10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 28, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission File Number 000-06920

Applied Materials, Inc.

(Exact name of registrant as specified in its charter)

Delaware	94-1655526
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3050 Bowers Avenue,	95052-8039
P.O. Box 58039 Santa Clara, California (Address of principal executive offices)	(Zip Code)

(408) 727-5555

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þNo  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þNo  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨No  þ

Number of shares outstanding of the issuer’s common stock as of July 28, 2013: 1,202,826,487

APPLIED MATERIALS, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JULY 28, 2013

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1:	Financial Statements (Unaudited)	3
	Consolidated Condensed Statements of Operations for the Three and Nine Months Ended July 28, 2013 and July 29, 2012	3
	Consolidated Condensed Statements of Comprehensive Income for the Three and Nine Months Ended July 28, 2013 and July 29, 2012	4
	Consolidated Condensed Balance Sheets at July 28, 2013 and October 28, 2012	5
	Consolidated Condensed Statement of Stockholders’ Equity for the Nine Months Ended July 28, 2013	6
	Consolidated Condensed Statements of Cash Flows for the Nine Months Ended July 28, 2013 and July 29, 2012	7
	Notes to Consolidated Condensed Financial Statements	8
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4:	Controls and Procedures	61
	PART II. OTHER INFORMATION
Item 1:	Legal Proceedings	62
Item 1A:	Risk Factors	62
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 6:	Exhibits	74
	Signatures	75

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

APPLIED MATERIALS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(Unaudited)
	(In millions, except per share amounts)
Net sales	$	1,975	$	2,343	$	5,521	$	7,073
Cost of products sold	1,169		1,413		3,325		4,347
Gross margin	806		930		2,196		2,726
Operating expenses:
Research, development and engineering	334		309		982		933
Marketing and selling	111		118		334		374
General and administrative	97		137		348		465
Impairment of goodwill and intangible assets (Note 8)	—		—		278		—
Restructuring charges and asset impairments (Note 10)	14		44		33		44
Total operating expenses	556		608		1,975		1,816
Income from operations	250		322		221		910
Impairments of strategic investments (Notes 3 and 4)	3		—		5		3
Interest and other expenses (Note 9)	23		24		71		72
Interest and other income, net	4		4		11		13
Income before income taxes	228		302		156		848
Provision for income taxes	60		84		83		224
Net income	$	168	$	218	$	73	$	624
Earnings per share:
Basic	$	0.14	$	0.17	$	0.06	$	0.49
Diluted	$	0.14	$	0.17	$	0.06	$	0.48
Weighted average number of shares:
Basic	1,203		1,257		1,201		1,282
Diluted	1,220		1,268		1,218		1,292

See accompanying Notes to Consolidated Condensed Financial Statements.

3

APPLIED MATERIALS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(Unaudited)
	(In millions)
Net income	$	168		$	218		$	73		$	624
Other comprehensive income (loss), net of tax:
Change in unrealized net gain on investments	(4		)	(9		)	3			(6		)
Change in unrealized net gain on derivative investments	(2		)	(4		)	5			(4		)
Change in defined benefit plan liability (Note 12)	—			—			(2		)	—
Change in cumulative translation adjustments	(1		)	1			(6		)	(1		)
Other comprehensive income (loss), net of tax	(7		)	(12		)	—			(11		)
Comprehensive income	$	161		$	206		$	73		$	613

See accompanying Notes to Consolidated Condensed Financial Statements.

4

APPLIED MATERIALS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

	July 28, 2013			October 28, 2012
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents (Notes 3 and 4)	$	1,745		$	1,392
Short-term investments (Notes 3 and 4)	230			545
Accounts receivable, net (Note 6)	1,170			1,220
Inventories (Note 7)	1,358			1,272
Other current assets (Note 7)	734			673
Total current assets	5,237			5,102
Long-term investments (Notes 3 and 4)	1,055			1,055
Property, plant and equipment, net (Note 7)	872			910
Goodwill (Note 8)	3,294			3,518
Purchased technology and other intangible assets, net (Note 8)	1,148			1,355
Deferred income taxes and other assets (Note 13)	145			162
Total assets	$	11,751		$	12,102
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses (Note 7)	$	1,446		$	1,510
Customer deposits and deferred revenue (Note 7)	756			755
Total current liabilities	2,202			2,265
Long-term debt (Note 9)	1,946			1,946
Other liabilities (Note 7)	649			656
Total liabilities	4,797			4,867
Stockholders’ equity (Note 11):
Common stock	12			12
Additional paid-in capital	6,055			5,863
Retained earnings	12,425			12,700
Treasury stock	(11,477		)	(11,279		)
Accumulated other comprehensive loss	(61		)	(61		)
Total stockholders’ equity	6,954			7,235
Total liabilities and stockholders’ equity	$	11,751		$	12,102

Amounts as of July 28, 2013 are unaudited. Amounts as of October 28, 2012 are derived from the October 28, 2012 audited consolidated financial statements.

See accompanying Notes to Consolidated Condensed Financial Statements.

5

APPLIED MATERIALS, INC

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

	Common Stock				Additional Paid-In Capital		Retained Earnings			Treasury Stock				Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount							Shares	Amount
	(Unaudited)
	(In millions)
Balance at October 28, 2012	1,197		$	12	$	5,863	$	12,700		699	$	(11,279	)	$	(61	)	$	7,235
Net income	—		—		—		73			—	—			—			73
Other comprehensive income, net of tax	—		—		—		—			—	—			—			—
Dividends	—		—		—		(348		)	—	—			—			(348		)
Share-based compensation	—		—		121		—			—	—			—			121
Issuance under stock plans, net of a tax benefit of $3 and other	21		—		71		—			—	—			—			71
Common stock repurchases	(15	)	—		—		—			15	(198		)	—			(198		)
Balance at July 28, 2013	1,203		$	12	$	6,055	$	12,425		714	$	(11,477	)	$	(61	)	$	6,954

See accompanying Notes to Consolidated Condensed Financial Statements.

6

APPLIED MATERIALS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	July 28, 2013			July 29, 2012
	(Unaudited)
	(In millions)
Cash flows from operating activities:
Net income	$	73		$	624
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization	312			325
Impairment of goodwill and intangible assets	278			—
Restructuring charges and asset impairments	33			44
Deferred income taxes and other	(102		)	144
Share-based compensation	121			138
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	51			183
Inventories	(85		)	571
Other assets	18			47
Accounts payable and accrued expenses	(132		)	(405		)
Customer deposits and deferred revenue	—			(230		)
Other liabilities	37			(1		)
Cash provided by operating activities	604			1,440
Cash flows from investing activities:
Capital expenditures, net	(140		)	(121		)
Cash paid for acquisitions, net of cash acquired	(1		)	(4,189		)
Proceeds from sales and maturities of investments	737			765
Purchases of investments	(438		)	(1,152		)
Cash provided by (used in) investing activities	158			(4,697		)
Cash flows from financing activities:
Proceeds from common stock issuances and others, net	125			51
Common stock repurchases	(198		)	(900		)
Payments of dividends to stockholders	(336		)	(323		)
Cash used in financing activities	(409		)	(1,172		)
Effect of exchange rate changes on cash and cash equivalents	—			(2		)
Increase (decrease) in cash and cash equivalents	353			(4,431		)
Cash and cash equivalents — beginning of year	1,392			5,960
Cash and cash equivalents — end of year	$	1,745		$	1,529
Supplemental cash flow information:
Cash payments for income taxes	$	184		$	233
Cash refunds from income taxes	$	67		$	5
Cash payments for interest	$	85		$	87

See accompanying Notes to Consolidated Condensed Financial Statements.

7

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1    Basis of Presentation

Basis of Presentation

In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 28, 2012 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 28, 2012 (2012 Form 10-K). Applied’s results of operations for the three and nine months ended July 28, 2013 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2013 and 2012 each contain 52 weeks, and the first nine months of fiscal 2013 and 2012 each contained 39 weeks.

Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Revenue Recognition

Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment, Applied recognizes revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided.

8

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued authoritative guidance that will require an unrecognized tax benefit to be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, with certain exceptions. The authoritative guidance becomes effective for Applied in the first quarter of fiscal 2015, with early adoption permitted. The guidance is not expected to have an impact on Applied's financial position or results of operations.

In February 2013, the FASB issued authoritative guidance that will require a public entity to present in its annual and interim financial statements information about reclassification adjustments from accumulated other comprehensive income in a single note or on the face of the financial statements. The authoritative guidance becomes effective for Applied in the first quarter of fiscal 2014, with early adoption permitted, and is not expected to have an impact on Applied's financial position or results of operations.

Note 2 Earnings Per Share

Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plans shares) outstanding during the period. Net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share as Applied has a non-complex capital structure.

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Numerator:
Net income	$	168	$	218	$	73	$	624
Denominator:
Weighted average common shares outstanding	1,203		1,257		1,201		1,282
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	17		11		17		10
Denominator for diluted earnings per share	1,220		1,268		1,218		1,292
Basic earnings per share	$	0.14	$	0.17	$	0.06	$	0.49
Diluted earnings per share	$	0.14	$	0.17	$	0.06	$	0.48
Potentially dilutive securities	1		11		1		12

Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share because the combined exercise price, average unamortized fair value and assumed tax benefits upon the exercise of options and the vesting of restricted stock units were greater than the average market price of Applied common stock, and therefore their inclusion would have been anti-dilutive.

9

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 3 Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarize Applied’s cash, cash equivalents and investments by security type:

July 28, 2013	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	600	$	—	$	—	$	600
Cash equivalents:
Money market funds	1,145		—		—		1,145
Total Cash equivalents	1,145		—		—		1,145
Total Cash and Cash equivalents	$	1,745	$	—	$	—	$	1,745
Short-term and long-term investments:
U.S. Treasury and agency securities	$	229	$	1	$	1	$	229
Non-U.S. government securities*	11		—		—		11
Municipal securities	378		1		1		378
Commercial paper, corporate bonds and medium-term notes	257		2		1		258
Asset-backed and mortgage-backed securities	281		2		2		281
Total fixed income securities	1,156		6		5		1,157
Publicly traded equity securities	30		27		—		57
Equity investments in privately-held companies	71		—		—		71
Total short-term and long-term investments	$	1,257	$	33	$	5	$	1,285
Total Cash, Cash equivalents and Investments	$	3,002	$	33	$	5	$	3,030

 _________________________

* Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Australia, Canada and Germany.

10

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

October 28, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	876	$	—	$	—	$	876
Cash equivalents:
Money market funds	483		—		—		483
Municipal securities	33		—		—		33
Total Cash equivalents	516		—		—		516
Total Cash and Cash equivalents	$	1,392	$	—	$	—	$	1,392
Short-term and long-term investments:
U.S. Treasury and agency securities	$	373	$	1	$	—	$	374
Non-U.S. government securities	29		—		—		29
Municipal securities	396		2		—		398
Commercial paper, corporate bonds and medium-term notes	381		3		—		384
Asset-backed and mortgage-backed securities	294		4		—		298
Total fixed income securities	1,473		10		—		1,483
Publicly traded equity securities	32		15		—		47
Equity investments in privately-held companies	70		—		—		70
Total short-term and long-term investments	$	1,575	$	25	$	—	$	1,600
Total Cash, Cash equivalents and Investments	$	2,967	$	25	$	—	$	2,992

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 28, 2013:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	195	$	195
Due after one through five years	681		682
No single maturity date**	381		408
	$	1,257	$	1,285

 _________________________

** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

11

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Gains and Losses on Investments

At July 28, 2013 and October 28, 2012, gross unrealized losses related to Applied's investment portfolio were not material. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at July 28, 2013 and July 29, 2012 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three and nine months ended July 28, 2013 or July 29, 2012. Applied recognized $3 million and $5 million of impairment charges on its equity investments in privately-held companies during the three and nine months ended July 28, 2013, respectively, and $3 million of impairment charges during the nine months ended July 29, 2012.

Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations.

Note 4 Fair Value Measurements

Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred.

Fair Value Hierarchy

Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Applied’s investments are comprised primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value.

Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of July 28, 2013, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs.

12

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities (excluding cash balances) measured at fair value on a recurring basis are summarized below as of July 28, 2013 and October 28, 2012:

	July 28, 2013						October 28, 2012
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	1,145	$	—	$	1,145	$	483	$	—	$	483
U.S. Treasury and agency securities	105		124		229		128		246		374
Non-U.S. government securities	—		11		11		—		29		29
Municipal securities	—		378		378		—		431		431
Commercial paper, corporate bonds and medium-term notes	—		258		258		—		384		384
Asset-backed and mortgage-backed securities	—		281		281		—		298		298
Publicly traded equity securities	57		—		57		47		—		47
Total	$	1,307	$	1,052	$	2,359	$	658	$	1,388	$	2,046

There were no transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended July 28, 2013 or July 29, 2012. Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of July 28, 2013 or October 28, 2012.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. At July 28, 2013, equity investments in privately-held companies totaled $71 million, of which $61 million of investments were accounted for under the cost method of accounting and $10 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. At October 28, 2012, equity investments in privately-held companies totaled $70 million, of which $57 million of investments were accounted for under the cost method of accounting and $13 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. Applied recognized $3 million and $5 million of impairment charges on its equity investments in privately-held companies during the three and nine months ended July 28, 2013, respectively, and $3 million of impairment charges during the nine months ended July 29, 2012.

13

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Other

The carrying amounts of Applied’s financial instruments, including cash and cash equivalents, accounts receivable, notes payable, and accounts payable and accrued expenses, approximate fair value due to their short maturities. At July 28, 2013, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.1 billion. At October 28, 2012, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.3 billion. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues.

Note 5 Derivative Instruments and Hedging Activities

Derivative Financial Instruments

Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel, Taiwanese dollar and Swiss franc. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically up to the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Derivative instruments and hedging activities, including foreign currency exchange contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses.

Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income or loss (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to derivative instruments included in AOCI at July 28, 2013 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in general and administrative expenses. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for the three and nine months ended July 28, 2013 and July 29, 2012.

Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged.

The fair values of derivative instruments at July 28, 2013 and October 28, 2012 were not material.

14

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

The effect of derivative instruments on the Consolidated Condensed Statements of Operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

		Three Months Ended July 28, 2013							Three Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	7	$	7	$	(1	)	$	(8	)	$	—		$	(1	)
Foreign exchange contracts	General and administrative	—		3		(1		)	—			(2		)	—
Total		$	7	$	10	$	(2	)	$	(8	)	$	(2	)	$	(1	)

		Nine Months Ended July 28, 2013							Nine Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	29	$	16	$	(2	)	$	(3	)	$	5		$	(1	)
Foreign exchange contracts	General and administrative	—		6		(1		)	—			(3		)	(1		)
Total		$	29	$	22	$	(3	)	$	(3	)	$	2		$	(2	)

		Amount of Gain or (Loss)  Recognized in Income
		Three Months Ended					Nine Months Ended
	Location of Gain or (Loss) Recognized in Income	July 28, 2013		July 29, 2012			July 28, 2013		July 29, 2012
		(In millions)
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	General and administrative	$	2	$	(11	)	$	31	$	3
Total		$	2	$	(11	)	$	31	$	3

15

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Credit Risk Contingent Features

If Applied’s credit rating were to fall below investment grade, it would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was immaterial as of July 28, 2013.

Entering into foreign exchange contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant.

Note 6    Accounts Receivable, Net

Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied sells its accounts receivable without recourse. Applied, from time to time, also discounts 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.

There was no factoring of accounts receivable or discounting of promissory notes during the three and nine months ended July 28, 2013 or the three months ended July 29, 2012. Applied factored accounts receivable and discounted promissory notes of $70 million during the nine months ended July 29, 2012. Applied did not utilize programs to discount letters of credit issued by customers during the three and nine months ended July 28, 2013 and July 29, 2012.Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operations and were not material for all periods presented.

Accounts receivable are presented net of allowance for doubtful accounts of $82 million at July 28, 2013 and $87 million at October 28, 2012. Applied sells principally to manufacturers within the semiconductor, display and solar industries. While Applied believes that its allowance for doubtful accounts is adequate and represents Applied’s best estimate as of July 28, 2013, Applied continues to closely monitor customer liquidity and other economic conditions, which may result in changes to Applied’s estimates regarding collectability.

Note 7 Balance Sheet Detail

	July 28, 2013		October 28, 2012
	(In millions)
Inventories
Customer service spares	$	270	$	312
Raw materials	311		331
Work-in-process	267		234
Finished goods	510		395
	$	1,358	$	1,272

Included in finished goods inventory are $128 million at July 28, 2013, and $60 million at October 28, 2012, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $175 million and $176 million of evaluation inventory at July 28, 2013 and October 28, 2012, respectively.

