8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 13, 2003

Applied Materials, Inc.
(Exact name of registrant as specified in its charter)

Commission file number 0-6920

 

Delaware	94-1655526
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

3050 Bowers Avenue
Santa Clara, CA    95054-3299
(Address of principal executive offices including zip code)

(408) 727-5555
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.

99.1    Press Release issued by Applied Materials, Inc. dated May 13, 2003.

Item 9. Regulation FD Disclosure. (Information furnished pursuant to Item 12. Results of Operations of Financial Condition)

On May 13, 2003, Applied Materials, Inc. ("Applied Materials") announced its financial results for the second fiscal quarter ended April 27, 2003. A copy of Applied Materials' press release is attached hereto as Exhibit 99.1.

The information contained herein and in the accompanying exhibit is being furnished pursuant to "Item 12. Results of Operations and Financial Condition" in accordance with interim guidance issued by the Securities and Exchange Commission in Release No.33-8216. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Applied Materials, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Use of Non-GAAP Financial Information

To supplement the consolidated financial statements prepared under United States Generally Accepted Accounting Priniciples ("GAAP"), Applied Materials uses a pro forma measure of net income that is GAAP net income, adjusted to exclude costs of the 2003 Realignment Plan (the "Plan"). Due to the amount of costs incurred with the Plan, Applied Materials believes that the use of pro forma measure facilitates meaningful comparison with prior periods. Applied Materials believes that pro forma net income reports baseline performance before costs of the Plan. In addition, pro forma net income is the primary indicator management uses to plan and forecast future periods. These measures are not in accordance with, or are an alternative for GAAP, and may be materially different from pro forma methods of accounting and reporting used by other companies. Pro forma net income is computed by adjusting GAAP net income with the impact of restructuring and realignment activities. The presentation of this additional information should not be considered as a substitute for net income prepared in accordance with GAAP. Reconciliations of reported results under GAAP to the pro forma amounts have been included as a supplement to the press release.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned therunto duly authorized.

Applied Materials, Inc.

By:  /s/ Joseph J. Sweeney

Joseph J. Sweeney

Group Vice President
Legal Affairs and Intellectual Property
and Corporate Secretary

Dated: May 13, 2003

EXHIBIT INDEX

Exhibit Number	Description
Exhibit 99.1*	Press Release issued by Applied Materials, Inc. dated May 13, 2003.

*    Also provided in PDF format as a courtesy.

EX-99.1

Exhibit 99.1

Release: Immediate

Contact: Carolyn Schwartz (investment community)
(408) 748-5227 Jeffrey Lettes (editorial/media)
(408) 563-5161

APPLIED MATERIALS ANNOUNCES RESULTS
FOR SECOND FISCAL QUARTER 2003

New Orders of $971 Million; Net Sales of $1.11 Billion

SANTA CLARA, Calif., May 13, 2003 -- Applied Materials, Inc., the world's largest supplier of wafer fabrication solutions to the semiconductor industry, reported results for its second fiscal quarter ended April 27, 2003. Net sales were $1.11 billion, up five percent from $1.05 billion from the first fiscal quarter of 2003, and down four percent from $1.16 billion for the second fiscal quarter of 2002. The net loss for the second fiscal quarter of 2003 was $62 million, or $0.04 per share, compared to a loss of $66 million, or $0.04 per share, for the first fiscal quarter of 2003, and down from net income of $52 million, or $0.03 per share reported for the second fiscal quarter of 2002. The initiation of the 2003 Realignment Plan (the "Plan") resulted in the reported net loss for the second fiscal quarter of 2003.

Gross margin for the second fiscal quarter of 2003 was 33.7 percent, down from 37.0 percent for the first fiscal quarter of 2003 and 40.0 percent for the second fiscal quarter of 2002.

On March 17, 2003, Applied Materials announced the Plan to realign the company's infrastructure with current business conditions. The Plan consists of two major elements: first, restructuring actions (including consolidation of facilities and a reduction in work force); and second, refocused product development and cost reduction programs. Both parts of the Plan will result in charges to income across multiple categories, as incurred. During the second fiscal quarter of 2003, the company began implementing the Plan, resulting in charges of $151.7 million. If the charges under the Plan had been excluded from the results reported above, the company would have reported gross margin of 38.1 percent and $44.8 million of net income or $0.03 per share on an ongoing basis.

New orders of $971 million for the second fiscal quarter of 2003 decreased four percent from $1.02 billion from the first fiscal quarter of 2003, and decreased 42 percent from $1.69 billion for the second fiscal quarter of 2002. Regional distribution of new orders for the second fiscal quarter of 2003 was: Japan 28 percent, Europe 25 percent, North America 23 percent, Korea 12 percent, Taiwan seven percent, and Southeast Asia and China five percent. Backlog at the end of the second fiscal quarter of 2003 decreased to $2.76 billion from $3.05 billion at the end of the first fiscal quarter of 2003.

