APPLIED MATERIALS INC /DE

Previous wording

The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips. Spending by semiconductor customers, which include companies that operate in the foundry, logic, memory, and other semiconductor chip markets, is driven by demand for products such as smartphones, mobile devices, personal computers (PC), servers for artificial intelligence (AI) and data centers, automobiles, clean energy, storage, and other products, and the nature and timing of technological advances in fabrication processes. The growth of data and emerging end-market drivers such as AI, the internet of things, robotics and smart vehicles are also creating the next wave of growth for the industry. As a result, products within the Semiconductor Systems segment are subject to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chip architectures, new materials and an increasing number of applications. Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites. Development efforts are focused on solving customers’ key technical challenges in patterning, transistor, interconnect, process control, and packaging performance.

Current wording

The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips. Spending by semiconductor customers, which include companies that operate in the foundry, logic, memory, and other semiconductor chip markets, is driven by demand for products such as smartphones, mobile devices, personal computers (PC), servers for AI and data centers, automobiles, clean energy, storage, and other products, and the nature and timing of technological advances in fabrication processes. The growth of data and emerging end-market drivers such as AI, the internet of things, robotics and smart vehicles are also creating the next wave of growth for the industry. As a result, products within the Semiconductor Systems segment are subject to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chip architectures, new materials and an increasing number of applications. Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites. Development efforts are focused on solving customers’ key technical challenges in patterning, transistor, interconnect, process control, and packaging performance.

Previous wording

Fiscal 2026 and 2025 each contain 52 weeks and the first six months of fiscal 2026 and 2025 each contained 26 weeks.

Current wording

Fiscal 2026 and 2025 each contain 52 weeks and the first nine months of fiscal 2026 and 2025 each contained 39 weeks.

Previous wording

Revenue by segment for the periods presented were as follows:

Current wording

Revenue by segment for the periods presented was as follows:

Previous wording

Revenue for Semiconductor Systems by market for the periods presented were as follows:

Current wording

Revenue for Semiconductor Systems by market for the periods presented was as follows:

Previous wording

Revenue in the three and six months ended April 26, 2026 increased compared to the same periods in the prior year. Gross margin in the three and six months ended April 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue and increases in average selling prices.

Current wording

Revenue in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year. Gross margin in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue, increases in average selling prices, and lower material and manufacturing costs. The increase in gross margin in the three months ended July 26, 2026 was also driven by favorable changes in product mix.

Previous wording

The Semiconductor Systems segment continued to represent the largest contributor of revenue. Semiconductor Systems revenue increased for the three and six months ended April 26, 2026 compared to the same periods in the prior year. Foundry and logic customers’ spending increased for the three months ended April 26, 2026 compared to the same period in the prior year primarily driven by increased demand for leading-edge manufacturing technologies. Foundry and logic customers’ spending decreased for the six months ended April 26, 2026 compared to the same period in the prior year primarily driven by reduced demand for trailing edge logic systems. Memory customers’ spending in the three and six months ended April 26, 2026 was higher compared to the same periods in the prior year primarily due to increased customer investments in DRAM technology transitions.

Current wording

The Semiconductor Systems segment remained our largest revenue contributor for which revenue increased for the three and nine months ended July 26, 2026, compared to the same periods in the prior year. The increase in foundry and logic customers’ spending for the three and nine months ended July 26, 2026 reflected stronger demand for leading-edge manufacturing technologies. For the nine months ended July 26, 2026, this increase was partially offset by lower customer demand for trailing-edge logic systems. Memory customers’ spending in the three and nine months ended July 26, 2026 was higher compared to the same periods in the prior year due to increased customer investments in DRAM technology transitions.

Previous wording

Our AGS revenue increased in the three and six months ended April 26, 2026 compared to the same periods in the prior year primarily due to higher long-term service agreement revenue and customer spending on spares.

Current wording

Our AGS revenue increased in the three and nine months ended July 26, 2026 compared to the same periods in the prior year primarily due to higher long-term service agreement revenue and customer spending on spares.

Previous wording

RD&E expenses for the three and six months ended April 26, 2026 increased compared to the same periods in the prior year, primarily due to additional headcount to support our ongoing investments in product development initiatives and higher depreciation expenses, consistent with our growth strategy. We continued to prioritize RD&E investments in technical capabilities and critical RD&E programs in current and new markets.

Current wording

RD&E expenses for the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year, primarily due to additional headcount to support our ongoing investments in product development initiatives and higher depreciation expenses, consistent with our growth strategy. We continued to prioritize RD&E investments in technical capabilities and critical RD&E programs in current and new markets.

Previous wording

Marketing and selling expenses for the three and six months ended April 26, 2026 increased compared to the same periods in the prior year primarily due to higher employee related expenses and higher corporate support costs.