16

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

	July 28, 2013		October 28, 2012
	(In millions)
Other Current Assets
Deferred income taxes, net	$	431	$	369
Prepaid expenses	127		101
Income taxes receivable	30		87
Other	146		116
	$	734	$	673

	Useful Life	July 28, 2013			October 28, 2012
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	167		$	169
Buildings and improvements	3-30	1,210			1,196
Demonstration and manufacturing equipment	3-5	787			760
Furniture, fixtures and other equipment	3-15	607			734
Construction in progress		55			58
Gross property, plant and equipment		2,826			2,917
Accumulated depreciation		(1,954		)	(2,007		)
		$	872		$	910

	July 28, 2013		October 28, 2012
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	515	$	396
Compensation and employee benefits	394		426
Warranty	100		119
Dividends payable	120		108
Income taxes payable	44		74
Other accrued taxes	28		18
Interest payable	14		30
Restructuring reserve	17		133
Other	214		206
	$	1,446	$	1,510

17

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

	July 28, 2013		October 28, 2012
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	145	$	143
Deferred revenue	611		612
	$	756	$	755

Applied typically receives deposits on future deliverables from customers in the Display and Energy and Environmental Solutions segments. In certain instances, customer deposits may be received from customers in the Applied Global Services segment.

	July 28, 2013		October 28, 2012
	(In millions)
Other Liabilities
Deferred income taxes	$	146	$	201
Income taxes payable	153		140
Defined benefit pension plan liability	190		184
Other	160		131
	$	649	$	656

Note 8 Goodwill, Purchased Technology and Other Intangible Assets

Goodwill and Purchased Intangible Assets

Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.

Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results.

To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would in the first step compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. Applied’s reporting units are consistent with the reportable segments identified in Note 15, Industry Segment Operations, which are based on the manner in which Applied operates its business and the nature of those operations.

18

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

During the second quarter of fiscal 2013, the solar industry experienced further deterioration of market conditions associated with continued manufacturing overcapacity and weaker operating performance and outlook, resulting in increased uncertainties regarding the timing and nature of a recovery in solar capital equipment expenditures. Taking these factors into account, Applied reassessed its financial outlook for the Energy and Environmental Solutions reporting unit and consequently reevaluated the recoverability of this reporting unit's goodwill. Applied performed the two-step impairment test and concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value. Based on Applied's analyses, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the reporting unit. As a result, in the second quarter of fiscal 2013, Applied recorded a goodwill impairment charge of $224 million, representing all of the remaining goodwill for this reporting unit. Applied also performed an impairment test for long-lived assets associated with the reporting unit and determined that the majority of intangible assets were impaired mostly due to the lower long-term revenue and profitability outlook associated with products related to these intangible assets. Accordingly, during the second quarter of fiscal 2013, Applied recorded an impairment charge of $54 million related to these intangible assets, which was the amount by which the carrying value of these intangible assets exceeded their estimated fair value, based on discounted projected cash flows.

The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time.

Details of goodwill and other indefinite-lived intangible assets as of July 28, 2013 and October 28, 2012 were as follows :

	July 28, 2013						October 28, 2012
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	2,151	$	142	$	2,293
Applied Global Services	1,027		—		1,027		1,027		—		1,027
Display	116		—		116		116		—		116
Energy and Environmental Solutions	—		—		—		224		—		224
Carrying amount	$	3,294	$	142	$	3,436	$	3,518	$	142	$	3,660

Other intangible assets that are not subject to amortization consist primarily of in-process technology, which will be subject to amortization upon commercialization. The fair value assigned to in-process technology was determined using the income approach taking into account estimates and judgments regarding risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. If an in-process technology project is abandoned, the acquired technology attributable to the project will be written off.

A summary of Applied's purchased technology and intangible assets is set forth below:

	July 28, 2013		October 28, 2012
	(In millions)
Purchased technology, net	$	786	$	945
Intangible assets - finite-lived, net	220		268
Intangible assets - indefinite-lived	142		142
Total	$	1,148	$	1,355

19

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Finite-Lived Purchased Intangible Assets

Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years.

Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach.

Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure.

Details of finite-lived intangible assets were as follows as of July 28, 2013 and October 28, 2012:

	July 28, 2013									October 28, 2012
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,301		$	252		$	1,553		$	1,300		$	252		$	1,552
Applied Global Services	28			44			72			28			44			72
Display	110			33			143			110			33			143
Energy and Environmental Solutions	5			15			20			105			232			337
Gross carrying amount	$	1,444		$	344		$	1,788		$	1,543		$	561		$	2,104
Accumulated amortization:
Silicon Systems Group	$	(524	)	$	(53	)	$	(577	)	$	(411	)	$	(36	)	$	(447	)
Applied Global Services	(23		)	(41		)	(64		)	(22		)	(39		)	(61		)
Display	(110		)	(29		)	(139		)	(106		)	(27		)	(133		)
Energy and Environmental Solutions	(1		)	(1		)	(2		)	(59		)	(191		)	(250		)
Accumulated amortization	$	(658	)	$	(124	)	$	(782	)	$	(598	)	$	(293	)	$	(891	)
Carrying amount	$	786		$	220		$	1,006		$	945		$	268		$	1,213

During the second quarter of fiscal 2013, the impact of the impairment of certain intangible assets associated with the Energy and Environmental Solutions segment on the gross carrying amount and accumulated amortization of the finite-lived intangible assets was approximately $317 million and $262 million, respectively.

20

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Details of amortization expense by segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	42	$	45	$	130	$	138
Applied Global Services	1		1		3		8
Display	2		2		6		5
Energy and Environmental Solutions	1		6		14		19
Total	$	46	$	54	$	153	$	170

For the three and nine months ended July 28, 2013 and July 29, 2012, amortization expense was charged to the following categories:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	40	$	44	$	126	$	141
Research, development and engineering	—		—		1		1
Marketing and selling	5		8		21		23
General and administrative	1		2		5		5
Total	$	46	$	54	$	153	$	170

As of July 28, 2013, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	46
2014	180
2015	175
2016	168
2017	165
Thereafter	272
Total	$	1,006

21

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 9 Borrowing Facilities and Long-Term Debt

Applied has credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement with a group of banks that was extended by one year in May 2013 and is scheduled to expire in May 2017. This agreement provides for borrowings in United States dollars at interest rates keyed to one of the two rates selected by Applied for each advance and includes financial and other covenants with which Applied was in compliance at July 28, 2013. Remaining credit facilities in the amount of approximately $80 million are with Japanese banks. Applied’s 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. No amounts were outstanding under any of these facilities at both July 28, 2013 and October 28, 2012 and Applied has not utilized these credit facilities.

Long-term debt outstanding as of July 28, 2013 and October 28, 2012 was as follows:

	Principal Amount			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			5.879%	June 15, December 15
	1,950
Total unamortized discount	(4		)
Total long-term debt	$	1,946

Applied has debt agreements that contain financial and other covenants. These covenants require Applied to maintain certain minimum financial ratios. At July 28, 2013, Applied was in compliance with all such covenants.

22

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 10 Restructuring Charges and Asset Impairments

From time to time, Applied initiates restructuring activities to appropriately align its cost structure relative to prevailing economic and industry conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with restructuring actions can include termination benefits and related charges, in addition to facility closure, contract termination and other related activities.

The following table summarizes major components of the restructuring and asset impairment charges during the three and nine months ended July 28, 2013:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs1	$	4	$	—	$	12	$	—
2012 EES Restructuring Plan
Severance and other employee-related costs2	3		24		5		24
Contract cancellation and other costs	1		—		3		—
Asset impairments	6		11		11		11
Others
Severance and other employee-related costs	—		9		2		9
	$	14	$	44	$	33	$	44

______________________________

¹ Includes share-based compensation expense which was recorded in additional paid-in capital.

² Includes post-retirement benefit expense which was recorded in accumulated other comprehensive loss.

Restructuring and asset impairment charges were recorded as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	—	$	1	$	1	$	1
Applied Global Services	—		11		2		11
Energy and Environmental Solutions	10		32		18		32
Corporate Unallocated	4		—		12		—
Total	$	14	$	44	$	33	$	44

Global Restructuring Plan

On October 3, 2012, Applied announced a restructuring plan (the 2012 Global Restructuring Plan) to realign its global workforce and enhance its ability to invest for growth. Under this plan, Applied implemented a voluntary retirement program and other workforce reduction actions that were expected to affect approximately 900 to 1,300 positions, or 6 percent to 9 percent of its global workforce. The voluntary retirement program was available to certain U.S. employees who met minimum age and length of service requirements, as well as other business-specific criteria. Applied implemented other workforce reduction actions globally across multiple business segments and functions, the extent of which depended on the number of employees who participated in the voluntary retirement program and other considerations.

23

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

In connection with the 2012 Global Restructuring Plan, Applied expects to incur aggregate pre-tax restructuring charges comprised of severance and other termination benefits in the range of $120 million to $160 million (including costs incurred to date of $118 million discussed below). Applied expected to substantially complete this plan by the end of the third quarter of fiscal 2013. Applied has extended this plan and expects to substantially complete it by the end of the first quarter of fiscal 2014.

During the third quarter and first nine months of fiscal 2013, Applied recognized $4 million and $12 million, respectively, of employee-related costs in connection with the 2012 Global Restructuring Plan. These costs were not allocated to the segments. Applied has incurred aggregate pre-tax restructuring charges comprised of severance and other termination benefits of $118 million under this plan.

2012 EES Restructuring Plan

On May 10, 2012, Applied announced a plan (the 2012 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and light-emitting diode (LED) equipment markets. As part of this plan, Applied relocated certain manufacturing, business operations and customer support functions of its precision wafering systems business and ceased LED development activities. This plan also impacted certain LED support activities in the Applied Global Services segment. The total estimated pre-tax cost of implementing this plan is expected to be in the range of approximately $70 million to $100 million, which will be incurred over a period of up to 18 months beginning in the third quarter of fiscal 2012, and reported primarily in the Energy and Environmental Solutions segment. This estimate consists of: (i) up to $30 million in fixed asset impairment charges; (ii) up to $15 million of inventory-related charges; (iii) up to $15 million in charges arising from lease terminations and other obligations, and (iv) up to $40 million in severance and other employee-related costs. The 2012 EES Restructuring Plan has impacted approximately 250 positions globally. As the Energy and Environmental Solutions segment continues to consolidate infrastructure and reduce its operating expenses, Applied expects approximately 150 additional positions to be impacted globally. No changes in the estimated pre-tax cost of the implementation of this plan are anticipated. During the third quarter and first nine months of fiscal 2013, Applied recognized $10 million and $19 million, respectively, of restructuring and asset impairment charges in connection with this plan, which were primarily reported in the Energy and Environmental Solutions segment. As of July 28, 2013, total costs incurred in implementing this plan were $80 million, of which $13 million were inventory-related charges.

Integration of Varian Semiconductor Associates, Inc. (Varian)

During the first nine months of fiscal 2013, Applied recognized $2 million of severance and other employee-related costs in connection with the integration of Varian, acquired in the first quarter of fiscal 2012, which costs were reported in the Silicon Systems Group and Applied Global Services segments. As of July 28, 2013, the remaining severance accrual associated with restructuring reserves under this program was $2 million.

Restructuring Reserves

Changes in restructuring reserves during the nine months ended July 28, 2013 were as follows:

	2012 Global Restructuring Plan			2012 EES Restructuring Plan						Others
	Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 28, 2012	$	106		$	16		$	1		$	5		$	5	$	133
Provision for restructuring reserves	8			4			3			2			—		17
Consumption of reserves	(106		)	(16		)	(2		)	(5		)	—		(129		)
Reclassification of restructuring reserves1	(4		)	—			—			—			—		(4		)
Balance, July 28, 2013	$	4		4			2			$	2		$	5	$	17

______________________________

¹ Includes reclassification of post-retirement benefit liability to other liabilities.

24

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 11 Stockholders’ Equity, Comprehensive Income and Share-Based Compensation

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss), on an after-tax basis where applicable, were as follows:

	July 28, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	19		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	6			1
Pension liability	(92		)	(90		)
Cumulative translation adjustments	6			12
	$	(61	)	$	(61	)

Stock Repurchase Program

On March 5, 2012, Applied's Board of Directors approved a stock repurchase program authorizing up to $3.0 billion in repurchases over the next three years ending in March 2015. Under this authorization, Applied purchases shares of its common stock under a systematic stock repurchase program and may also make supplemental stock repurchases from time to time, depending on market conditions, stock price and other factors. At July 28, 2013, $1.6 billion remained available for future stock repurchases under this repurchase program.

The following table summarizes Applied’s stock repurchases for the periods indicated:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Shares of common stock repurchased	3		47		15		81
Cost of stock repurchased	$	50	$	500	$	198	$	900
Average price paid per share	$	15.33	$	10.71	$	13.18	$	11.09

Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings.

Dividends

In June 2013, March 2013 and December 2012, Applied's Board of Directors declared a quarterly cash dividend in the amount of $0.10, $0.10 and $0.09 per share, respectively. Dividends declared during the nine months ended July 28, 2013 and July 29, 2012 were $348 million and $330 million, respectively. Applied currently anticipates 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 Applied’s 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 Applied’s stockholders.

25

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Share-Based Compensation

Applied has a stockholder-approved equity plan, the Employee Stock Incentive Plan, which permits grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made beginning in March 2012 under the plan may be subject to accelerated vesting under certain circumstances in the event of a change in control of Applied. Applied also has two Employee Stock Purchase Plans, one generally for United States employees and a second for employees of international subsidiaries (collectively, ESPP), which enable eligible employees to purchase Applied common stock.

During the three and nine months ended July 28, 2013 and July 29, 2012, Applied recognized share-based compensation expense related to stock options, ESPP shares, restricted stock, restricted stock units, performance shares and performance units. Total share-based compensation and related tax benefits were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Share-based compensation	$	40	$	42	$	121	$	138
Tax benefit recognized	$	11	$	12	$	34	$	39

The effect of share-based compensation on the results of operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	13	$	13	$	37	$	40
Research, development, and engineering	14		14		39		40
Marketing and selling	5		5		15		17
General and administrative	8		10		25		41
Restructuring charge	—		—		5		—
Total	$	40	$	42	$	121	$	138

The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards is recognized for each tranche over the service period, based on an assessment of the likelihood that the applicable performance goals will be achieved.

At July 28, 2013, Applied had $270 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of share-based awards and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.5 years. At July 28, 2013, there were 185 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 44 million shares available for issuance under the ESPP.

26

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Stock Options

Applied grants options to purchase, at future dates, shares of its common stock to employees and consultants. The exercise price of each stock option equals the fair market value of Applied common stock on the date of grant. Options typically vest over three to four years, subject to the grantee’s continued service with Applied through the scheduled vesting date, and expire no later than seven years from the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. Applied employee stock options have characteristics significantly different from those of publicly traded options. There were no stock options granted during the three and nine months ended July 28, 2013 and July 29, 2012. As part of the acquisition of Varian in the first quarter of fiscal 2012, stock options to purchase 5 million shares of Applied common stock were assumed.

Stock option activity for the nine months ended July 28, 2013 was as follows:

	Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding at October 28, 2012	21		$	10.53
Granted	—		$	—
Exercised	(10	)	$	8.00
Canceled and forfeited	(5	)	$	17.63
Outstanding at July 28, 2013	6		$	8.69
Exercisable at July 28, 2013	6		$	8.77

Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units

Restricted stock units are converted into shares of Applied common stock upon vesting on a one-for-one basis. Restricted stock has the same rights as other issued and outstanding shares of Applied common stock except these shares generally have no right to dividends and are held in escrow until the award vests. Performance shares and performance units are awards that result in a payment to a grantee in shares of Applied common stock on a one-for-one basis if performance goals and/or other vesting criteria established by the Human Resources and Compensation Committee of Applied's Board of Directors (the Committee) are achieved or the awards otherwise vest. Restricted stock units, restricted stock, performance shares and performance units typically vest over four years and vesting is usually subject to the grantee’s continued service with Applied and, in some cases, achievement of specified performance goals. The compensation expense related to the service-based awards is determined using the fair market value of Applied common stock on the date of the grant, and the compensation expense is recognized over the vesting period.

27

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Restricted stock, performance shares and performance units granted to certain executive officers are also subject to the achievement of specified performance goals (performance-based awards). These performance-based awards become eligible to vest only if performance goals are achieved and then actually will vest only if the grantee remains employed by Applied through each applicable vesting date. The fair value of these performance-based awards is estimated on the date of grant and assumes that the specified performance goals will be achieved. If the goals are achieved, these awards vest over a specified remaining service period of generally three or four years, provided that the grantee remains employed by Applied through each scheduled vesting date. If the performance goals are not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost of each award is reflected over the service period and is reduced for estimated forfeitures.

For performance-based awards granted during fiscal 2011 and fiscal 2010, the performance goals require (i) the achievement of targeted adjusted annual operating profit margin levels compared to Applied’s peer companies in at least one of the four fiscal years beginning with the fiscal year of the grant, and (ii) that Applied’s annual adjusted operating profit margin is positive in such year. Performance-based awards that do not become eligible to vest in a particular year may become eligible to vest in subsequent years up until the fourth fiscal year after grant, after which they are forfeited if the required performance goals have not been achieved.

In fiscal 2013 and fiscal 2012, the Committee granted performance-based awards that require the achievement of positive and relative adjusted operating profit margin goals in a manner generally similar to the previously granted performance-based awards. For the fiscal 2013 and fiscal 2012 awards, additional shares become eligible for time-based vesting if Applied achieves certain levels of total shareholder return (TSR) relative to a peer group comprised of companies in the Standard & Poor's 500 Information Technology Index measured at the end of a two-year period.