"We achieved our financial objectives for the second fiscal quarter despite challenging market conditions," said James C. Morgan, chairman of Applied Materials. "We believe that the Plan, which began during the quarter, will improve the company's cost structure and enable greater strategic focus on partnering with our customers to address their technology challenges as they move to 300mm wafers, smaller chip design geometries, and new materials.

"Semiconductor manufacturers remain cautious but continue to invest in advanced technologies, as they balance their need to develop the most advanced process capabilities with the uncertainties in the global economy and the impact of near-term weakness in chip demand. We believe that Applied Materials' strategic investment in product and service solutions, as well as our process integration expertise, strongly position the company for growth as the economy and capital spending levels improve.

"With the addition of Mike Splinter, as president and CEO, I am confident that our seasoned management team, together with our technological capabilities, global infrastructure and financial strength, uniquely position Applied Materials to rapidly respond to the opportunities ahead."

Reconciliations of reported results of operations under U.S. Generally Accepted Accounting Principles (GAAP) to the pro forma amounts have been included as a supplement to this press release. Due to the amount of costs incurred with realignment activities, Applied Materials believes that reconciliation to ongoing operations facilitates meaningful comparison with prior periods. To supplement the consolidated financial statements prepared under GAAP, the company uses a pro forma measure of net income that is GAAP net income, adjusted to exclude costs of the Plan. The company believes that pro forma net income reports baseline performance before costs of the Plan. In addition, pro forma net income is the primary indicator management uses to plan and forecast future periods. These measures are not in accordance with, or are an alternative for GAAP, and may be materially different from pro forma methods of accounting and reporting used by other companies. Pro forma net income is computed by adjusting GAAP net income with the impact of restructuring and realignment activities. The presentation of this additional information should not be considered as a substitute for net income prepared in accordance with GAAP.

This press release contains certain forward-looking statements, including, but not limited to, those relating to the impact of the Plan, the company's strategic position and the semiconductor equipment and semiconductor industries' outlook. These forward-looking statements are based on management's estimates, projections and assumptions as of the date hereof. Forward-looking statements may contain words such as "expects," "anticipates," "believes," "may," "should," "will," "estimates," "forecasts," or similar expressions, and include the assumptions that underlie such statements. 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: the company's ability to implement the Plan according to the timetable and to the extent anticipated; the impact of the Plan on the company's net sales and profitability; the company's ability to maintain effective cost controls and to timely align its cost structure with market conditions; the length and severity of the economic and industry downturn; changes in management; geopolitical uncertainties; changes in opportunities for growth; changes in demand for electronic products and semiconductors; customer capacity requirements, including capacity utilizing the latest technology; changes in the timing and amount of customers' capital spending for new technology; the company's ability to develop, deliver and support a broad range of products and services on a timely basis; the company's successful and timely development of new markets, products, processes and services and other risks described in Applied Materials' Forms 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. The company assumes no obligation to update the information in this press release.

Applied Materials will be discussing its second fiscal quarter results, along with its outlook for the third fiscal quarter of 2003, 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 (Nasdaq: AMAT), the largest supplier of products and services to the global semiconductor industry, is one of the world's leading information infrastructure providers. Applied Materials enables Information for Everyone™ by helping semiconductor manufacturers produce more powerful, portable and affordable chips.

Applied Materials' web site is http://www.appliedmaterials.com.

###

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

                                                 Three Months Ended    Six Months Ended
                                             ----------------------  ----------------------
                                             April 28,   April 27,   April 28,   April 27,
                                                2002        2003        2002        2003
                                             ----------  ----------  ----------  ----------
(In thousands, except per share amounts)                                                   
Net sales                                   $1,156,472  $1,107,177  $2,156,932  $2,161,386
Cost of products sold                          693,732     734,403   1,308,740   1,398,230
                                             ----------  ----------  ----------  ----------
Gross margin                                   462,740     372,774     848,192     763,156

Operating expenses:
  Research, development and engineering        256,879     232,438     503,678     475,643
  Marketing and selling                         90,084      83,568     173,888     175,785
  General and administrative                    76,415      78,198     146,458     150,999
  Restructuring, asset impairments and
    other charges*                                  --      92,731      85,479     192,069
                                             ----------  ----------  ----------  ----------
Income/(loss) from operations                   39,362    (114,161)    (61,311)   (231,340)