Current wording

Marketing and selling expenses for the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily due to higher employee related expenses and higher corporate support costs.

Previous wording

G&A expenses for the three and six months ended April 26, 2026 decreased compared to the same periods in the prior year primarily due to lower corporate support costs.

Current wording

G&A expenses for the three and nine months ended July 26, 2026 decreased compared to the same periods in the prior year primarily due to lower corporate support costs.

Previous wording

In the first six months of fiscal 2026, we recorded a charge of $253 million related to a settlement agreement which resolved a previously disclosed export controls compliance matter. See the information under the heading “Legal Matters” in Note 13 of the Notes to Consolidated Condensed Financial Statements for information regarding this matter and the settlement agreement.

Current wording

In the first nine months of fiscal 2026, we recorded a charge of $253 million related to a settlement agreement which resolved a previously disclosed export controls compliance matter. See the information under the heading “Legal Matters” in Note 13 of the Notes to Consolidated Condensed Financial Statements for information regarding this matter and the settlement agreement.

Previous wording

In the first six months of fiscal 2026, we recognized $12 million in restructuring charges, consisting primarily of severance and other employment termination benefits incurred in connection with the approved Fiscal 2025 Restructuring Plan.

Current wording

In the first nine months of fiscal 2026, we recognized $12 million in restructuring charges, consisting primarily of severance and other employment termination benefits incurred in connection with the approved Fiscal 2025 Restructuring Plan.

Previous wording

Interest expense incurred was primarily associated with our senior unsecured notes. Interest expense in the six months ended April 26, 2026 increased compared to the same periods in the prior year, primarily due to our issuance of senior unsecured notes in September 2025.

Current wording

Interest expense incurred was primarily associated with our senior unsecured notes. Interest expense in the nine months ended July 26, 2026 increased compared to the same period in the prior year, primarily due to our issuance of senior unsecured notes in September 2025.

Previous wording

Interest and other income (expense), net in the three and six months ended April 26, 2026 increased compared to the same periods in the prior year, primarily driven by higher net unrealized gain on equity investments.

Current wording

Interest and other income (expense), net in the three months ended July 26, 2026 decreased compared to the same period in the prior year, primarily driven by higher unrealized loss on equity investments. Interest and other income (expense), net in the nine months ended July 26, 2026 increased compared to the same period in the prior year, primarily driven by higher net unrealized gain on equity investments.

Previous wording

Our effective tax rates for the first six months of fiscal 2026 and 2025 were 13.0 percent and 25.2 percent, respectively. The effective tax rate for the first six months of fiscal 2026 was lower than the same period in the prior fiscal year, primarily due to a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore, partially offset by a reduction of unrecognized tax benefits related to foreign operations as a result of the lapse of statutes of limitations in fiscal 2025.

Current wording

Our effective tax rates for the first nine months of fiscal 2026 and 2025 were 12.9 percent and 27.2 percent, respectively. The effective tax rate for the first nine months of fiscal 2026 was lower than the same period in the prior fiscal year, primarily due to a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore, and the recognition of a valuation allowance against deferred tax assets related to CAMT credits in fiscal 2025.

Previous wording

Semiconductor Systems’ operating margin for the three months ended April 26, 2026 increased compared to the same period in the prior year primarily driven by higher revenue and increases in average selling prices, partially offset by increased RD&E expenses. Semiconductor Systems’ operating margin for the six months ended April 26, 2026 decreased compared to the same period in the prior year primarily driven by a legal settlement charge related to a previously disclosed export controls compliance matter, increased RD&E expenses, partially offset by higher revenue and increases in average selling prices.

Current wording

Semiconductor Systems’ operating margin for the three months ended July 26, 2026 increased compared to the same period in the prior year primarily driven by higher revenue, favorable changes in product mix, increases in average selling prices and lower material and manufacturing costs, partially offset by increased RD&E expenses. Semiconductor Systems’ operating margin for the nine months ended July 26, 2026 increased compared to the same period in the prior year primarily driven by higher revenue, increases in average selling prices and lower material and manufacturing costs, partially offset by increased RD&E expenses and a legal settlement charge related to a previously disclosed export controls compliance matter.

Previous wording

AGS’ operating margin for the three and six months ended April 26, 2026 increased compared to the same periods in the prior year primarily due to higher revenue from services and spares and favorable changes in customer and product mix.

Current wording

AGS’ operating margin for the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily due to higher revenue from services and spares and favorable changes in customer and product mix.