A summary of the performance-based awards approved by the Committee is presented below:

	Number of Performance-Based Awards Granted		Percent of Performance-Based Awards Earned as of July 28, 2013*
Fiscal Year Granted	Performance Shares/Performance Units	Shares of Restricted Stock
	(in millions)
2013	3	—	0%
2012	3	1	14%
2011	2	0.1	100%
2010	2	0.1	82%

___________________

* subject to additional time-based vesting requirements

28

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the nine months ended July 28, 2013 is presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 years
Granted	18		$	10.36
Vested	(11	)	$	11.46
Canceled	(5	)	$	11.33
Non-vested restricted stock units, restricted stock, performance shares and performance units at July 28, 2013	38		$	11.03	2.7 years

At July 28, 2013, 2 million additional performance-based awards could be earned upon certain levels of achievement of Applied's TSR relative to a peer group at a future date.

Employee Stock Purchase Plans

Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Based on the Black-Scholes option pricing model, the weighted average estimated fair value of purchase rights under the ESPP was $2.90 and $2.89 for the nine months ended July 28, 2013 and July 29, 2012, respectively. The number of shares issued under the ESPP during the nine months ended July 28, 2013 and July 29, 2012 was 3 million. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:

	Nine Months Ended
	July 28, 2013	July 29, 2012
ESPP:
Dividend yield	2.94%	2.94%
Expected volatility	24.3%	33.0%
Risk-free interest rate	0.12%	0.12%
Expected life (in years)	0.5	0.5

29

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 12    Employee Benefit Plans

Applied sponsors a number of employee benefit plans, including defined benefit plans of certain foreign subsidiaries, and a plan that provides certain medical and vision benefits to eligible retirees. A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three and nine months ended July 28, 2013 and July 29, 2012 is presented below:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Service cost	$	5		$	4		$	15		$	12
Interest cost	4			4			12			11
Expected return on plan assets	(3		)	(2		)	(9		)	(8		)
Amortization of actuarial loss	1			—			4			1
Net periodic benefit cost	$	7		$	6		$	22		$	16

Note 13    Income Taxes

Applied’s effective tax rates for the third quarter of fiscal 2013 and 2012 were 26.3 percent and 27.8 percent, respectively. The effective tax rate for the third quarter of fiscal 2013 decreased compared to the same period in the prior year primarily due to changes in the geographic composition of income, including jurisdictions with tax incentives, and benefits resulting from resolution of prior years’ income tax filings.

Applied’s effective tax rates for the first nine months of fiscal 2013 and 2012 were 53.2 percent and 26.4 percent, respectively. The effective tax rate for the first nine months of fiscal 2013 increased compared to the same period in the prior year primarily due to the goodwill impairment charge recorded in the second quarter of fiscal 2013 that was not deductible. The effective tax rate for the first nine months of fiscal 2013 also reflected a $14 million benefit resulting from the resolution of prior years’ income tax filings and a $13 million benefit from the reinstatement of the U.S. federal research and development tax credit retroactive to January 1, 2012 during fiscal 2013. The effective tax rates were further affected by changes in the geographic composition of income, including jurisdictions with tax incentives. Applied’s future effective income tax rate depends on various factors, such as tax legislation and the geographic composition of Applied’s pre-tax income. Management carefully monitors these factors and timely adjusts the interim effective income tax rate accordingly.

The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be made as part of the resolution process, is highly uncertain and could cause an impact to Applied’s consolidated results of operations. This could also cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. Applied does not expect a material change in unrecognized tax benefits in the next 12 months.

30

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 14 Warranty, Guarantees and Contingencies

Warranty

Changes in the warranty reserves during the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Beginning balance	$	104		$	152		$	119		$	168
Provisions for warranty	27			25			76			87
Consumption of reserves	(31		)	(40		)	(95		)	(118		)
Ending balance	$	100		$	137		$	100		$	137

Applied products are generally sold with a warranty for a 12-month period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales.

Guarantees

In the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of July 28, 2013, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $41 million. Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does 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.

Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of July 28, 2013, Applied Materials, Inc. has provided parent guarantees to banks for approximately $102 million to cover these arrangements.

31

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Legal Matters

Jusung

Applied has been engaged in several lawsuits and patent and administrative proceedings with Jusung Engineering Co., Ltd. and/or Jusung Pacific Co., Ltd. (Jusung) in Asia since 2003 involving technology used in manufacturing liquid crystal displays (LCDs), including the following. In 2004, Applied filed a complaint for patent infringement against Jusung in the Hsinchu District Court in Taiwan seeking damages and a permanent injunction for infringement of a patent related to chemical vapor deposition (CVD) equipment, and Jusung filed a counterclaim. On December 31, 2010, the Hsinchu District Court dismissed both actions. Both parties appealed to the Taiwan Intellectual Property Court, and on August 12, 2013, the Court dismissed both appeals. In 2009, Jusung filed an action seeking invalidation of Applied's CVD patent in the Taiwan Intellectual Property Office which remains pending but which Applied does not believe is material.

Korea Criminal Proceedings

In 2010, the Seoul Eastern District Court began hearings on indictments brought by the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) alleging that employees of several companies improperly received and used confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The individuals charged included the former head of Applied Materials Korea (AMK), who at the time of the indictment was a vice president of Applied Materials, Inc., and certain other AMK employees. Neither Applied nor any of its subsidiaries was named as a party to the proceedings. Hearings on these matters concluded in November 2012 and the Court issued its decision on February 7, 2013. As part of the ruling, nine AMK employees (including the former head of AMK) were acquitted of all charges, while one AMK employee was found guilty on some of the charges and received a suspended jail sentence. The Prosecutor's Office has filed notices of appeal.

Other Matters

From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business.

Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material adverse effect on its consolidated financial condition or results of operations.

32

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Note 15 Industry Segment Operations

Applied’s four reportable segments are: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. As defined in the accounting literature, Applied’s chief operating decision-maker are its Chief Executive Officer and its President, who both review operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of July 28, 2013 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments.

Each reportable segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker.

Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level, which include costs related to share-based compensation; certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments.

The Silicon Systems Group segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation.

The Applied Global Services segment includes technically differentiated products and services to improve operating efficiency, reduce operating costs and lessen the environmental impact of semiconductor, display and solar customers’ factories. Applied Global Services’ products consist of spares, services, certain earlier generation products, remanufactured equipment, and products that have reached a particular stage in the product lifecycle. Customer demand for these products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites.

The Display segment includes products for manufacturing LCDs, organic light-emitting diodes (OLEDs), and other display technologies for TVs, personal computers, tablets, smart phones, and other consumer-oriented devices.

The Energy and Environmental Solutions segment includes products for fabricating crystalline-silicon (c-Si) solar photovoltaic cells and modules. This segment also includes products for high throughput roll-to-roll deposition equipment for flexible electronics and other applications.

With the acquisition of Varian, Applied acquired ion implantation technology for semiconductor as well as for c-Si solar cell manufacturing, which was recorded under the Silicon Systems Group segment in fiscal 2012. In fiscal 2013, Applied began marketing the solar implant products commercially through its Energy and Environmental Solutions segment. Accordingly, effective in the first quarter of fiscal 2013, Applied accounts for its solar implant products under the Energy and Environmental Solutions segment. The effect of the solar implant products was not material to the operations of either the Silicon Systems Group or Energy and Environmental Solutions segments.

33

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)

Net sales and operating income (loss) for each reportable segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended					Nine Months Ended
	Net Sales		Operating Income  (Loss)			Net Sales		Operating Income  (Loss)
	(In millions)
July 28, 2013:
Silicon Systems Group	$	1,272	$	246		$	3,532	$	663
Applied Global Services	497		114			1,485		321
Display	161		33			375		55
Energy and Environmental Solutions	45		(27		)	129		(403		)
Total Segment	$	1,975	$	366		$	5,521	$	636
July 29, 2012:
Silicon Systems Group	$	1,545	$	427		$	4,666	$	1,202
Applied Global Services	579		122			1,664		338
Display	142		10			380		23
Energy and Environmental Solutions	77		(102		)	363		(188		)
Total Segment	$	2,343	$	457		$	7,073	$	1,375

Operating results for the three and nine months ended July 28, 2013 and July 29, 2012 included restructuring charges and asset impairments as discussed in detail in Note 10, Restructuring Charges and Asset Impairments.

Reconciliations of total segment operating results to Applied consolidated totals for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Total segment operating income	$	366		$	457		$	636		$	1,375
Corporate and unallocated costs	(112		)	(135		)	(403		)	(465		)
Restructuring charges and asset impairments	(4		)	—			(12		)	—
Income from operations	$	250		$	322		$	221		$	910

The following companies accounted for at least 10 percent of Applied’s net sales for the nine months ended July 28, 2013, which were for products in multiple reportable segments.

	Percentage of Net Sales
Taiwan Semiconductor Manufacturing Company Limited	29	%
Samsung Electronics Co., Ltd.	15	%

34

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management's discussion and analysis is provided in addition to the accompanying consolidated condensed financial statements and notes to assist in understanding Applied's results of operations and financial condition. Financial information as of July 28, 2013 should be read in conjunction with the financial statements for the fiscal year ended October 28, 2012 contained in the Company's Form 10-K filed December 5, 2012.

All statements in this report and those made by the management of Applied, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include those regarding Applied’s future financial or operating results, cash flows and cash deployment strategies, declaration of dividends, share repurchases, restructuring activities, business strategies, costs, products, competitive positions, management’s plans and objectives for future operations, research and development, acquisitions and joint ventures, growth opportunities, customers, working capital, liquidity, investment portfolio and policies, and legal proceedings and claims, as well as industry trends and outlooks. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “potential” and “continue,” the negative of these terms, or other comparable terminology. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Any expectations based on forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in Part II, Item 1A, “Risk Factors” below and elsewhere in this report. These and many other factors could affect Applied’s future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by Applied or on its behalf. Applied undertakes no obligation to revise or update any forward-looking statements.

Overview

Applied provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic (PV) and related industries. Applied’s customers include manufacturers of semiconductor wafers and chips, flat panel liquid crystal and other displays, solar PV cells and modules, and other electronic devices. These customers may use what they manufacture in their own end products or sell the items to other companies for use in advanced electronic components. Applied operates in four reportable segments: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. A summary of financial information for each reportable segment is found in Note 15 of Notes to Consolidated Condensed Financial Statements. A discussion of factors that could affect Applied’s operations is set forth under “Risk Factors” in Part II, Item 1A, which is incorporated herein by reference. Product development and manufacturing activities occur primarily in the United States, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.

Applied’s results are driven primarily by worldwide demand for semiconductors, which in turn depends on end-user demand for electronic products. Each of Applied’s businesses is subject to highly cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, liquid crystal displays (LCDs), solar PVs and other electronic devices, as well as other factors, such as global economic and market conditions, and technological advances in fabrication processes. In light of this cyclicality, Applied's results can vary significantly year-over-year, as well as quarter-over-quarter.

35

The following tables presents certain significant measurements for the periods indicated:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013			Q3 2013 over Q3 2012
	(In millions, except per share amounts and percentages)
New orders	$	1,995		$	2,266		$	1,799		$	(271	)	$	196
Net sales	$	1,975		$	1,973		$	2,343		$	2		$	(368	)
Gross margin	$	806		$	808		$	930		$	(2	)	$	(124	)
Gross margin percent	40.8		%	41.0		%	39.7		%	(0.2) point			1.1 points
Operating income (loss)	$	250		$	(68	)	$	322		$	318		$	(72	)
Operating margin percent	12.7		%	(3.4		)%	13.7		%	16.1 points			(1.0) point
Net income (loss)	$	168		$	(129	)	$	218		$	297		$	(50	)
Earnings (loss) per diluted share	$	0.14		$	(0.11	)	$	0.17		$	0.25		$	(0.03	)
Non-GAAP Adjusted Results
Non-GAAP adjusted gross margin	$	847		$	852		$	974		$	(5	)	$	(127	)
Non-GAAP adjusted gross margin percent	42.9		%	43.2		%	41.6		%	(0.3) point			1.3 points
Non-GAAP adjusted operating income	$	312		$	285		$	431		$	27		$	(119	)
Non-GAAP adjusted operating margin percent	15.8		%	14.4		%	18.4		%	1.4 points			(2.6) points
Non-GAAP adjusted net income	$	223		$	199		$	300		$	24		$	(77	)
Non-GAAP adjusted earnings per diluted share	$	0.18		$	0.16		$	0.24		$	0.02		$	(0.06	)

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except per share amounts and percentages)
New orders	$	6,374		$	6,572		$	(198	)
Net sales	$	5,521		$	7,073		$	(1,552	)
Gross margin	$	2,196		$	2,726		$	(530	)
Gross margin percent	39.8		%	38.5		%	1.3 points
Operating income	$	221		$	910		$	(689	)
Operating margin percent	4.0		%	12.9		%	(8.9) points
Net income	$	73		$	624		$	(551	)
Earnings per diluted share	$	0.06		$	0.48		$	(0.42	)
Non-GAAP Adjusted Results
Non-GAAP adjusted gross margin	$	2,325		$	2,935		$	(610	)
Non-GAAP adjusted gross margin percent	42.1		%	41.5		%	0.6 point
Non-GAAP adjusted operating income	$	709		$	1,266		$	(557	)
Non-GAAP adjusted operating margin percent	12.8		%	17.9		%	(5.1) points
Non-GAAP adjusted net income	$	491		$	889		$	(398	)
Non-GAAP adjusted earnings per diluted share	$	0.40		$	0.69		$	(0.29	)

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below. Fiscal 2013 and 2012 each contain 52 weeks, and the first nine months of both fiscal years each contained 39 weeks.

36

Mobility continued to be the largest influence on semiconductor industry spending during the third quarter of fiscal 2013. The first half of fiscal 2013 was characterized by strong demand for semiconductor equipment by foundry customers. In the third quarter of fiscal 2013, demand from foundry customers softened from the prior quarter, reflecting seasonal consumer buying patterns for mobility products, while demand from memory and logic customers improved. Mobility also represents a significant driver of display industry spending, with demand for mobile display equipment remaining strong during the third quarter of fiscal 2013. Demand for LCD TV manufacturing equipment also increased during the third quarter of fiscal 2013 on higher consumer demand in emerging markets and demand for larger LCD TVs. Investment in solar equipment remained low during the third quarter of fiscal 2013 due to continued excess manufacturing capacity in the industry.

Results of Operations

New Orders

New orders by reportable segment for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Silicon Systems Group	$	1,203	60%	$	1,551	68%	$	1,166	65%	(22)%	3%
Applied Global Services	517		26%	481		21%	531		29%	7%	(3)%
Display	256		13%	195		9%	67		4%	31%	282%
Energy and Environmental Solutions	19		1%	39		2%	35		2%	(51)%	(46)%
Total	$	1,995	100%	$	2,266	100%	$	1,799	100%	(12)%	11%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Silicon Systems Group	$	4,117	65%	$	4,552	69%	(10)%
Applied Global Services	1,542		24%	1,697		26%	(9)%
Display	589		9%	192		3%	207%
Energy and Environmental Solutions	126		2%	131		2%	(4)%
Total	$	6,374	100%	$	6,572	100%	(3)%

New orders for the third quarter of fiscal 2013 decreased compared to the prior quarter due to lower demand for semiconductor equipment, partially offset by increased demand for LCD TV equipment. The Silicon Systems Group's proportion of total new orders relative to other segments decreased compared to the prior quarter but still comprise the majority of the Company's total new orders.

New orders for the third quarter of fiscal 2013 increased compared to the same period in fiscal 2012, primarily as a result of improvement in demand for LCD TV equipment. New orders for the first nine months of fiscal 2013 slightly decreased from the comparable period in fiscal 2012, mainly due to lower demand for semiconductor equipment and service products, partially offset by increased demand for LCD TV equipment.

37

New orders by geographic region, determined by the product shipment destination specified by the customer, were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Taiwan	$	356	18%	$	902	40%	$	588	33%	(61)%	(39)%
China	339		17%	276		12%	101		6%	23%	236%
Korea	249		12%	259		11%	299		17%	(4)%	(17)%
Japan	333		17%	191		8%	128		7%	74%	160%
Southeast Asia	124		6%	67		3%	91		5%	85%	36%
Asia Pacific	1,401		70%	1,695		74%	1,207		68%	(17)%	16%
United States	369		19%	398		18%	420		23%	(7)%	(12)%
Europe	225		11%	173		8%	172		9%	30%	31%
Total	$	1,995	100%	$	2,266	100%	$	1,799	100%	(12)%	11%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Taiwan	$	2,164	34%	$	1,765	27%	23%
China	853		14%	302		5%	182%
Korea	706		11%	1,670		25%	(58)%
Japan	705		11%	416		6%	69%
Southeast Asia	256		4%	209		3%	22%
Asia Pacific	4,684		74%	4,362		66%	7%
United States	1,158		18%	1,559		24%	(26)%
Europe	532		8%	651		10%	(18)%
Total	$	6,374	100%	$	6,572	100%	(3)%

The decrease in new orders from customers in Taiwan in the third quarter of fiscal 2013 compared to the prior quarter primarily reflected lower demand for semiconductor equipment from foundry customers, while the increase in new orders from customers in Japan was due to improved demand for semiconductor equipment from memory customers. The increase in new orders from customers in China reflected increased demand for LCD TV equipment.