Interest expense                                11,097      12,217      23,088      23,559
Interest income                                 45,537      38,256      93,669      73,628
                                             ----------  ----------  ----------  ----------
Income/(loss) before income taxes               73,802     (88,122)      9,270    (181,271)
Provision/(benefit) for income taxes            21,772     (25,996)      2,735     (53,475)
                                             ----------  ----------  ----------  ----------
Net income/(loss)                           $   52,030  $  (62,126) $    6,535  $ (127,796)
                                             ==========  ==========  ==========  ==========
Earnings/(loss) per share:
  Basic                                     $     0.03  $    (0.04) $       --  $    (0.08)
  Diluted                                   $     0.03  $    (0.04) $       --  $    (0.08)


Weighted average number of shares:
  Basic                                      1,643,317   1,655,927   1,639,871   1,652,981
  Diluted                                    1,719,777   1,655,927   1,708,669   1,652,981

* The Company's reported results of operations for the second fiscal quarter of 2003 included a pre-tax restructuring charge for employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan previously announced on March 17, 2003.

APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS*

                                               October 27,    April 27,
                                                   2002          2003
                                               ------------  ------------
(In thousands)                                                           
ASSETS

Current assets:
Cash and cash equivalents                     $  1,284,791  $  1,427,621
Short-term investments                           3,644,735     3,792,123
Accounts receivable, net                         1,046,016       742,063
Inventories                                      1,273,816     1,114,726
Deferred income taxes                              565,936       578,153
Other current assets                               257,499       204,402
                                               ------------  ------------
Total current assets                             8,072,793     7,859,088

Property, plant and equipment, net               1,764,937     1,661,988
Other assets                                       387,035       402,819
                                               ------------  ------------
Total assets                                  $ 10,224,765  $  9,923,895
                                               ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable                                 $     40,323  $         --
Current portion of long-term debt                    9,453         9,821
Accounts payable and accrued expenses            1,348,156     1,256,126
Income taxes payable                               103,524        10,967
                                               ------------  ------------
Total current liabilities                        1,501,456     1,276,914

Long-term debt                                     573,853       570,153
Deferred income taxes and other liabilities        129,807       138,906
                                               ------------  ------------
Total liabilities                                2,205,116     1,985,973

Stockholders' equity:
Common stock                                        16,480        16,574
Additional paid-in capital                       2,022,546     2,041,467
Retained earnings                                5,962,014     5,834,218
Accumulated other comprehensive income              18,609        45,663
                                               ------------  ------------
Total stockholders' equity                       8,019,649     7,937,922
                                               ------------  ------------
Total liabilities and stockholders' equity    $ 10,224,765  $  9,923,895
                                               ============  ============

* Amounts as of April 27, 2003 are unaudited. Amounts as of October 27, 2002 are from the October 27, 2002 audited financial statements.

APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)

                                                                             Three Months Ended
                                               --------------------------------------------------------------------------
                                                          April 28, 2002                        April 27, 2003
                                               ------------------------------------  ------------------------------------
                                                            Special       Ongoing                 Special       Ongoing
                                               Reported(1)  Items(2)      Results    Reported(1)  Items(3)      Results
                                               ----------  ----------    ----------  ----------  ----------    ----------
(In thousands, except per share amounts)                                                                                 
Net sales                                     $1,156,472  $       --    $1,156,472  $1,107,177  $       --    $1,107,177
Cost of products sold                            693,732          --       693,732     734,403     (49,000)(a)   685,403
                                               ----------  ----------    ----------  ----------  ----------    ----------
Gross margin                                     462,740          --       462,740     372,774      49,000       421,774

Operating expenses:
  Research, development and engineering          256,879          --       256,879     232,438     (10,000)(b)   222,438
  Marketing and selling                           90,084          --        90,084      83,568          --        83,568
  General and administrative                      76,415          --        76,415      78,198          --        78,198
  Restructuring, asset impairments and
    other charges                                     --          --            --      92,731     (92,731)(c)        --
                                               ----------  ----------    ----------  ----------  ----------    ----------
Income/(loss) from operations                     39,362          --        39,362    (114,161)    151,731        37,570

Interest expense                                  11,097          --        11,097      12,217          --        12,217
Interest income                                   45,537          --        45,537      38,256          --        38,256
                                               ----------  ----------    ----------  ----------  ----------    ----------
Income/(loss) before income taxes                 73,802          --        73,802     (88,122)    151,731        63,609
Provision/(benefit) for income taxes              21,772          --        21,772     (25,996)     44,761 (d)    18,765
                                               ----------  ----------    ----------  ----------  ----------    ----------
Net income/(loss)                             $   52,030  $       --    $   52,030  $  (62,126) $  106,970    $   44,844
                                               ==========  ==========    ==========  ==========  ==========    ==========
Earnings/(loss) per share:
  Basic                                       $     0.03  $       --    $     0.03  $    (0.04) $     0.06    $     0.03
  Diluted                                     $     0.03  $       --    $     0.03  $    (0.04) $     0.06    $     0.03


Weighted average number of shares:
  Basic                                        1,643,317   1,643,317     1,643,317   1,655,927   1,655,927     1,655,927
  Diluted                                      1,719,777   1,719,777     1,719,777   1,655,927   1,681,571     1,681,571

(1) Reported results of operations are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

(2) There were no special item adjustments to reported results of operations for the second fiscal quarter of 2002. Therefore, ongoing results are equal to reported results of operations.