Previous wording

Accounting for Government Grants Received by Business Entities. In December 2025, the Financial Accounting Standards Board (FASB) issued an accounting standard update establishing authoritative guidance on the accounting for government grants received by business entities, including grants related to an asset and grants related to income. This authoritative guidance will be effective for us beginning with our interim and annual reporting for fiscal year 2030, with early adoption permitted. The standard allows for adoption on a modified prospective, modified retrospective, or full retrospective basis. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures.

Current wording

Accounting for Government Grants Received by Business Entities. In December 2025, the FASB issued an accounting standard update establishing authoritative guidance on the accounting for government grants received by business entities, including grants related to an asset and grants related to income. This authoritative guidance will be effective for us beginning with our interim and annual reporting for fiscal year 2030, with early adoption permitted. The standard allows for adoption on a modified prospective, modified retrospective, or full retrospective basis. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures.

Previous wording

Improvements to Income Tax Disclosures. In December 2023, the FASB issued an accounting standard update to improve income tax disclosures (Topic 740). The standard prescribes specific categories for the components of the effective tax rate reconciliation, requires disclosure of income taxes paid by jurisdiction, and modifies other income tax-related disclosures. This authoritative guidance will be effective for us beginning with our annual reporting for fiscal year 2026. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures.

Current wording

Improvements to Income Tax Disclosures. In December 2023, the FASB issued an accounting standard update to improve income tax disclosures (Topic 740). The standard prescribes specific categories for the components of the effective tax rate reconciliation, requires disclosure of income taxes paid by jurisdiction, and modifies other income tax-related disclosures. This authoritative guidance will be effective for us beginning with our annual reporting for fiscal year 2026 and the adoption is expected to expand the disclosures in our notes to the consolidated financial statements.

Previous wording

Cash from operating activities for the six months ended April 26, 2026 was $2.5 billion, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components. Significant non-cash charges included depreciation, amortization, gain or loss on investments or asset sale, share-based compensation, deferred income taxes and restructuring charges. Cash provided by operating activities remained relatively flat in the first six months of fiscal 2026 compared to the same period in the prior fiscal year primarily due to lower payments for income taxes offset by higher vendor payments.

Current wording

Cash from operating activities for the nine months ended July 26, 2026 was $5.6 billion, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components. Significant non-cash charges included depreciation, amortization, gain or loss on investments or asset sales, share-based compensation, deferred income taxes and restructuring charges. Cash provided by operating activities increased in the first nine months of fiscal 2026 compared to the same period in the prior fiscal year primarily due to higher net income and lower payments for income taxes, partially offset by a higher accounts receivable balance and higher vendor payments.

Previous wording

Our working capital was $13.6 billion as of April 26, 2026 and $12.9 billion as of October 26, 2025.

Current wording

Our working capital was $14.7 billion as of July 26, 2026 and $12.9 billion as of October 26, 2025.

Previous wording

Days sales outstanding of our accounts receivable at April 26, 2026 and April 27, 2025 were 73 days and 79 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily driven by favorable collection performance.

Current wording

Days sales outstanding of our accounts receivable at July 26, 2026 and July 27, 2025 were 77 days and 72 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The increase in days sales outstanding was primarily driven by higher down payment invoices for which revenue has not yet been recognized as of July 26, 2026 and lower accounts receivable factoring compared to the same period in the prior year.

Previous wording

We used $1.7 billion of cash in investing activities during the six months ended April 26, 2026. Capital expenditures totaled $1.3 billion and purchases of investments, net of proceeds from sales and maturities of investments, were $289 million and net cash paid for acquisition was $175 million, partially offset by net proceeds from asset sale of $6 million, during the six months ended April 26, 2026.

Current wording

We used $3.2 billion of cash in investing activities during the nine months ended July 26, 2026. Capital expenditures totaled $2.0 billion and purchases of investments, net of proceeds from sales and maturities of investments, were $908 million and net cash paid for acquisitions was $262 million, partially offset by net proceeds from asset sale of $6 million, during the nine months ended July 26, 2026.

Previous wording

We used $1.7 billion of cash in financing activities during the six months ended April 26, 2026, consisting primarily of cash used for repurchases of common stock of $737 million, cash dividends paid to stockholders totaling $730 million, tax withholding payments for vested equity awards of $309 million and net payments on commercial paper notes of $100 million, partially offset by proceeds received from common stock issuances of $131 million under our employees’ stock purchase plan.

Current wording

We used $2.6 billion of cash in financing activities during the nine months ended July 26, 2026, consisting primarily of cash used for repurchases of common stock of $1.2 billion, cash dividends paid to stockholders totaling $1.2 billion, tax withholding payments for vested equity awards of $437 million and net payments on commercial paper notes of $1 million, partially offset by proceeds received from common stock issuances of $131 million under our employees’ stock purchase plan.

