offset by lower material, freight and logistics costs and lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024.

Previous wording

The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, certain remanufactured earlier generation equipment and factory automation software for semiconductor, display and solar products.

Current wording

The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, 200mm generation equipment and factory automation software for semiconductor, display and solar products.

Previous wording

Net revenue for the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on legacy systems. Operating margin for the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to the increase in net revenue. In the three months ended January 28, 2024, one customer accounted for at least 10 percent of this segment’s net revenue.

Current wording

Net revenue for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on 200mm generation equipment. Operating margin for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to the increase in net revenue.

Previous wording

Net revenue for the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to higher customer investments in display manufacturing equipment for products in the mobile market. Operating margin for the three months ended January 28, 2024 increased compared to the same period in the prior year primarily due to higher net revenue.

Current wording

Net revenue for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets. In addition, the increase in net revenue for the three months ended April 28, 2024 was partially offset by lower customer investments in display manufacturing equipment for products in the mobile market. Operating margin for the three months ended April 28, 2024 decreased compared to the same period in the prior year primarily due to unfavorable changes in product mix, partially offset by higher net revenue. Operating margin for the six months ended April 28, 2024 increased compared to the same period in the prior year primarily due to higher net revenue, partially offset by unfavorable changes in product mix.

Previous wording

Cash from operating activities for the three months ended January 28, 2024 was $2.3 billion, which reflects net income adjusted for the effect of non-cash items and changes in working capital components. Significant non-cash items included depreciation, amortization, gain on investments, and share-based compensation. Cash provided by operating activities remained relatively flat in the first three months of fiscal 2024 compared to the same period in the prior year.

Current wording

Cash from operating activities for the six months ended April 28, 2024 was $3.7 billion, which reflects net income adjusted for the effect of non-cash items and changes in working capital components. Significant non-cash items included depreciation, amortization, gain on investments, and share-based compensation. Cash provided by operating activities decreased in the first six months of fiscal 2024 compared to the same period in the prior year primarily due to higher payments for income taxes and lower new billings for products and services for which there were unsatisfied performance obligations, partially offset by lower payments to vendors.

Previous wording

We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. We sold $169 million and $279 million of account receivables during the three months ended January 28, 2024 and January 29, 2023, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the three months ended January 28, 2024 and January 29, 2023, respectively.

Current wording

We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. We sold $264 million and $529 million of account receivables during the six months ended April 28, 2024 and April 30, 2023, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the six months ended April 28, 2024 and April 30, 2023, respectively.

Previous wording

Our working capital was $12.1 billion as of January 28, 2024 and $11.8 billion as of October 29, 2023.

Current wording

Our working capital was $12.4 billion as of April 28, 2024 and $11.8 billion as of October 29, 2023.

Previous wording

Days sales outstanding of our accounts receivable for the three months ended January 28, 2024 and January 29, 2023 were 64 days and 73 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily due to favorable revenue linearity and lower accounts receivable balances as a result of the timing of customer payments.

Current wording

Days sales outstanding of our accounts receivable for the three months ended April 28, 2024 and April 30, 2023 were 65 days and 76 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily due to favorable revenue linearity and lower accounts receivable balance as a result of the timing of customer payments.

Previous wording

We used $447 million of cash in investing activities during the three months ended January 28, 2024. Capital expenditures totaled $229 million and purchases of investments, net of proceeds from sales and maturities of investments were $218 million, during the three months ended January 28, 2024.

Current wording

We used $596 million of cash in investing activities during the six months ended April 28, 2024. Capital expenditures totaled $486 million and purchases of investments, net of proceeds from sales and maturities of investments were $110 million, during the six months ended April 28, 2024.

Previous wording

We used $1.2 billion of cash in financing activities during the three months ended January 28, 2024, consisting primarily of cash used for repurchases of common stock of $700 million, dividends to stockholders of $266 million, and tax withholding payments for vested equity awards of $192 million.

Current wording

We used $2.2 billion of cash in financing activities during the six months ended April 28, 2024, consisting primarily of cash used for repurchases of common stock of $1.5 billion, dividends to stockholders of $532 million, tax withholding payments for vested equity awards of $233 million and net payments of principals on financing leases of $13 million, partially offset by proceeds received from common stock issuances of $119 million under our employee stock purchase plan.

Previous wording

In December 2023, our Board of Directors declared a quarterly cash dividend payable in March 2024, in the amount of $0.32 per share. We currently anticipate that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of our stockholders.

Current wording

In March 2024 and December 2023, our Board of Directors declared quarterly cash dividends in the amount of $0.40 and $0.32 per share, respectively. The dividend declared in March 2024 is payable in June 2024. We currently anticipate that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of our stockholders.

Previous wording

In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022. As of January 28, 2024, approximately $12.0 billion remained available for future stock repurchases under the repurchase program.

Current wording

In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022. As of April 28, 2024, approximately $11.2 billion remained available for future stock repurchases under the repurchase program.

Previous wording

Remaining credit facilities in the amount of approximately $54 million are with Japanese banks. Our ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen.

Current wording

Remaining credit facilities in the amount of approximately $52 million are with Japanese banks. Our ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen.

Previous wording

In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of January 28, 2024, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $349 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.

Current wording

In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of April 28, 2024, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $387 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.

Previous wording

We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of January 28, 2024, we have provided parent guarantees to banks for approximately $294 million to cover these arrangements.

Current wording

We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of April 28, 2024, we have provided parent guarantees to banks for approximately $292 million to cover these arrangements.

Previous wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The transition tax expense is payable in installments over eight years, with eight percent due in each of the first five years starting with fiscal 2018. As of January 28, 2024, we had $612 million of total payments remaining, payable in installments in the next three years.

Current wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The transition tax expense is payable in installments over eight years, with eight percent due in each of the first five years starting with fiscal 2018. As of April 28, 2024, we had $459 million of total payments remaining, payable in installments in the next two years.