(3) Special items for the second fiscal quarter of 2003 consisted of the following:

1. Charges to cost of products sold for inventory deemed to be excess as a result of refocused product efforts initiated under the 2003 Realignment Plan.
2. Charges to research, development and engineering expense for laboratory tool write-offs associated with refocused product efforts initiated under the 2003 Realignment Plan.
3. Restructuring, asset impairments and other charges consist of employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan.
4. Pro forma tax provision for the tax effect of special items.

APPLIED MATERIALS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS - ONGOING BASIS
(UNAUDITED)

                                                                             Six Months Ended
                                               --------------------------------------------------------------------------
                                                          April 28, 2002                        April 27, 2003
                                               ------------------------------------  ------------------------------------
                                                            Special       Ongoing                 Special       Ongoing
                                               Reported(1)  Items(2)      Results    Reported(1)  Items(3)      Results
                                               ----------  ----------    ----------  ----------  ----------    ----------
(In thousands, except per share amounts)                                                                                 
Net sales                                     $2,156,932  $       --    $2,156,932  $2,161,386  $       --    $2,161,386
Cost of products sold                          1,308,740          --     1,308,740   1,398,230     (49,000)(c) 1,349,230
                                               ----------  ----------    ----------  ----------  ----------    ----------
Gross margin                                     848,192          --       848,192     763,156      49,000       812,156

Operating expenses:
  Research, development and engineering          503,678          --       503,678     475,643     (10,000)(d)   465,643
  Marketing and selling                          173,888          --       173,888     175,785          --       175,785
  General and administrative                     146,458          --       146,458     150,999          --       150,999
  Restructuring, asset impairments and
    other charges                                 85,479     (85,479)(a)        --     192,069    (192,069)(e)        --
                                               ----------  ----------    ----------  ----------  ----------    ----------
Income/(loss) from operations                    (61,311)     85,479        24,168    (231,340)    251,069        19,729

Interest expense                                  23,088          --        23,088      23,559          --        23,559
Interest income                                   93,669          --        93,669      73,628          --        73,628
                                               ----------  ----------    ----------  ----------  ----------    ----------
Income/(loss) before income taxes                  9,270      85,479        94,749    (181,271)    251,069        69,798
Provision/(benefit) for income taxes               2,735      25,216 (b)    27,951     (53,475)     74,065 (f)    20,590
                                               ----------  ----------    ----------  ----------  ----------    ----------
Net income/(loss)                             $    6,535  $   60,263    $   66,798  $ (127,796) $  177,004    $   49,208
                                               ==========  ==========    ==========  ==========  ==========    ==========
Earnings/(loss) per share:
  Basic                                       $       --  $     0.04    $     0.04  $    (0.08) $     0.11    $     0.03
  Diluted                                     $       --  $     0.04    $     0.04  $    (0.08) $     0.11    $     0.03


Weighted average number of shares:
  Basic                                        1,639,871   1,639,871     1,639,871   1,652,981   1,652,981     1,652,981
  Diluted                                      1,708,669   1,708,669     1,708,669   1,652,981   1,681,846     1,681,846

(1) Reported results of operations are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP).

(2) Special items for the six months ended April 28, 2002 consisted of the following:

1. Restructuring consisting of employee-related costs, consolidation of facilities and other costs totaling approximately $77 million, and in-process research and development expense in connection with its acquisitions of Schlumberger's electron-beam wafer inspection business and Global Knowledge Services, Inc. totaling approximately $8 million.
2. Pro forma tax provision for the tax effect of special items.

(3) Special items for the six months ended April 27, 2003 consisted of the following:

3. Charges to cost of products sold for inventory deemed to be excess as a result of refocused product efforts initiated under the 2003 Realignment Plan.
4. Charges to research, development and engineering expense for laboratory tool write-offs associated with refocused product efforts initiated under the 2003 Realignment Plan.
5. Restructuring, asset impairments and other charges consist of employee-related costs, impairment of certain assets and facilities consolidation costs associated with the 2003 Realignment Plan and restructuring activities for the first fiscal quarter of 2003.
6. Pro forma tax provision for the tax effect of special items.