Previous wording

In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023. As of April 26, 2026, approximately $13.2 billion remained available for future stock repurchases under the repurchase program.

Current wording

In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023. As of July 26, 2026, approximately $12.8 billion remained available for future stock repurchases under the repurchase program.

Previous wording

We have credit facilities for unsecured borrowings in various currencies of up to an aggregate amount of $4.1 billion. These credit facilities consist of a $2.0 billion five-year committed revolving credit agreement with a group of banks (Five-Year Credit Agreement), a $2.0 billion 364-day committed revolving credit agreement with a group of banks (364-Day Credit Agreement), and revolving credit facilities with Japanese banks pursuant to which we may borrow up to approximately $50 million in aggregate at any time. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permitted under the terms of the agreement. The 364-Day Credit Agreement is scheduled to expire in September 2026, provided, however, if any loans are outstanding on the maturity date, we may convert all or part of such loans to term loans that will mature in September 2027, subject to payment of a fee by us and other customary conditions. The Five-Year Credit Agreement and the 364-Day Credit Agreement each include financial and other covenants with which we were in compliance as of April 26, 2026. No amounts were outstanding under any of these credit facilities as of April 26, 2026. See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Condensed Financial Statements for further discussion related to our Revolving Credit Agreement and other credit facilities.

Current wording

We have credit facilities for unsecured borrowings in various currencies of up to an aggregate amount of $4.0 billion. These credit facilities consist of a $2.0 billion five-year committed revolving credit agreement with a group of banks (Five-Year Credit Agreement), a $2.0 billion 364-day committed revolving credit agreement with a group of banks (364-Day Credit Agreement), and revolving credit facilities with Japanese banks pursuant to which we may borrow up to approximately $49 million in aggregate at any time. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permitted under the terms of the agreement. The 364-Day Credit Agreement is scheduled to expire in September 2026, provided, however, if any loans are outstanding on the maturity date, we may convert all or part of such loans to term loans that will mature in September 2027, subject to payment of a fee by us and other customary conditions. The Five-Year Credit Agreement and the 364-Day Credit Agreement each include financial and other covenants with which we were in compliance as of July 26, 2026. No amounts were outstanding under any of these credit facilities as of July 26, 2026. See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Condensed Financial Statements for further discussion related to our Revolving Credit Agreement and other credit facilities.

Previous wording

We have a short-term commercial paper program under which we may issue unsecured commercial paper notes up to a total of $4.0 billion. The proceeds from the issuances of commercial paper are used for general corporate purposes. As of April 26, 2026, we had no commercial paper notes outstanding.

Current wording

We have a short-term commercial paper program under which we may issue unsecured commercial paper notes up to a total of $4.0 billion. The proceeds from the issuances of commercial paper are used for general corporate purposes. As of July 26, 2026, we had commercial paper notes outstanding with an aggregate principal amount of $100 million.

Previous wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act required a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries to be paid in installments beginning in fiscal 2018. The transition tax expense has been fully paid as of April 26, 2026.

Current wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act required a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries to be paid in installments beginning in fiscal 2018. The transition tax expense has been fully paid in fiscal 2026.

Previous wording

On August 9, 2022, the U.S. government enacted the U.S. CHIPS and Science Act (CHIPS Act). The CHIPS Act creates a 25% investment tax credit for certain investments in domestic semiconductor manufacturing. The credit is provided for qualifying property, which is placed in service after December 31, 2022, for which construction begins before January 1, 2027, and is treated as a government grant recognized against property, plant and equipment and a reduction of income taxes payable or an increase to taxes receivable for any credit expected to be refunded. We recognize this investment tax credit when there is reasonable assurance that we will qualify for the credit and the benefit will be received. As of April 26, 2026, we have recorded $1.1 billion of investment tax credits, of which $63 million was recorded in other current assets and will offset fiscal 2026 income tax liabilities, and $1.0 billion was recorded in deferred income taxes and other assets and is expected to be refunded.

Current wording

On August 9, 2022, the U.S. government enacted the U.S. CHIPS and Science Act (CHIPS Act). The CHIPS Act creates a 25% investment tax credit for certain investments in domestic semiconductor manufacturing. The credit is provided for qualifying property, which is placed in service after December 31, 2022, for which construction begins before January 1, 2027, and is treated as a government grant recognized against property, plant and equipment and a reduction of income taxes payable or an increase to taxes receivable for any credit expected to be refunded. We recognize this investment tax credit when there is reasonable assurance that we will qualify for the credit and the benefit will be received. As of July 26, 2026, we have recorded $1.2 billion of investment tax credits, of which $41 million was recorded in other current assets and will offset fiscal 2026 income tax liabilities, and $1.2 billion was recorded in deferred income taxes and other assets and is expected to be refunded.