The increase in new orders from customers in China in the third quarter and first nine months of fiscal 2013 from the comparable periods in the prior year was primarily due to improved demand for LCD TV equipment. The changes in new orders for these same periods from Japan, Korea, Taiwan and North America were primarily due to changes in relative demand for semiconductor equipment among foundry, memory and logic customers.

38

Changes in backlog during the nine months ended July 28, 2013 were as follows:

	July 28, 2013
	(In millions)
Beginning balance	$	1,606
New orders	6,374
Net sales	(5,521		)
Net adjustments	(170		)
Ending balance	$	2,289

Backlog consists of: (1) orders for which written authorizations have been accepted and assigned shipment dates are within the next 12 months, or shipment has occurred but revenue has not been recognized; and (2) contractual service revenue and maintenance fees to be earned within the next 12 months. Applied’s backlog at any particular time is not necessarily indicative of actual sales for any future periods due to the potential for customer changes in delivery schedules or cancellation of orders. Backlog adjustments included $137 million of order cancellations and other adjustments for items not meeting above criteria, as well as $33 million of currency adjustments. Approximately 82 percent of the backlog as of the end of the third quarter of fiscal 2013 is anticipated to be shipped within the next two quarters.

Backlog by reportable segment as of the end of the most recent three fiscal quarters was as follows:

	July 28, 2013			April 28, 2013			January 27, 2013			Q3 2013 over Q2 2013	Q3 2013 over Q1 2013
	(In millions, except percentages)
Silicon Systems Group	$	1,171	51%	$	1,261	55%	$	1,076	51%	(7)%	9%
Applied Global Services	585		26%	572		25%	633		30%	2%	(8)%
Display	409		18%	315		14%	246		12%	30%	66%
Energy and Environmental Solutions	124		5%	149		6%	151		7%	(17)%	(18)%
Total	$	2,289	100%	$	2,297	100%	$	2,106	100%	—%	9%

Total backlog remained essentially flat in the third quarter of fiscal 2013 compared to the prior quarter, while the backlog composition changed due to increased demand for LCD TV equipment and lower demand for semiconductor equipment. In the third quarter of fiscal 2013, approximately 45 percent of net sales in the Silicon Systems Group, Applied’s largest business segment, were for orders received and shipped within the quarter, down from 61 percent in the prior quarter.

39

Net Sales

Net sales by reportable segment for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Silicon Systems Group	$	1,272	65%	$	1,291	65%	$	1,545	66%	(1)%	(18)%
Applied Global Services	497		25%	517		26%	579		25%	(4)%	(14)%
Display	161		8%	127		7%	142		6%	27%	13%
Energy and Environmental Solutions	45		2%	38		2%	77		3%	18%	(42)%
Total	$	1,975	100%	$	1,973	100%	$	2,343	100%	—%	(16)%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Silicon Systems Group	$	3,532	64%	$	4,666	66%	(24)%
Applied Global Services	1,485		27%	1,664		24%	(11)%
Display	375		7%	380		5%	(1)%
Energy and Environmental Solutions	129		2%	363		5%	(64)%
Total	$	5,521	100%	$	7,073	100%	(22)%

Net sales were essentially flat for the third quarter of fiscal 2013 compared to the prior quarter. During the third quarter of fiscal 2013, increased investments in LCD TV equipment were offset by lower investments in semiconductor equipment from foundry customers. The Silicon Systems Group's relative share of total net sales remained unchanged compared to the prior quarter and remains the largest contributor of net sales.

For the third quarter of fiscal 2013 compared to the same period in the prior year, net sales decreased due to lower customer investments in semiconductor and solar equipment, partially offset by increased investments in LCD TV equipment. For the first nine months of fiscal 2013 compared to the same period in the prior year, net sales decreased across all segments.

The Silicon Systems Group and Applied Global Services comprised at least 90 percent of Applied's total net sales for all periods presented.

Net sales by geographic region, determined by the location of customers' facilities to which products were shipped, were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Taiwan	$	658	33%	$	828	42%	$	811	34%	(21)%	(19)%
China	273		14%	183		9%	254		11%	49%	7%
Korea	262		13%	226		12%	392		17%	16%	(33)%
Japan	154		8%	157		8%	189		8%	(2)%	(19)%
Southeast Asia	100		5%	73		4%	72		3%	37%	39%
Asia Pacific	1,447		73%	1,467		75%	1,718		73%	(1)%	(16)%
United States	353		18%	362		18%	441		19%	(2)%	(20)%
Europe	175		9%	144		7%	184		8%	22%	(5)%
Total	$	1,975	100%	$	1,973	100%	$	2,343	100%	—%	(16)%

40

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Taiwan	$	2,051	37%	$	1,954	28%	5%
China	583		11%	592		8%	(2)%
Korea	693		13%	1,770		25%	(61)%
Japan	409		7%	574		8%	(29)%
Southeast Asia	231		4%	215		3%	7%
Asia Pacific	3,967		72%	5,105		72%	(22)%
United States	1,116		20%	1,376		20%	(19)%
Europe	438		8%	592		8%	(26)%
Total	$	5,521	100%	$	7,073	100%	(22)%

The increase in net sales from customers in China in the third quarter of fiscal 2013 compared to the prior quarter primarily reflected higher investments in LCD TV equipment, while the decrease in net sales from customers in Taiwan was mainly due to reduced investments in semiconductor equipment from foundry customers.

The decrease in net sales from customers in Korea, United States and Europe in the third quarter and first nine months of fiscal 2013 compared to the same periods in the prior year was primarily due to lower investment in semiconductor equipment and changes in customer mix.

Gross Margin

Gross margins for the periods indicated were as follows:

	Three Months Ended									Change						Nine Months Ended						Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013			Q3 2013 over Q3 2012			July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Gross margin	$	806		$	808		$	930		$	(2	)	$	(124	)	$	2,196		$	2,726		$	(530	)
Gross margin percent	40.8		%	41.0		%	39.7		%	(0.2) point			1.1 points			39.8		%	38.5		%	1.3 points
Non-GAAP Adjusted Results
Non-GAAP adjusted gross margin	$	847		$	852		$	974		$	(5	)	$	(127	)	$	2,325		$	2,935		$	(610	)
Non-GAAP adjusted gross margin percent	42.9		%	43.2		%	41.6		%	(0.3) point			1.3 points			42.1		%	41.5		%	0.6 point

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below.

Gross margin and non-GAAP adjusted gross margin, as well as gross margin percent and non-GAAP adjusted gross margin percent were essentially flat in the third quarter of fiscal 2013 as compared to the prior quarter, with the slight changes driven mostly by an unfavorable change in product mix. Gross margin and non-GAAP adjusted gross margin in the third quarter and first nine months of fiscal 2013 decreased from the comparable periods in the prior year primarily reflecting lower net sales. Gross margin percent and non-GAAP adjusted gross margin percent in the third quarter and first nine months of fiscal 2013 increased slightly from the comparable periods in the prior year primarily due to lower inventory charges and a favorable change in product mix. Gross margin and non-GAAP adjusted gross margin during the three months ended July 28, 2013, April 28, 2013 and July 29, 2012 included $13 million, $12 million and $13 million, respectively, of share-based compensation expense. Gross margin and non-GAAP adjusted gross margin during the nine months ended July 28, 2013 and July 29, 2012 included $37 million and $40 million, respectively, of share-based compensation expense.

41

Research, Development and Engineering

Research, Development and Engineering (RD&E) expenses for the periods indicated were as follows:

	Three Months Ended						Change					Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013			Q3 2013 over Q3 2012		July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
Research, development and engineering	$	334	$	344	$	309	$	(10	)	$	25	$	982	$	933	$	49

Applied’s future operating results depend to a considerable extent on its ability to maintain a competitive advantage in the equipment and service products it provides. Applied believes that it is critical to continue to make substantial investments in RD&E to assure the availability of innovative technology that meets the current and projected requirements of its customers’ most advanced designs. Applied historically has maintained its commitment to investing in RD&E in order to continue to offer new products and technologies. Development cycles range from 12 to 36 months depending on whether the product is an enhancement of an existing product, which typically has a shorter development cycle, or a new product, which typically has a longer development cycle. Most of Applied’s existing products resulted from internal development activities and innovations involving new technologies, materials and processes. In certain instances, Applied acquires technologies, either in existing or new product areas, to complement its existing technology capabilities and to reduce time to market.

As a result of the Company's actions, including workforce reductions and reprioritization of existing spending, Applied is increasing funding for investments in technical capabilities and critical R&D programs in current and new markets, with a focus on semiconductor technologies. Consequently, RD&E expenses increased in the third quarter and first nine months of fiscal 2013 compared to the same periods in the prior year. The decrease in RD&E expenses in the third quarter of fiscal 2013 compared to the prior quarter was primarily due to lower variable compensation. RD&E expense during the three months ended July 28, 2013, April 28, 2013 and July 29, 2012 included $14 million, $13 million and $14 million, respectively, of share-based compensation expense. RD&E expense during the nine months ended July 28, 2013 and July 29, 2012 included $39 million and $40 million, respectively, of share-based compensation expense.

Marketing and Selling

Marketing and selling expenses for the periods indicated were as follows:

	Three Months Ended						Change						Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013			Q3 2013 over Q3 2012			July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
Marketing and selling	$	111	$	118	$	118	$	(7	)	$	(7	)	$	334	$	374	$	(40	)

Marketing and selling expenses for the third quarter of fiscal 2013 decreased slightly from the prior quarter and from the same period in fiscal 2012. The decrease in marketing and selling expenses for the first nine months of fiscal 2013 compared to the same period in fiscal 2012 was primarily attributable to savings from restructuring programs and the absence of provision for bad debts during the first nine months of fiscal 2013. Marketing and selling expenses during the three months ended July 28, 2013, April 28, 2013 and July 29, 2012 each included $5 million of share-based compensation. Marketing and selling expenses during the nine months ended July 28, 2013 and July 29, 2012 included $15 million and $17 million, respectively, of share-based compensation.

42

General and Administrative

General and administrative (G&A) expenses for the periods indicated were as follows:

	Three Months Ended						Change						Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013			Q3 2013 over Q3 2012			July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
General and administrative	$	97	$	126	$	137	$	(29	)	$	(40	)	$	348	$	465	$	(117	)

G&A expenses for the third quarter of fiscal 2013 decreased from the prior quarter due to lower variable compensation, savings from temporary shutdowns and continued cost reduction activities. The decrease in G&A expenses for the third quarter and first nine months of fiscal 2013 compared to the same periods in fiscal 2012 was primarily attributable to savings from restructuring programs and the absence of certain costs incurred during fiscal 2012 associated with the acquisition of Varian, including share-based compensation for accelerated vesting of certain awards. G&A expenses during the three months ended July 28, 2013, April 28, 2013 and July 29, 2012 included $8 million, $8 million and $10 million, respectively, of share-based compensation. G&A expenses during the nine months ended July 28, 2013 and July 29, 2012 included $25 million and $41 million, respectively, of share-based compensation.

Impairment of Goodwill and Intangible Assets

During the second quarter of fiscal 2013, the solar industry experienced further deterioration of market conditions associated with continued manufacturing overcapacity and weaker operating performance and outlook, resulting in increased uncertainties regarding the timing and nature of a recovery in solar capital equipment expenditures. Taking these factors into account, Applied reassessed its financial outlook for the Energy and Environmental Solutions reporting unit and consequently reevaluated the recoverability of this reporting unit's goodwill. Applied performed the two-step impairment test and concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value. Based on Applied's analyses, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the reporting unit. As a result, in the second quarter of fiscal 2013, Applied recorded a goodwill impairment charge of $224 million, representing all of the remaining goodwill for this reporting unit. Applied also performed an impairment test for long-lived assets associated with the reporting unit and determined that a majority of intangible assets were impaired mostly due to the lower long-term revenue and profitability outlook associated with the products related to these intangible assets. Accordingly, during the second quarter of fiscal 2013, Applied recorded an impairment charge of $54 million related to these intangible assets, which was the amount by which the carrying value of these intangible assets exceeded their estimated fair value, based on discounted projected cash flows.

The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time.

For further details, see Note 8 of Notes to Consolidated Condensed Financial Statements.

43

Restructuring Charges and Asset Impairments

Restructuring charges and asset impairments for the periods indicated were as follows:

	Three Months Ended						Change					Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013		Q3 2013 over Q3 2012			July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
Restructuring charges and asset impairments	$	14	$	10	$	44	$	4	$	(30	)	$	33	$	44	$	(11	)

On October 3, 2012, Applied announced a restructuring plan (the 2012 Global Restructuring Plan) to realign its global workforce and enhance its ability to invest for growth. Under this plan, Applied implemented a voluntary retirement program and other workforce reduction actions that were expected to affect approximately 900 to 1,300 positions, or 6 percent to 9 percent of its global workforce. In connection with the 2012 Global Restructuring Plan, Applied expects to incur aggregate pre-tax restructuring charges comprised of severance and other termination benefits in the range of $120 million to $160 million (including costs incurred to date of $118 million discussed below). Applied expected to substantially complete this plan by the end of the third quarter of fiscal 2013. Applied has extended this plan and expects to substantially complete it by the end of the first quarter of fiscal 2014.

During the third quarter and first nine months of fiscal 2013, Applied recognized $4 million and $12 million of employee-related costs in connection with the 2012 Global Restructuring Plan, respectively. These costs were not allocated to the segments. Applied has incurred aggregate pre-tax restructuring charges comprised of severance and other termination benefits of $118 million under this plan.

On May 10, 2012, Applied announced a plan (the 2012 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and light-emitting diode (LED) equipment markets. As part of the 2012 EES Restructuring Plan, Applied relocated certain manufacturing, business operations and customer support functions of its precision wafering systems business, and ceased LED development activities. As the Energy and Environmental Solutions segment continues to consolidate infrastructure and reduce its operating expenses, Applied expects approximately 150 additional positions to be impacted globally. No changes in the estimated pre-tax cost of the implementation of this plan are anticipated. During the third quarter and first nine months of fiscal 2013, Applied recognized $10 million and $19 million of restructuring and asset impairment charges in connection with this plan, which were primarily reported in the Energy and Environmental Solutions segment. As of July 28, 2013, total costs incurred in implementing this plan were $80 million, of which $13 million were inventory-related charges.

Also, during the first nine months of fiscal 2013, Applied incurred severance costs of $2 million associated with the integration of Varian.

For further details, see Note 10 of Notes to Consolidated Condensed Financial Statements.

44

Interest and Other Expenses

Interest and other expenses for the periods indicated were as follows:

	Three Months Ended						Change						Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013			Q3 2013 over Q3 2012			July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
Interest and other expense	$	23	$	24	$	24	$	(1	)	$	(1	)	$	71	$	72	$	(1	)

Interest and other expense remained essentially flat in the third quarter of fiscal 2013 compared to the prior quarter and for the third quarter and the first nine months of fiscal 2013 compared to the comparable periods in fiscal 2012. Interest expenses incurred were primarily associated with the senior unsecured notes issued in June 2011.

Interest and Other Income, net

Interest and other income, net for the periods indicated was as follows:

	Three Months Ended						Change				Nine Months Ended				Change
	July 28, 2013		April 28, 2013		July 29, 2012		Q3 2013 over Q2 2013		Q3 2013 over Q3 2012		July 28, 2013		July 29, 2012		YTD Q3 2013 over YTD Q3 2012
	(In millions)
Interest and other income, net	$	4	$	4	$	4	$	—	$	—	$	11	$	13	$	(2	)

Interest and other income, net remained essentially flat in the third quarter and first nine months of fiscal 2013 compared to the prior quarter and to the comparable periods in fiscal 2012. Interest and other income, net primarily includes interest earned on cash and investments and realized gains on sale of securities.

Income Taxes

Income tax expenses for the periods indicated were as follows:

	Three Months Ended									Change					Nine Months Ended						Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013		Q3 2013 over Q3 2012			July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Provision for income taxes	$	60		$	39		$	84		$	21	$	(24	)	$	83		$	224		$	(141	)
Effective tax rate	26.3		%	(43.3		)%	27.8		%	69.6 points		(1.5) points			53.2		%	26.4		%	26.8 points

The effective tax rates for the third and second quarters of fiscal 2013 were 26.3 percent and negative 43.3 percent, respectively. The change in the effective tax rate for the third quarter of fiscal 2013 from the prior quarter was primarily due to the goodwill impairment charge recorded in the second quarter of fiscal 2013 that was not deductible. The goodwill impairment charge also resulted in an income tax provision on a loss before income taxes that caused a negative effective tax rate for the second quarter of fiscal 2013.

The effective tax rate for the third quarter of fiscal 2013 decreased compared to the same period in the prior year primarily due to changes in the geographic composition of income, including jurisdictions with tax incentives, and benefits resulting from resolution of prior years’ income tax filings.

45

The effective tax rate increased for the first nine months of fiscal 2013 compared to the same period in the prior year primarily due to the goodwill impairment charge recorded in the prior quarter that was not deductible. The effective tax rate for the first nine months of fiscal 2013 also reflected a $14 million benefit resulting from the resolution of prior years’ income tax filings and a $13 million benefit from the reinstatement of the U.S. federal research and development tax credit, retroactive to January 1, 2012.

The effective tax rates for the periods presented were also affected by changes in geographic composition of income, including income outside the U.S. in jurisdictions with tax incentives. Applied’s effective income tax rate depends on various factors, such as tax legislation and the geographic composition of Applied’s pre-tax income.

Segment Information

Applied reports financial results in four segments: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. A description of the products, as well as financial data, for each reportable segment can be found in Note 15 of Notes to Consolidated Condensed Financial Statements. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level. These unallocated costs include costs for share-based compensation; certain management, finance, legal, human resources, and RD&E functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment.

The results for each reportable segment are discussed below.

Silicon Systems Group Segment

The Silicon Systems Group segment includes semiconductor capital equipment for deposition, etch, ion implantation, rapid thermal processing, chemical mechanical planarization, metrology and inspection, and wafer packaging. Development efforts are focused on solving customers' key technical challenges in transistor, patterning, interconnect and packaging performance as devices scale to advanced technology nodes. The mobility trend remains the largest influence on industry spending, as it drives device manufacturers to deliver high-performance, low-power processors and affordable solid-state storage in a small form factor.

The competitive environment for the Silicon Systems Group in the first nine months of fiscal 2013 reflected continued investment in the semiconductor industry, driven by the demands of mobile computing. Foundry customers remain the primary driver of net sales of the Silicon Systems Group. As manufacturers of DRAM and NAND balance supply with demand in their markets, capacity requirements improved moderately from the same period last year. Memory spending remained focused on technology conversions to fulfill growing demand for mobility-related end markets.

With the acquisition of Varian, Applied acquired ion implantation technology for semiconductor as well as c-Si solar cell manufacturing, which was recorded under the Silicon Systems Group segment in fiscal 2012. In fiscal 2013, Applied began marketing the solar implant products commercially through its Energy and Environmental Solutions segment. Accordingly, effective in the first quarter of fiscal 2013, Applied accounts for its solar implant products under the Energy and Environmental Solutions segment. The effect of the solar implant products was not material to the operations of either the Silicon Systems Group or Energy and Environmental Solutions segments.

46

Certain significant measures for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013				Q3 2013 over Q3 2012
	(In millions, except percentages and ratios)
New orders	$	1,203		$	1,551		$	1,166		$	(348	)	(22)%	$	37		3%
Net sales	1,272			1,291			1,545			(19		)	(1)%	(273		)	(18)%
Book to bill ratio	0.9			1.2			0.8
Operating income	246			283			427			(37		)	(13)%	(181		)	(42)%
Operating margin	19.3		%	21.9		%	27.6		%				(2.6) points				(8.3) points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	283		$	329		$	482		(46		)	(14)%	(199		)	(41)%
Non-GAAP adjusted operating margin percent	22.2		%	25.5		%	31.2		%				(3.3) points				(9.0) points

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages and ratios)
New orders	$	4,117		$	4,552		$	(435	)	(10)%
Net sales	3,532			4,666			(1,134		)	(24)%
Book to bill ratio	1.2			1.0
Operating income	663			1,202			(539		)	(45)%
Operating margin	18.8		%	25.8		%				(7.0) points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	792		$	1,442		(650		)	(45)%
Non-GAAP adjusted operating margin percent	22.4		%	30.9		%				(8.5) points

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below.

New orders for the Silicon Systems Group by end use application for the periods indicated were as follows:

	Three Months Ended			Nine Months Ended
	July 28, 2013	April 28, 2013	July 29, 2012	July 28, 2013	July 29, 2012
Foundry	45%	66%	58%	62%	64%
Memory	38%	21%	29%	24%	23%
Logic and other	17%	13%	13%	14%	13%
	100%	100%	100%	100%	100%

47

New orders for the third quarter of fiscal 2013 decreased and net sales slightly declined compared to the prior quarter, primarily due to lower demand and spending from foundry customers, partially offset by increased demand and spending from memory and logic customers. Approximately 45 percent of net sales in the third quarter of fiscal 2013 were for orders received and shipped within the quarter. Operating income and non-GAAP adjusted operating income decreased in the third quarter of fiscal 2013 compared to the prior quarter, primarily reflecting changes in product mix. In the third quarter of fiscal 2013, four customers accounted for approximately 56 percent of this segment's total new orders, while two customers accounted for 49 percent of net sales.

New orders for the third quarter of fiscal 2013 increased slightly compared to the same period in fiscal 2012 mainly due to increased demand from memory customers, partially offset by lower demand from foundry customers. Net sales during the current quarter decreased compared to the same period in fiscal 2012 due to lower sales across all customer categories. Both new orders and net sales for the first nine months of fiscal 2013 decreased compared to the prior year primarily due to lower demand and spending from foundry and memory customers. Operating income and non-GAAP adjusted operating income decreased in the third quarter and first nine months of fiscal 2013 compared to the same periods in the prior year, reflecting the decrease in net sales and changes in product mix.

The following regions accounted for at least 30 percent of total net sales for the Silicon Systems Group segment for one or more of the periods indicated:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Taiwan	$	533	42%	$	716	55%	$	680	44%	(26)%	(22)%
Korea	$	190	15%	$	113	9%	$	294	19%	68%	(35)%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Taiwan	$	1,711	48%	$	1,428	31%	20%
Korea	$	419	12%	$	1,496	32%	(72)%

48

Applied Global Services Segment

The Applied Global Services segment encompasses spares, upgrades, services, remanufactured earlier generation equipment (including 200mm systems) and factory automation software for semiconductor, display and solar manufacturing. These products are designed to improve customers' operating efficiency, optimize their operating costs, and lessen the environmental impact of their factories. Customer demand for products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites.

Industry conditions that affected Applied Global Services' sales of spares and services during the first nine months of fiscal 2013 were principally semiconductor manufacturers' wafer starts as well as utilization rates.

Certain significant measures for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013				Q3 2013 over Q3 2012
	(In millions, except percentages and ratios)
New orders	$	517		$	481		$	531		$	36		7%	$	(14	)	(3)%
Net sales	497			517			579			(20		)	(4)%	(82		)	(14)%
Book to bill ratio	1.0			0.9			0.9
Operating income	114			118			122			(4		)	(3)%	(8		)	(7)%
Operating margin	22.9		%	22.8		%	21.1		%				0.1 point				1.8 points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	116			120			135			(4		)	(3)%	(19		)	(14)%
Non-GAAP adjusted operating margin percent	23.3		%	23.2		%	23.3		%				0.1 point				—%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages and ratios)
New orders	$	1,542		$	1,697		$	(155	)	(9)%
Net sales	1,485			1,664			(179		)	(11)%
Book to bill ratio	1.0			1.0
Operating income	321			338			(17		)	(5)%
Operating margin	21.6		%	20.3		%				1.3 points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	327		$	359		(32		)	(9)%
Non-GAAP adjusted operating margin percent	22.0		%	21.6		%				0.4 point

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below.

49

New orders for the third quarter of fiscal 2013 increased compared to the prior quarter primarily due to increased demand for spares and equipment upgrades. Net sales for the third quarter of fiscal 2013 decreased slightly from the prior quarter, which resulted in slightly lower operating income and non-GAAP adjusted operating income.

New orders for the third quarter and first nine months of fiscal 2013 decreased compared to the same periods in fiscal 2012 mainly due to decreased demand for semiconductor spares and services. The decrease in new orders for the first nine months of fiscal 2013 was also attributable to an order for thin film solar equipment of $95 million recorded during the first nine months of fiscal 2012. Net sales for the third quarter and first nine months of fiscal 2013 decreased compared to the same periods in the prior year due mainly to decreased spending in semiconductor spares and services. Operating income and non-GAAP adjusted operating income decreased in the third quarter and first nine months of fiscal 2013 compared to the same periods in the prior year, reflecting the decrease in net sales. Operating income for the first nine months of fiscal 2013 included restructuring and asset impairment charges of $2 million associated with the 2012 EES Restructuring Plan and the integration of Varian.

There was no single region that accounted for at least 30 percent of total net sales for the Applied Global Services segment for any of the periods presented.

Display Segment

The Display segment encompasses products for manufacturing LCDs, organic light-emitting diodes (OLEDs), and other display technologies for TVs, personal computers (PCs), tablets, smart phones, and other consumer-oriented devices. The segment is focused on expanding market share through technologically-differentiated equipment for manufacturing large-scale TVs; entry into new markets such as the low temperature polysilicon (LTPS), metal oxide, and touch panel sectors; and development of products that enable cost reductions through productivity and uniformity. Historically, display industry growth has depended primarily on consumer demand for increasingly larger and more advanced LCD TVs.

The market environment for Applied's Display segment in the first nine of fiscal 2013 was characterized by continued demand for touch screen and high-end mobile devices, as well as a recovery in the LCD TV equipment market.

Certain significant measures for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013			Q3 2013 over Q3 2012
	(In millions, except percentages and ratios)
New orders	$	256		$	195		$	67		$	61	31%	$	189	282%
Net sales	161			127			142			34		27%	19		13%
Book to bill ratio	1.6			1.5			0.5
Operating income	33			19			10			14		74%	23		230%
Operating margin	20.5		%	15.0		%	7.0		%			5.5 points			13.5 points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	34		$	21		$	12		13		62%	22		183%
Non-GAAP adjusted operating margin percent	21.1		%	16.5		%	8.5		%			4.6 points			12.6 points

50

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages and ratios)
New orders	$	589		$	192		$	397		207%
Net sales	375			380			(5		)	(1)%
Book to bill ratio	1.6			0.5
Operating income	55			23			32			139%
Operating margin	14.7		%	6.1		%				8.6 points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	60		$	29		31			107%
Non-GAAP adjusted operating margin percent	16.0		%	7.6		%				8.4 points

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below.

New orders and net sales for the third quarter of fiscal 2013 increased compared to the prior quarter primarily reflecting increased demand for LCD TV equipment. Operating income and non-GAAP adjusted operating income increased primarily due to higher level of net sales. One customer accounted for approximately 70 percent of new orders for the Display segment in the third quarter of fiscal 2013. Three customers accounted for 74 percent of net sales for this segment in the third quarter of fiscal 2013, with one of the customers accounting for 43 percent of net sales.

New orders for the third quarter and first nine months of fiscal 2013 increased compared to the same periods in the prior year primarily due to increased demand for LCD TV equipment as a result of improvement in end-market conditions. Net sales for the third quarter of fiscal 2013 increased compared to the same period in fiscal 2012 primarily due to increased investments in LCD TV equipment, while net sales for the first nine months of fiscal 2013 were essentially flat compared to the prior year. Operating income and non-GAAP adjusted operating income increased for the third quarter and first nine months of fiscal 2013 from the comparable periods in fiscal 2012, as a result of favorable changes in product mix and operating cost reductions.

The following regions accounted for at least 30 percent of total net sales for the Display segment for one or more of the periods indicated:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Korea	$	26	16%	$	59	46%	$	28	20%	(56)%	(7)%
China	$	113	70%	$	30	24%	$	58	41%	277%	95%
Taiwan	$	14	9%	$	9	7%	$	8	6%	56%	75%
Japan	$	8	5%	$	28	22%	$	46	32%	(71)%	(83)%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Korea	$	128	34%	$	74	19%	73%
China	$	187	50%	$	78	21%	140%
Taiwan	$	24	6%	$	145	38%	(83)%
Japan	$	36	10%	$	71	19%	(49)%

51

Energy and Environmental Solutions Segment

The Energy and Environmental Solutions segment includes products for fabricating c-Si solar PVs, as well as high throughput roll-to-roll deposition equipment for flexible electronics, packaging and other applications. This business is focused on delivering solutions to generate and conserve energy, with an emphasis on lowering the cost to produce solar power and increasing conversion efficiency. While end-demand for solar PVs has been robust over the last several years, investment levels in capital equipment remain depressed. Global solar PV production capacity exceeds anticipated demand, which has caused solar PV manufacturers to significantly reduce or delay investments in manufacturing capacity and new technology, or in some instances to cease operations.

The solar PV industry environment in the first nine months of fiscal 2013 was characterized by continued excess manufacturing capacity despite continued growth in end-market demand, uncertainty related to international trade disputes, and tightened access to capital.  As a result, solar cell and wafering customers are deferring purchases of new equipment. 

With the acquisition of Varian, Applied acquired ion implantation technology for semiconductor as well as c-Si solar cell manufacturing which was recorded under the Silicon Systems Group segment in fiscal 2012. In fiscal 2013, Applied began marketing the solar implant products commercially through its Energy and Environmental Solutions segment. Accordingly, effective in the first quarter of fiscal 2013, Applied accounts for its solar implant products under the Energy and Environmental Solutions segment. The effect of the solar implant products was not material to the operations of either the Silicon Systems Group or Energy and Environmental Solutions segments.

Certain significant measures for the periods indicated were as follows:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013				Q3 2013 over Q3 2012
	(In millions, except percentages and ratios)
New orders	$	19		$	39		$	35		$	(20	)	(51)%	$	(16	)	(46)%
Net sales	45			38			77			7			18%	(32		)	(42)%
Book to bill ratio	0.4			1.0			0.5
Operating loss	(27		)	(322		)	(102		)	295			92%	75			74%
Operating margin	(60.0		)%	(847.4		)%	(132.5		)%				787.4 points				72.5 points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating loss	(15		)	(34		)	(64		)	19			56%	49			77%
Non-GAAP adjusted operating margin percent	(33.3		)%	(89.5		)%	(83.1		)%				56.2 points				49.8 points

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages and ratios)
New orders	$	126		$	131		$	(5	)	(4)%
Net sales	129			363			(234		)	(64)%
Book to bill ratio	1.0			0.4
Operating loss	(403		)	(188		)	(215		)	(114)%
Operating margin	(312.4		)%	(51.8		)%				(260.6) points
Non-GAAP Adjusted Results
Non-GAAP adjusted operating loss	$	(93	)	$	(138	)	45			33%
Non-GAAP adjusted operating margin percent	(72.1		)%	(38.0		)%				(34.1) points

Reconciliations of non-GAAP adjusted measures are presented under "Non-GAAP Adjusted Results" below.

52

New orders and net sales for the third quarter and first nine months of fiscal 2013 remained at low levels due to continued excess manufacturing capacity in the solar industry, which resulted in operating losses for the segment. One customer accounted for approximately 15 percent of new orders and net sales for this segment during the third quarter of fiscal 2013. Non-GAAP adjusted operating loss decreased for the third quarter of fiscal 2013 compared to the prior quarter and third quarter of fiscal 2012 due to spending reductions resulting from restructuring activities and continued cost reduction measures.

The following regions accounted for at least 30 percent of total net sales for the Energy and Environmental Solutions segment for one or more of the periods presented:

	Three Months Ended									Change
	July 28, 2013			April 28, 2013			July 29, 2012			Q3 2013 over Q2 2013	Q3 2013 over Q3 2012
	(In millions, except percentages)
Taiwan	$	7	16%	$	3	8%	$	15	19%	133%	(53)%
China	$	30	67%	$	21	55%	$	45	58%	43%	(33)%

	Nine Months Ended						Change
	July 28, 2013			July 29, 2012			YTD Q3 2013 over YTD Q3 2012
	(In millions, except percentages)
Taiwan	$	17	13%	$	114	31%	(85)%
China	$	66	51%	$	171	47%	(61)%

Operating income for the third quarter and first nine months of fiscal 2013 included restructuring and asset impairment charges of $10 million and $18 million, respectively, associated with the 2012 EES Restructuring Plan discussed above.

During the second quarter of fiscal 2013, Applied performed a two-step goodwill impairment test. Applied concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value and therefore recorded a $224 million goodwill impairment charge. In addition, Applied performed an impairment test for long-lived assets associated with the reporting unit and determined that the majority of intangible assets were impaired. Accordingly, Applied recorded an impairment charge of $54 million related to these intangible assets. See discussion in the Impairment of Goodwill and Intangible Assets section above and Note 8 of Notes to the Consolidated Condensed Financial Statements for further details.

53

Financial Condition, Liquidity and Capital Resources

Applied's cash, cash equivalents and investments consist of the following:

	July 28, 2013		October 28, 2012
	(In millions)
Cash and cash equivalents	$	1,745	$	1,392
Short-term investments	230		545
Long-term investments	1,055		1,055
Total cash, cash-equivalents and investments	$	3,030	$	2,992

A summary of cash provided by (used in) operating, investing, and financing activities is as follows:

	Nine Months Ended
	July 28, 2013			July 29, 2012
	(In millions)
Cash provided by operating activities	$	604		$	1,440
Cash provided by (used in) investing activities	$	158		$	(4,697	)
Cash used in financing activities	$	(409	)	$	(1,172	)

Cash from operating activities for the nine months ended July 28, 2013 was $604 million, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components. Non-cash charges included depreciation, amortization, share-based compensation, impairment of goodwill and intangible assets, and restructuring and asset impairments. Cash from operations was negatively affected by increases in inventories and decreases in accounts payable and accrued expenses. The increases in inventories were mainly due to slightly higher deferred inventory at the end of the third quarter of fiscal 2013. The decreases in accounts payable and accrued expenses were mostly related to cash usage for existing restructuring plans and variable compensation programs.

Applied did not utilize programs to discount letters of credit issued by customers during the three and nine months ended July 28, 2013 and July 29, 2012. 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. There was no factoring of accounts receivable or discounting of promissory notes during the three and nine months ended July 28, 2013 and during the three months ended July 29, 2012. Applied factored accounts receivable and discounted promissory notes of $70 million during the nine months ended July 29, 2012.

Applied’s working capital was $3.0 billion at July 28, 2013 and $2.8 billion at October 28, 2012.

Days sales, inventory and payable outstanding at the end of each of the periods indicated are:

	July 28, 2013	April 28, 2013	July 29, 2012
Days sales outstanding	54	59	60
Days inventory outstanding	106	103	89
Days payable outstanding	40	41	29

Days sales outstanding varies due to the timing of shipments and the payment terms. Days sales outstanding decreased in the third quarter of fiscal 2013 compared to the prior quarter primarily due to better sales linearity and improved collection performance. Days inventory outstanding increased in the third quarter of fiscal 2013 compared to the prior quarter due to slightly higher deferred inventory at quarter end, while days payable outstanding remained relatively flat. Days inventory outstanding and days payable outstanding increased during the third quarter of fiscal 2013 compared to the same period in the prior year reflecting lower business volumes.

Applied generated $158 million of cash from investing activities during the nine months ended July 28, 2013. Proceeds from sales and maturities of investments, net of purchases of investments, totaled $299 million and capital expenditures, net were $140 million during the nine months ended July 28, 2013. During the nine months ended July 29, 2012, Applied used $4.7 billion in investing activities, primarily due to the acquisition of Varian.

54

Applied used cash for financing activities in the amount of $409 million during the nine months ended July 28, 2013, consisting primarily of $336 million in payment of cash dividends to stockholders and $198 million in repurchases of common stock, offset by proceeds from stock issuances related to equity compensation awards of $125 million.

In June 2013, March 2013 and December 2012, Applied's Board of Directors declared a quarterly cash dividend in the amount of $0.10, $0.10 and $0.09 per share, respectively. Applied currently anticipates 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 Applied’s 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 Applied’s stockholders.

Applied has credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement with a group of banks was extended by one year in May 2013 and is scheduled to expire in May 2017. This agreement provides for borrowings in United States dollars at interest rates keyed to one of the two rates selected by Applied for each advance and includes financial and other covenants with which Applied was in compliance at July 28, 2013. Remaining credit facilities in the amount of approximately $80 million are with Japanese banks. Applied’s 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. No amounts were outstanding under any of these facilities at both July 28, 2013 and October 28, 2012 and Applied has not utilized these credit facilities.

Applied has debt agreements that contain financial and other covenants. These covenants require Applied to maintain certain minimum financial ratios. At July 28, 2013, Applied was in compliance with all such covenants. See Note 9 of Notes to Consolidated Condensed Financial Statements for additional discussion of long-term debt.

In the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of July 28, 2013, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $41 million. Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does 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.

Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of July 28, 2013, Applied Materials, Inc. has provided parent guarantees to banks for approximately $102 million to cover these arrangements.

Applied’s investment portfolio consists principally of investment grade money market mutual funds, U.S. Treasury and agency securities, municipal bonds, corporate bonds and mortgage-backed and asset-backed securities, as well as equity securities. Applied regularly monitors the credit risk in its investment portfolio and takes appropriate measures, which may include the sale of certain securities, to manage such risks prudently in accordance with its investment policies. During the three and nine months ended July 28, 2013, Applied did not recognize any impairment of its fixed income and publicly traded equity securities. At July 28, 2013, gross unrealized losses due to a decrease in the fair value of certain fixed income securities were not material.

During the nine months ended July 28, 2013, Applied recorded a favorable adjustment of $5 million to the allowance for doubtful accounts. While Applied believes that its allowance for doubtful accounts at July 28, 2013 is adequate, it will continue to closely monitor customer liquidity and economic conditions.

As of July 28, 2013, approximately $1.3 billion of cash, cash equivalents, and marketable securities held by foreign subsidiaries may be subject to U.S. taxes if repatriated for U.S. operations. Of this amount, Applied intends to permanently reinvest approximately $0.9 billion of these funds outside of the U.S. and does not plan to repatriate these funds. For the remaining cash, cash equivalents and marketable securities held by foreign subsidiaries, U.S. taxes have been provided for in the financial statements.

Although cash requirements will fluctuate based on the timing and extent of factors such as those discussed above, Applied’s management believes that cash generated from operations, together with the liquidity provided by existing cash balances and borrowing capability, will be sufficient to satisfy Applied’s liquidity requirements for the next 12 months. For further details regarding Applied’s operating, investing and financing activities, see the Consolidated Condensed Statements of Cash Flows in this report.

55

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 1 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K and Note 1 of Notes to Consolidated Condensed Financial Statements in this report describe the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies.

A critical accounting policy is defined as one that is both material to the presentation of Applied's consolidated financial statements and that requires management to make difficult, subjective or complex judgments that could have a material effect on Applied's financial condition or results of operations. Specifically, these policies have the following attributes: (1) Applied is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates Applied could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on Applied's financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. Applied bases its estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as Applied's operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. These uncertainties include those discussed in Part II, Item 1A, “Risk Factors.” Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that Applied's consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America, and provide a meaningful presentation of Applied's financial condition and results of operations.

Management believes that the following are critical accounting policies and estimates:

Revenue Recognition

Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; sales price is fixed or determinable; and collectability is probable. Each sale arrangement may contain commercial terms that differ from other arrangements. In addition, Applied frequently enters into contracts that contain multiple deliverables. Judgment is required to properly identify the accounting units of the multiple deliverable transactions and to determine the manner in which revenue should be allocated among the accounting units. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of the estimated sales price between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition, which could have a material effect on Applied's financial condition and results of operations.

Warranty Costs

Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied's warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. As Applied's customer engineers and process support engineers are highly trained and deployed globally, labor availability is a significant factor in determining labor costs. The quantity and availability of critical replacement parts is another significant factor in estimating warranty costs. Unforeseen component failures or exceptional component performance can also result in changes to warranty costs. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required, which could have a material adverse effect on Applied's business, financial condition and results of operations.

Allowance for Doubtful Accounts

Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer's ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied, which could have a material adverse effect on Applied's business, financial condition and results of operations.

56

Inventory Valuation

Inventories are generally stated at the lower of cost or market, with cost determined on a first-in, first-out basis. The carrying value of inventory is reduced for estimated obsolescence by the difference between its cost and the estimated market value based upon assumptions about future demand. Applied evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand. In addition, inventories are evaluated for potential obsolescence due to the effect of known and anticipated engineering change orders and new products. If actual demand were to be substantially lower than estimated, additional adjustments for excess or obsolete inventory may be required, which could have a material adverse effect on Applied's business, financial condition and results of operations.

Goodwill and Intangible Assets

Applied reviews goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, and also annually reviews goodwill and intangibles with indefinite lives for impairment. Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. If actual product acceptance differs significantly from the estimates, Applied may be required to record an impairment charge to reduce the carrying value of the reporting unit to its realizable value. The fair value of a reporting unit is estimated using both the income approach and the market approach taking into account such factors as future anticipated operating results and estimated cost of capital. Management uses significant judgment when assessing goodwill for potential impairment, especially in emerging markets. A severe decline in market value could result in an unexpected impairment charge for impaired goodwill, which could have a material adverse effect on Applied's business, financial condition and results of operations.

Income Taxes

The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, non-tax deductible expenses incurred in connection with acquisitions and availability of tax credits. Management carefully monitors the changes in many factors and adjusts the effective income tax rate as required. If actual results differ from these estimates, Applied could be required to record a valuation allowance on deferred tax assets or adjust its effective income tax rate, which could have a material adverse effect on Applied's business, financial condition and results of operations.

Applied accounts for income taxes by recognizing deferred tax assets and liabilities using statutory tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards. Deferred tax assets are also reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. Management has determined that it is more likely than not that Applied's future taxable income will be sufficient to realize its deferred tax assets, net of existing valuation allowance.

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with Applied's expectations could have a material impact on Applied's results of operations and financial condition.

Non-GAAP Adjusted Results

Management uses non-GAAP adjusted results to evaluate operating and financial performance in light of business objectives and for planning purposes. Applied believes these measures enhance investors’ ability to review the Company’s business from the same perspective as management and facilitate comparisons of this period’s results with prior periods. The non-GAAP adjusted results presented below exclude the impact of the following, where applicable: certain acquisition-related costs; restructuring charges and any associated adjustments; impairments of assets, goodwill, or investments; gain or loss on sale of facilities; and certain tax items. These non-GAAP adjusted measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.

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The following tables present a reconciliation of the GAAP and non-GAAP adjusted consolidated results:

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

	Three Months Ended									Nine Months Ended
(In millions, except percentages)	July 28, 2013			April 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
Non-GAAP Adjusted Gross Margin
Reported gross margin (GAAP basis)	$	806		$	808		$	930		$	2,196		$	2,726
Certain items associated with acquisitions1	40			43			44			126			209
Acquisition integration and deal costs	1			1			—			3			—
Non-GAAP adjusted gross margin	$	847		$	852		$	974		$	2,325		$	2,935
Non-GAAP adjusted gross margin percent (% of net sales)	42.9		%	43.2		%	41.6		%	42.1		%	41.5		%
Non-GAAP Adjusted Operating Income
Reported operating income (loss) (GAAP basis)	$	250		$	(68	)	$	322		$	221		$	910
Impairment of goodwill and intangible assets	—			278			—			278			—
Certain items associated with acquisitions1	47			53			57			154			242
Acquisition integration and deal costs	5			12			8			27			70
Restructuring charges and asset impairments2, 3, 4, 5	14			10			44			33			44
Gain on sale of facility	(4		)	—			—			(4		)	—
Non-GAAP adjusted operating income	$	312		$	285		$	431		$	709		$	1,266
Non-GAAP adjusted operating margin percent (% of net sales)	15.8		%	14.4		%	18.4		%	12.8		%	17.9		%
Non-GAAP Adjusted Net Income
Reported net income (loss) (GAAP basis)	$	168		$	(129	)	$	218		$	73		$	624
Impairment of goodwill and intangible assets	—			278			—			278			—
Certain items associated with acquisitions1	47			53			57			154			242
Acquisition integration and deal costs	5			12			8			27			70
Restructuring charges and asset impairments2, 3, 4, 5	14			10			44			33			44
Impairment of strategic investments	3			2			—			5			3
Gain on sale of facility	(4		)	—			—			(4		)	—
Reinstatement of federal R&D tax credit	—			(3		)	—			(13		)	—
Resolution of prior years’ income tax filings	(3		)	—			(10		)	(14		)	(17		)
Income tax effect of non-GAAP adjustments	(7		)	(24		)	(17		)	(48		)	(77		)
Non-GAAP adjusted net income	$	223		$	199		$	300		$	491		$	889

1	These items are incremental charges attributable to acquisitions, consisting of inventory fair value adjustments on products sold, and amortization of purchased intangible assets.
2	Results for the three months ended July 28, 2013 included $4 million of employee-related costs related to the restructuring program announced on October 3, 2012 and restructuring and asset impairment charges of $10 million related to the restructuring program announced on May 10, 2012.
3	Results for the three months ended April 28, 2013 included $4 million of employee-related costs related to the restructuring program announced on October 3, 2012 and restructuring and asset impairment charges of $6 million related to the restructuring program announced on May 10, 2012.
4	Results for the three and nine months ended July 29, 2012 included $35 million of restructuring and asset impairment charges related to the restructuring program announced on May 10, 2012 and severance charges of $9 million related to the integration of Varian.
5	Results for the nine months ended July 28, 2013 included $12 million of employee-related costs, net, related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of $19 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian.

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APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

	Three Months Ended								Nine Months Ended
(In millions, except per share amounts)	July 28, 2013		April 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
Non-GAAP Adjusted Earnings Per Diluted Share
Reported earnings (loss) per diluted share (GAAP basis)	$	0.14	$	(0.11	)	$	0.17		$	0.06		$	0.48
Impairment of goodwill and intangible assets	—		0.22			—			0.22			—
Certain items associated with acquisitions	0.03		0.04			0.04			0.10			0.15
Acquisition integration and deal costs	—		0.01			0.01			0.02			0.04
Restructuring charges and asset impairments	0.01		—			0.03			0.02			0.03
Reinstatement of federal R&D tax credit and resolution of prior years’ income tax filings	—		—			(0.01		)	(0.02		)	(0.01		)
Non-GAAP adjusted earnings per diluted share	$	0.18	$	0.16		$	0.24		$	0.40		$	0.69
Weighted average number of diluted shares	1,220		1,217			1,268			1,218			1,292

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The following table presents a reconciliation of the GAAP and non-GAAP adjusted segment results:

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

	Three Months Ended									Nine Months Ended
(In millions, except percentages)	July 28, 2013			April 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
SSG Non-GAAP Adjusted Operating Income
Reported operating income (GAAP basis)	$	246		$	283		$	427		$	663		$	1,202
Certain items associated with acquisitions1	42			45			47			131			208
Acquisition integration and deal costs, net	(5		)	1			7			(3		)	31
Restructuring charges and asset impairments4, 5	—			—			1			1			1
Non-GAAP adjusted operating income	$	283		$	329		$	482		$	792		$	1,442
Non-GAAP adjusted operating margin percent (% of net sales)	22.2		%	25.5		%	31.2		%	22.4		%	30.9		%
AGS Non-GAAP Adjusted Operating Income
Reported operating income (GAAP basis)	$	114		$	118		$	122		$	321		$	338
Certain items associated with acquisitions1	2			1			2			4			10
Restructuring charges and asset impairments3, 4, 5	—			1			11			2			11
Non-GAAP adjusted operating income	$	116		$	120		$	135		$	327		$	359
Non-GAAP adjusted operating margin percent (% of net sales)	23.3		%	23.2		%	23.3		%	22.0		%	21.6		%
Display Non-GAAP Adjusted Operating Income
Reported operating income (GAAP basis)	$	33		$	19		$	10		$	55		$	23
Certain items associated with acquisitions1	1			2			2			5			6
Non-GAAP adjusted operating income	$	34		$	21		$	12		$	60		$	29
Non-GAAP adjusted operating margin percent (% of net sales)	21.1		%	16.5		%	8.5		%	16.0		%	7.6		%
EES Non-GAAP Adjusted Operating Loss
Reported operating loss (GAAP basis)	$	(27	)	$	(322	)	$	(102	)	$	(403	)	$	(188	)
Impairment of goodwill and intangible assets	—			278			—			278			—
Certain items associated with acquisitions1	2			5			6			14			18
Restructuring charges and asset impairments2, 3, 4, 5	10			5			32			18			32
Non-GAAP adjusted operating loss	$	(15	)	$	(34	)	$	(64	)	$	(93	)	$	(138	)
Non-GAAP adjusted operating margin percent (% of net sales)	(33.3		)%	(89.5		)%	(83.1		)%	(72.1		)%	(38.0		)%

1	These items are incremental charges attributable to acquisitions, consisting of inventory fair value adjustments on products sold, and amortization of purchased intangible assets.
2	Results for the three months ended July 28, 2013 included restructuring and asset impairment charges of $10 million related to the restructuring program announced on May 10, 2012.
3	Results for the three months ended April 28, 2013 included restructuring and asset impairment charges of $6 million related to the restructuring program announced on May 10, 2012.
4	Results for the three and nine months ended July 29, 2012 included restructuring and asset impairment charges of $35 million related to the restructuring program announced on May 10, 2012 and severance charges of $9 million related to the integration of Varian.
5	Results for the nine months ended July 28, 2013 included restructuring and asset impairment charges of $19 million related to the restructuring program announced on May 10, 2012 and severance charges of $2 million related to the integration of Varian.

Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain operating expenses that are managed separately at the corporate level and certain expenses that are not absorbed by the segments, which are reported within corporate and unallocated costs and included in consolidated operating income.

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Item 3: Quantitative and Qualitative Disclosures About Market Risk

Applied is exposed to interest rate risk related to its investment portfolio and debt issuances. Applied’s investment portfolio includes fixed-income securities with a fair value of approximately $1.2 billion at July 28, 2013. These securities are subject to interest rate risk and will decline in value if interest rates increase. Based on Applied’s investment portfolio at July 28, 2013, an immediate 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of approximately $20 million. While an increase in interest rates reduces the fair value of the investment portfolio, Applied will not realize the losses in the consolidated statement of operations unless the individual fixed-income securities are sold prior to recovery or the loss is determined to be other-than-temporary. At July 28, 2013, the carrying amount of debt issued by Applied was $1.9 billion with an estimated fair value of $2.1 billion. A hypothetical decrease in interest rates of 100 basis points would result in an increase in the fair value of Applied’s debt issuances of approximately $180 million at July 28, 2013.

Certain operations of Applied are conducted in foreign currencies, such as Japanese yen, euro, Israeli shekel, Taiwanese dollar and Swiss franc. Applied enters into currency forward exchange and option contracts to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions generally expected to occur within the next 24 months. Gains and losses on these contracts are generally recognized in income at the time that the related transactions being hedged are recognized. Because the effect of movements in currency exchange rates on currency forward exchange and option contracts generally offsets the related effect on the underlying items being hedged, these financial instruments are not expected to subject Applied to risks that would otherwise result from changes in currency exchange rates. Applied does not use derivative financial instruments for trading or speculative purposes.

Item 4.    Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, management of Applied conducted an evaluation, under the supervision and with the participation of Applied’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of Applied’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, Applied’s Chief Executive Officer and Chief Financial Officer concluded that Applied’s disclosure controls and procedures were effective as of the end of the period covered by this report in ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by Applied in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the third quarter of fiscal 2013, there were no changes in the internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, that materially affected, or are reasonably likely to materially affect, Applied’s internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

The information set forth above under the caption “Legal Matters” in Note 14 contained in Notes to Consolidated Condensed Financial Statements is incorporated herein by reference.

Item 1A: Risk Factors

The risk factors set forth below include any material changes to, and supersede the description of, the risk factors disclosed in Part I, Item 1A of Applied’s 2012 Form 10-K. These factors could materially and adversely affect Applied’s business, financial condition or results of operations and cause reputational harm, and they should be carefully considered in evaluating the Company and its business, in addition to other information presented elsewhere in this report.

The industries that Applied serves are volatile and difficult to predict.

As a supplier to the global semiconductor, flat panel display, and solar industries, Applied is subject to business cycles, the timing, length and volatility of which can be difficult to predict and which vary by reportable segment. These industries historically have been cyclical due to sudden changes in customers’ requirements for new manufacturing capacity and advanced technology, which depend in part on customers’ capacity utilization, production volumes, access to affordable capital, end-use demand, consumer buying patterns, and inventory levels relative to demand, as well as the rate of technology transitions and general economic conditions. These changes have affected the timing and amounts of customers’ purchases and investments in technology, and continue to affect Applied’s orders, net sales, operating expenses and net income.

To meet rapidly changing demand in the industries it serves, Applied must accurately forecast demand and effectively manage its resources and production capacity for each of its segments as well as across multiple segments, and may incur unexpected or additional costs to align its business operations. During periods of increasing demand for its products, Applied must have sufficient manufacturing capacity and inventory to meet customer demand; effectively manage its supply chain; attract, retain and motivate a sufficient number of qualified employees; and continue to control costs. During periods of decreasing demand, Applied must reduce costs and align its cost structure with prevailing market conditions; effectively manage its supply chain; and motivate and retain key employees.

Applied is exposed to risks associated with the uncertain global economy.

Uncertain global economic conditions and low or negative growth in China, Europe, and the United States, along with difficulties in the financial markets, national debt and fiscal concerns in various regions, and government austerity measures, are posing challenges to the industries in which Applied operates. The markets for semiconductors and flat panel displays in particular depend largely on consumer spending, while the solar market depends in part on government incentives and the availability of financing for PV installations. Economic uncertainty and related factors exacerbate negative trends in business and consumer spending and may cause certain Applied customers to push out, cancel, or refrain from placing orders for equipment or services, which may in turn reduce Applied's net sales, reduce backlog, and affect Applied’s ability to convert backlog to sales. Uncertain market conditions, difficulties in obtaining capital, or reduced profitability may also cause some customers to scale back operations, exit businesses, merge with other manufacturers, or file for bankruptcy protection and potentially cease operations, which can also result in lower sales and/or additional inventory or bad debt expense for Applied. These conditions may similarly affect key suppliers, which could impair their ability to deliver parts and result in delays for Applied’s products or added costs. In addition, these conditions may lead to strategic alliances by, or consolidation of, other equipment manufacturers, which could adversely affect Applied’s ability to compete effectively.

Uncertainty about future economic and industry conditions also makes it more challenging for Applied to forecast its operating results, make business decisions, and identify and prioritize the risks that may affect its businesses, sources and uses of cash, financial condition and results of operations. Applied may be required to implement additional cost reduction efforts, including restructuring activities, which may adversely affect Applied’s ability to capitalize on opportunities. In addition, Applied maintains an investment portfolio that is subject to general credit, liquidity, foreign exchange, market and interest rate risks. The risks to Applied’s investment portfolio may be exacerbated if financial market conditions deteriorate and, as a result, the value and liquidity of the investment portfolio, as well as returns on pension assets, could be negatively impacted and lead to impairment charges. Applied also maintains cash balances in various bank accounts globally in order to fund normal operations. If any of these financial institutions becomes insolvent, it could limit Applied’s ability to access cash in the affected accounts.

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Applied is exposed to risks as a result of ongoing changes in the various industries in which it operates.

The global semiconductor, flat panel display, solar and related industries in which Applied operates are characterized by ongoing changes affecting some or all of these industries that impact demand for and/or the profitability of Applied's products, including:

• the nature, timing and degree of visibility of changes in end demand for electronic products, including those related to fluctuations in consumer buying patterns tied to seasonality or the introduction of new products, and the effects of these changes on foundry and other customers’ businesses and, in turn, on demand for Applied’s products;

• increasing capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital;

• differences in growth rates among the semiconductor, display and solar industries;

• the increasing importance of establishing, improving and maintaining strong relationships with customers;

• the increasing cost and complexity for customers to move from product design to volume manufacturing, which may slow the adoption rate of new manufacturing technology;

• the need to continually reduce the total cost of manufacturing system ownership, due in part to greater demand for lower-cost consumer electronics compared to business information technology spending;

• the heightened importance to customers of system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability;

• the increasing importance of, and difficulties in, developing products with sufficient differentiation to influence customers’ purchasing decisions;

• requirements for shorter cycle times for the development, manufacture and installation of manufacturing equipment;

• price and performance trends for semiconductor devices, displays and solar PVs, and the corresponding effect on demand for such products;

• the increasing importance of the availability of spare parts to maximize the time that customers’ systems are available for production;

• the increasing role for and complexity of software in Applied products; and

• the increasing focus on reducing energy usage and improving the environmental impact and sustainability associated with manufacturing operations.

Applied is exposed to risks as a result of ongoing changes specific to the semiconductor industry.

The largest proportion of Applied’s consolidated net sales and profitability has been and continues to be derived from sales of manufacturing equipment by the Silicon Systems Group to the global semiconductor industry. In addition, a majority of the revenues of Applied Global Services is from sales of service products to semiconductor manufacturers. The semiconductor industry is characterized by ongoing changes particular to this industry that impact demand for and/or the profitability of Applied's semiconductor equipment and service products, including:

• the increasing cost of research and development due to many factors, including: decreasing linewidths on a chip, the use of new materials, new and more complex device structures, more applications and process steps, increasing chip design costs, and the increasing cost and complexity of integrated manufacturing processes;

• the need to reduce product development time, despite the increasing difficulty of technical challenges;

• the growing number of types and varieties of semiconductors and number of applications across multiple substrate sizes;

• the increasing cost and complexity for semiconductor manufacturers to move more technically advanced capability and smaller linewidths to volume manufacturing, and the resulting impact on the rates of technology transition and investment in capital equipment;

• challenges in generating organic growth given semiconductor manufacturers’ levels of capital expenditures and the allocation of capital investment to market segments that Applied does not serve, such as lithography, or segments where Applied's products have lower relative market share;

• the importance of increasing market positions in under-penetrated segments, such as etch and inspection;

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• the growing demand for mobility products, such as tablets and smartphones, and corresponding industry investment in devices that require fewer Applied products to manufacture, such as NAND flash memory, than are needed to make devices used in other applications, such as DRAM for personal computers;

• the adoption of cloud-based memory storage particularly for mobility products, and the associated inhibiting effect on NAND bit growth rates;

• the increasing frequency and complexity of technology transitions and inflections, such as 3-D transistors and advanced interconnects;

• shorter cycle times between order placements by customers (particularly foundries) and product shipment, which may lead to inventory write-offs and manufacturing inefficiencies that decrease gross margin;

• competitive factors that make it difficult to enhance market share, including challenges in securing development-tool-of-record (DTOR) and production-tool-of-record (PTOR) positions with customers;

• shifts in sourcing strategies by computer and electronics companies that impact the equipment requirements of Applied's foundry customers;

• the concentration of new wafer starts in Korea and Taiwan, where Applied’s service penetration and service-revenue-per-wafer-start have been lower than in other regions; and

• the increasing fragmentation of semiconductor markets, leading certain markets to become too small to support the cost of a new fabrication plant, while others require less technologically advanced products.

Applied must accurately forecast, and allocate appropriate resources and investment towards addressing, key technology changes and inflections, such as the transition to 20nm devices, in order to enable opportunities for market share gains. In addition, the industry transition from 300mm to 450mm wafers presents opportunities as well as risks and uncertainties, including those related to cost, technical complexity, timing, and the resulting effect on demand for manufacturing equipment and services. Several semiconductor customers have invested in another wafer fabrication equipment supplier to help fund development of 450mm and other new technologies, which may influence the timing of technology transitions, funding allocations or other matters.

Applied is exposed to risks as a result of ongoing changes specific to the flat panel display industry.

The global flat panel display industry historically has experienced considerable volatility in capital equipment investment levels, due in part to the limited number of display manufacturers, the concentrated nature of end-use applications, excess production capacity relative to end-use demand, and panel manufacturer profitability. Industry growth has depended primarily on consumer demand for increasingly larger and more advanced TVs and, more recently, on demand for smartphones and other mobile devices, which demand is highly sensitive to cost and improvements in technologies and features. The display industry is characterized by ongoing changes particular to this industry that impact demand for and/or the profitability of Applied's display products, including:

• the timing and extent of an expansion of manufacturing facilities in China by Chinese display manufacturers and manufacturers from other countries, and the ability of non-Chinese manufacturers to obtain government approvals on a timely basis;

• the rate of transition to larger substrate sizes for TVs and the resulting effect on capital intensity in the industry and on Applied’s product differentiation, gross margin and return on investment;

• the importance of new types of display technologies, such as low temperature polysilicon (LTPS), organic light-emitting diode (OLED) and metal oxide, and new touch panel films, such as anti-reflective and anti-fingerprint; and

• uncertainty with respect to future display technology end-use applications and growth drivers.

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Applied is exposed to risks as a result of ongoing changes specific to the solar industry.

Investment levels in capital equipment for the global solar industry have experienced considerable volatility. In recent years, global solar PV production capacity has exceeded end-use demand, causing customers to significantly reduce or delay investments in manufacturing capacity and new technology, or to cease operations. The global solar market is characterized by ongoing changes specific to this industry that impact demand for and/or the profitability of Applied’s solar products, including:

• the need to continually decrease the cost-per-watt of electricity produced by solar PV products to at or below grid parity in more global regions by, among other things, reducing operating costs and increasing throughputs for solar PV manufacturing, and improving the conversion efficiency of solar PVs;

• the variability and uncertainty of government energy policies and their effect in influencing the rate of growth of the solar PV market, including the availability and amount of incentives for solar power such as tax credits, feed-in tariffs, rebates, renewable portfolio standards that require electricity providers to sell a targeted amount of energy from renewable sources, and goals for solar installations on government facilities;

• the number of solar PV manufacturers and amount of global production capacity for solar PVs, primarily in China;

• the filing of regulatory unfair trade proceedings against solar PVs from China, where most of Applied’s solar equipment sales are concentrated, which has resulted in the assessment of duties on solar cells and modules imported from China and led to other trade-related conflicts and outcomes;

• the varying levels of operating and industry experience among solar PV manufacturers and the resulting differences in the nature and extent of customer support services requested from Applied;

• challenges associated with marketing and selling manufacturing equipment and services to a diverse and diffuse customer base;

• the growth of market segments in which Applied does not participate, such as passivation and furnaces;

• the availability and condition of used solar equipment, which impacts demand for new equipment;

• complexities associated with government-affiliated entities as customers, for example in China;

• the financial condition of solar PV customers and their access to affordable financing and capital; and

• solar panel manufacturing overcapacity, which has led to weak industry operating performance and outlooks, deterioration of the solar equipment market, and a worsening of the financial condition of certain customers.

Applied must continually innovate, commercialize its products, and adapt its business and product offerings to respond to competition and rapid technological changes.

As Applied operates in a highly competitive environment in which innovation is critical, its future success depends on many factors, including the effective commercialization and customer acceptance of its equipment, services and related products. In addition, Applied must successfully execute its growth strategy, including enhancing market share in existing markets, expanding into related markets, cultivating new markets and exceeding industry growth rates, while constantly improving its operational performance. The development, introduction and support of a broadening set of products in more collaborative, geographically diverse, open and varied competitive environments have grown more complex and expensive over time. Furthermore, new or improved products may entail higher costs and reduced profits. Applied’s performance may be adversely affected if it does not timely, cost-effectively and successfully:

• identify and address technology inflections, market changes, new applications, customer requirements and end-use demand;

• develop new products (including disruptive technologies), improve and/or develop new applications for existing products, and adapt similar products for use by customers in different applications and/or markets with varying technical requirements;

• differentiate its products from those of competitors and any disruptive technologies, meet customers’ performance specifications, appropriately price products, and achieve market acceptance;

• maintain operating flexibility to enable different responses to different markets, customers and applications;

• enhance its worldwide operations across all business segments to reduce cycle time, enable continuous quality improvement, reduce costs, and enhance design for manufacturability and serviceability;

• focus on product development and sales and marketing strategies that address customers' high value problems and foster strong customer relationships;

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• allocate resources, including people and R&D funding, among Applied’s products and between the development of new products and the enhancement of existing products, as most appropriate and effective for future growth;

• reduce the cost and improve the productivity of capital invested in R&D activities;

• accurately forecast demand, work with suppliers and meet production schedules for its products;

• improve its manufacturing processes and achieve cost efficiencies across product offerings;

• adapt to changes in value offered by companies in different parts of the supply chain;

• qualify products for evaluation and, in turn, volume manufacturing with its customers; and

• implement changes in its design engineering methodology, including those that enable reduction of material costs and cycle time, greater commonality of platforms and types of parts used in different systems, greater effectiveness of product life cycle management, and reduced energy usage and environmental impact.

Applied is exposed to risks associated with a highly concentrated customer base.

Applied’s semiconductor customer base historically has been, and is becoming even more, highly concentrated as a result of economic and industry conditions. In the third quarter of fiscal 2013, two semiconductor manufacturers accounted for 49 percent of Silicon Systems Group net sales and two customers accounted for 44 percent of Applied’s consolidated net sales. Applied’s display customer base is also highly concentrated, while concentration within Applied’s solar customer base varies depending on the product line but is increasing due to challenging industry conditions. Applied’s customer base is also geographically-concentrated. In the third quarter of fiscal 2013, customers in Taiwan accounted for 42 percent of net sales for the Silicon Systems Group segment; customers in China and Korea accounted for 86 percent of the net sales for the Display segment; and customers in China accounted for 67 percent of net sales for the Energy and Environmental Solutions segment.

In addition, certain customers have experienced significant ownership or management changes, consolidated with other manufacturers, outsourced manufacturing activities, or engaged in collaboration or cooperation arrangements with other manufacturers. Customers have entered into strategic alliances or industry consortia that have increased the influence of key industry participants in technology decisions made by their partners. Also, certain customers are making an increasingly greater percentage of their respective industry’s capital equipment investments. Further, claims or litigation involving key industry participants have resulted and may continue to result in changes in their sourcing strategies and other outcomes. In this environment, contracts or orders from a relatively limited number of manufacturers have accounted for, and are expected to continue to account for, a substantial portion of Applied’s business. The mix and type of customers, and sales to any single customer, may vary significantly from quarter to quarter and from year to year. If customers do not place orders, or they substantially reduce, delay or cancel orders, Applied may not be able to replace the business. As Applied’s products are configured to customer specifications, changing, rescheduling or canceling orders may result in significant, non-recoverable costs. Major customers may also seek, and on occasion receive, pricing, payment, intellectual property-related, or other commercial terms that are less favorable to Applied.

Applied is exposed to the risks of operating a global business.

In the third quarter of fiscal 2013, approximately 82 percent of Applied’s net sales were to customers in regions outside the United States. Moreover, China now represents the largest market for various electronic products, such as TVs, PCs, and smartphones. Certain of Applied’s R&D and manufacturing facilities, as well as suppliers to Applied, are also located outside the United States, including in Singapore, Taiwan, China, Korea, Israel, Germany and Italy. Applied is also expanding its business and operations in new countries. The global nature of Applied’s business and operations, combined with the need to continually improve the Company’s operating cost structure, presents challenges, including but not limited to those arising from:

• varying regional and geopolitical business conditions and demands;

• political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors;

• customer- or government-supported efforts to influence Applied to conduct more of its operations and sourcing in a particular country, such as Korea and China;

• variations among, and changes in, local, regional, national or international laws and regulations (including intellectual property, labor, tax, and import/export laws), as well as the interpretation and application of such laws and regulations;

• global trade issues, including those related to the interpretation and application of import and export licenses, as well as international trade disputes;

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• positions taken by governmental agencies regarding possible national commercial and/or security issues posed by international business operations;

• fluctuating raw material, commodity, energy and shipping costs or shipping delays;

• challenges associated with managing more geographically diverse operations and projects, which require an effective organizational structure and appropriate business processes, procedures and controls;

• a more diverse workforce with different experience levels, cultures, customs, business practices and worker expectations;

• variations in the ability to develop relationships with local customers, suppliers and governments;

• fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against the Japanese yen, euro, Taiwanese dollar, Israeli shekel or Chinese yuan;

• the need to provide sufficient levels of technical support in different locations around the world;

• political instability, natural disasters (such as earthquakes, floods or storms), pandemics, social unrest, terrorism or acts of war in locations where Applied has operations, suppliers or sales, or that may influence the value chain of the industries that Applied serves;

• the need for an effective business continuity plan if a disaster or other event occurs that could disrupt business operations;

• the need to regularly reassess the size, capability and location of global infrastructure and make appropriate changes;

• cultural and language differences;

• difficulties and uncertainties associated with the entry into new countries;

• hiring and integration of an increasing number of new workers, including in countries such as India and China;

• the increasing need for the workforce to be more mobile and work in or travel to different regions;

• uncertainties with respect to economic growth rates in various countries; and

• uncertainties with respect to growth rates for the manufacture and sale of semiconductors, displays and solar PVs in the developing economies of certain countries.

Many of these challenges are present in China and Korea, which are experiencing significant growth of customers, suppliers and competitors to Applied. Applied further believes that China and Korea present large potential markets for its products and opportunity for growth over the long term, although at lower projected levels of profitability and margins for certain products than historically have been achieved in other regions.

Operating in multiple industries, and the entry into new markets and industries, entail additional challenges and obligations.

As part of its growth strategy, Applied must successfully expand into related or new markets and industries, either with its existing products or with new products developed internally or obtained through acquisitions. The entry into different markets involves additional challenges, including those arising from:

• the need to devote additional resources to develop new products for, and operate in, new markets;

• the need to develop new sales and technical marketing strategies, cultivate relationships with new customers and meet different customer service requirements;

• differing rates of profitability and growth among multiple businesses;

• Applied’s ability to anticipate demand, capitalize on opportunities, and avoid or minimize risks;

• the complexity of managing multiple businesses with variations in production planning, execution, supply chain management and logistics;

• the adoption of new business models, business processes and systems;

• Applied’s ability to rapidly expand or reduce its operations to meet increased or decreased demand, respectively, and the associated effect on working capital;

•new materials, processes and technologies;

• the need to attract, motivate and retain employees with skills and expertise in these new areas;

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• new and more diverse customers and suppliers, including some with limited operating histories, uncertain and/or limited funding, evolving business models and/or locations in regions where Applied does not have, or has limited, operations;

• new or different competitors with potentially more financial or other resources, industry experience and/or established customer relationships;

• entry into new industries and countries, with differing levels of government involvement, laws and regulations, and business, employment and safety practices;

• third parties’ intellectual property rights; and

• the need to comply with, or work to establish, industry standards and practices.

In addition, Applied from time to time receives funding from United States and other government agencies for certain strategic development programs to increase its research and development resources and address new market opportunities. As a condition to this government funding, Applied may be subject to certain record-keeping, audit, intellectual property rights-sharing and/or other obligations.

Manufacturing interruptions or delays could affect Applied’s ability to meet customer demand and lead to higher costs, while the failure to estimate customer demand accurately could result in excess or obsolete inventory.

Applied’s business depends on its timely supply of equipment, services and related products that meet the rapidly changing technical and volume requirements of its customers, which depends in part on the timely delivery of parts, components and subassemblies (collectively, parts) from suppliers, including contract manufacturers. Some key parts are subject to long lead-times and/or obtainable only from a single supplier or limited group of suppliers, and some sourcing or subassembly is provided by suppliers located in countries other than the countries where Applied conducts its manufacturing, including China and Korea. Cyclical industry conditions and the volatility of demand for manufacturing equipment increase capital, technical, operational and other risks for Applied and for companies throughout its supply chain. Further, the uncertain global economic conditions and industry slowdowns have caused, and may continue to cause, some suppliers to scale back operations, exit businesses, merge with other companies, or file for bankruptcy protection and possibly cease operations. Applied may also experience significant interruptions of its manufacturing operations, delays in its ability to deliver products or services, increased costs or customer order cancellations as a result of:

• the failure or inability of suppliers to timely deliver sufficient quantities of quality parts on a cost-effective basis;

• volatility in the availability and cost of materials, including rare earth elements;

• difficulties or delays in obtaining required import or export approvals;

• information technology or infrastructure failures; and

• natural disasters or other events beyond Applied's control (such as earthquakes, floods or storms, regional economic downturns, pandemics, social unrest, political instability, terrorism, or acts of war), particularly where it conducts manufacturing.

If a supplier fails to meet Applied’s requirements concerning quality, cost, socially-responsible business practices, or other performance factors, Applied may transfer its business to alternative sources, which could entail manufacturing delays, additional costs, or other difficulties. In addition, if Applied needs to rapidly increase its business and manufacturing capacity to meet increases in demand or expedited shipment schedules, this may exacerbate any interruptions in Applied’s manufacturing operations and supply chain and the associated effect on Applied’s working capital. Moreover, if actual demand for Applied’s products is different than expected, Applied may purchase more/fewer parts than necessary or incur costs for canceling, postponing or expediting delivery of parts. If Applied purchases inventory in anticipation of customer demand that does not materialize, or if customers reduce or delay orders, Applied may incur excess inventory charges.

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The ability to attract, retain and motivate key employees is vital to Applied’s success.

Applied’s success, competitiveness and ability to execute on its global strategies and maintain a culture of innovation depend in large part on its ability to attract, retain and motivate key employees, especially in critical positions. Achieving this objective may be difficult due to many factors, including fluctuations in global economic and industry conditions, management changes, Applied’s organizational structure, hiring practices of competitors and other companies, cost reduction activities (including workforce reductions and unpaid shutdowns), availability of career development opportunities, the ability to obtain necessary authorizations for workers to provide services outside their home countries, and the effectiveness of Applied’s compensation and benefit programs, including its share-based programs. Restructuring programs present particular challenges to the extent they involve the departure of knowledgeable and experienced employees and the resulting need to identify and train existing or new workers to perform necessary functions, which may result in unexpected costs, reduced productivity, and/or difficulties with respect to internal processes and controls.

Applied is exposed to risks associated with acquisitions and strategic investments.

Applied has made, and in the future intends to make, acquisitions of or investments in companies, technologies or products in existing, related or new markets for Applied. Acquisitions involve numerous risks that vary depending on the scale and nature of the acquisition, including but not limited to:

• diversion of management’s attention from other operational matters;

• inability to complete acquisitions as anticipated or at all;

• the failure of acquired businesses to meet or exceed expected returns;

• requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and/or restrictions on the conduct of Applied’s existing business or the acquired business;

• ineffective integration of operations, systems, technologies, products or employees of an acquired business, which can impact the ability to realize anticipated synergies or other benefits;

• failure to commercialize purchased technologies;

• initial dependence on unfamiliar supply chains or relatively small supply partners;

• inability to capitalize on characteristics of new markets that may be significantly different from Applied’s existing markets and where competitors may have stronger market positions and customer relationships;

• failure to attract, retain and motivate key employees from the acquired business;

• reductions in cash balances and/or increases in debt obligations to finance the acquisition, which reduce the availability of cash flow for general corporate or other purposes;

• exposure to new operational risks, rules, regulations, worker expectations, customs and practices to the extent acquired businesses are located in regions where Applied has not historically conducted business;

• challenges associated with managing new, more diverse and more widespread operations, projects and people;

• inability to obtain and protect intellectual property rights in key technologies;

• inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, and/or environmental, health and safety, anti-corruption, human resource, or other policies or practices;

• impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance of the segment;

• the risk of litigation or claims associated with a proposed or completed transaction;

• unknown, underestimated and/or undisclosed commitments or liabilities; and

• the inappropriate scale of acquired entities’ critical resources or facilities for business needs.

Applied also makes strategic investments in other companies, including companies formed as joint ventures, which may decline in value and/or not meet desired objectives. The success of these investments depends on various factors over which Applied may have limited or no control and, particularly with respect to joint ventures, requires ongoing and effective cooperation with strategic partners. The risks to Applied’s strategic investment portfolio may be exacerbated by unfavorable financial market and macroeconomic conditions and, as a result, the value of the investment portfolio could be negatively impacted and lead to impairment charges.

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Applied is exposed to various risks related to protection and enforcement of intellectual property rights and cybersecurity threats.

Applied’s success depends in significant part on the protection of its intellectual property and other rights. Infringement of Applied’s rights by a third party, such as the unauthorized manufacture or sale of equipment or spare parts, could result in uncompensated lost market and revenue opportunities for Applied. Policing any unauthorized use of intellectual property is difficult and costly and Applied cannot be certain that the measures it has implemented will prevent misuse. Applied’s intellectual property rights may not provide significant competitive advantages if they are circumvented, invalidated, rendered obsolete by the rapid pace of technological change, or if Applied does not adequately protect or assert these rights or obtain necessary licenses on commercially reasonable terms. Furthermore, the laws and practices of other countries, including China, India, Taiwan and Korea, permit the protection and enforcement of Applied’s rights to varying extents, which may not be sufficient to adequately protect Applied’s rights. In addition, changes in intellectual property laws or their interpretation, such as recent changes in U.S. patent laws, may impact Applied's ability to protect and assert its intellectual property rights, increase costs and uncertainties in the prosecution of patent applications and enforcement or defense of issued patents, and diminish the value of Applied's intellectual property.

Applied has experienced and expects to continue to be subject to global cybersecurity threats and incidents, ranging from employee error or misuse to individual attempts to gain unauthorized access to information systems to sophisticated and targeted measures known as advanced persistent threats. These could result in business disruption; misappropriation, corruption or loss of confidential information (Applied's and/or that of third parties) and critical data; reputational damage; litigation with third parties; diminution in the value of Applied's investment in research, development and engineering; data privacy issues; and increased cybersecurity protection and remediation costs.

Applied is exposed to various risks related to legal proceedings.

Applied from time to time is, and in the future may be, involved in legal proceedings or claims regarding patent infringement, intellectual property rights, antitrust, environmental regulations, securities, contracts, product performance, product liability, unfair competition, misappropriation of trade secrets, employment, workplace safety, and other matters. Applied also on occasion receives notification from customers who believe that Applied owes them indemnification or other obligations related to claims made against such customers by third parties.

Legal proceedings and claims, whether with or without merit, and associated internal investigations, may (1) be time-consuming and expensive to prosecute, defend or conduct; (2) divert management’s attention and other Applied resources; (3) inhibit Applied’s ability to sell its products; (4) result in adverse judgments for damages, injunctive relief, penalties and fines; and/or (5) negatively affect Applied’s business. There can be no assurance regarding the outcome of current or future legal proceedings, claims or investigations.

The failure to successfully implement and conduct outsourcing activities and other operational initiatives could adversely affect results of operations.

To better align its costs with market conditions, locate closer to customers, enhance productivity, and improve efficiencies, Applied conducts certain engineering, software development, manufacturing, sourcing and other operations in regions outside the United States, including India, Taiwan, China, and Korea. Applied has implemented a distributed manufacturing model, under which certain manufacturing and supply chain activities are conducted in various countries, including the United States, Europe, Israel, Singapore, Taiwan and other countries in Asia, and assembly of some systems is completed at customer sites. In addition, Applied outsources certain functions to third parties, including companies in the United States, India, China, Korea, Malaysia and other countries. Outsourced functions include contract manufacturing, engineering, customer support, software development, information technology support, finance and administrative activities. The expanding role of third party providers has required changes to Applied’s existing operations and the adoption of new procedures and processes for retaining and managing these providers, as well as redistributing responsibilities as warranted, in order to realize the potential productivity and operational efficiencies, assure quality and continuity of supply, and protect the intellectual property of Applied and its customers, suppliers and other partners. If Applied does not accurately forecast the amount, timing and mix of demand for products, or if contract manufacturers or other outsource providers fail to perform in a timely manner or at satisfactory quality levels, Applied’s ability to meet customer requirements could suffer, particularly during a market upturn.

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In addition, Applied must regularly implement or update comprehensive programs and processes to better align its global organizations, including initiatives to enhance the Asia supply chain and improve back office and information technology infrastructure for more efficient transaction processing. Applied also is implementing a multi-year, company-wide program to transform certain business processes or extend established processes, including the transition to a single enterprise resource planning (ERP) software system to perform various functions. The implementation of additional functionality to the ERP system entails certain risks, including difficulties with changes in business processes that could disrupt Applied’s operations, such as its ability to track orders and timely ship products, project inventory requirements, manage its supply chain and aggregate financial and operational data. During transitions Applied must continue to rely on legacy information systems, which may be costly or inefficient, while the implementation of new initiatives may not achieve the anticipated benefits and may divert management’s attention from other operational activities, negatively affect employee morale, or have other unintended consequences.

If Applied does not effectively develop and implement its outsourcing and relocation strategies, if required export and other governmental approvals are not timely obtained, if Applied’s third party providers do not perform as anticipated, or if there are delays or difficulties in enhancing business processes, Applied may not realize anticipated productivity improvements or cost efficiencies, and may experience operational difficulties, increased costs (including energy and transportation), manufacturing interruptions or delays, inefficiencies in the structure and/or operation of its supply chain, loss of its intellectual property rights, quality issues, reputational harm, increased product time-to-market, and/or inefficient allocation of human resources.

Applied may incur impairment charges to goodwill or long-lived assets.

Applied has a significant amount of goodwill and other acquired intangible assets related to acquisitions. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year, and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The review compares the fair value for each of Applied’s reporting units to its associated carrying value, including goodwill. Factors that could lead to impairment of goodwill and intangible assets include adverse industry or economic trends, reduced estimates of future cash flows, declines in the market price of Applied common stock, changes in Applied’s strategies or product portfolio, and restructuring activities. Applied’s valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and projections of future operating performance. For example, in the second quarter of fiscal 2013, Applied recorded goodwill and intangible asset impairment charges. Applied may be required to record future charges to earnings during the period in which an impairment of goodwill or intangible assets is determined to exist.

Changes in tax rates or tax assets and liabilities could affect results of operations.

As a global company, Applied is subject to taxation in the United States and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Applied’s future annual and quarterly tax rates could be affected by numerous factors, including changes in the: (1) applicable tax laws; (2) amount and composition of pre-tax income in countries with differing tax rates; (3) plans of the Company to permanently reinvest certain funds held outside of the U.S.; or (4) valuation of Applied’s deferred tax assets and liabilities.

To better align with the international nature of its business, Applied conducts certain manufacturing, supply chain, and other operations in Asia, bringing these activities closer to customers and reducing operating costs. Applied has received authorization to use tax incentives that provide that income earned in certain countries outside the U.S. will be subject to tax holidays or reduced income tax rates. To obtain the benefit of these tax provisions, Applied must meet requirements relating to various activities. Applied’s ability to realize benefits from these provisions could be materially affected if, among other things, applicable requirements are not met, or if Applied incurs net losses for which it cannot claim a deduction.

In addition, Applied is subject to regular examination by the Internal Revenue Service and other tax authorities, and from time to time initiates amendments to previously filed tax returns. Applied regularly assesses the likelihood of favorable or unfavorable outcomes resulting from these examinations and amendments to determine the adequacy of its provision for income taxes, which requires estimates and judgments. Although Applied believes its tax estimates are reasonable, there can be no assurance that the tax authorities will agree with such estimates. Applied may have to engage in litigation to achieve the results reflected in the estimates, which may be time-consuming and expensive. There can be no assurance that Applied will be successful or that any final determination will not be materially different from the treatment reflected in Applied’s historical income tax provisions and accruals.

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Applied is subject to risks of non-compliance with environmental and safety regulations.

Applied is subject to environmental and safety regulations in connection with its global business operations, including but not limited to: regulations related to the development, manufacture and use of its products; recycling and disposal of materials used in its products or in producing its products; the operation of its facilities; and the use of its real property. The failure or inability to comply with existing or future environmental and safety regulations, such as those related to climate change, could result in: (1) significant remediation liabilities; (2) the imposition of fines; (3) the suspension or termination of the development, manufacture, sale or use of certain of its products; (4) limitations on the operation of its facilities or ability to use its real property; and/or (5) a decrease in the value of its real property.

Applied is exposed to various risks related to the regulatory environment.

Applied is subject to various risks related to: (1) new, different, inconsistent or even conflicting laws, rules and regulations that may be enacted by executive order, legislative bodies and/or regulatory agencies in the countries in which Applied operates; (2) disagreements or disputes between national or regional regulatory agencies related to international trade; and (3) the interpretation and application of laws, rules and regulations. For example, as a public company with global operations, Applied is subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to financial and other disclosures, corporate governance, privacy, and anti-corruption. Changes in laws, regulations and standards may create uncertainty regarding compliance matters. Efforts to comply with new and changing regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information as of July 28, 2013 with respect to the shares of common stock repurchased by Applied during the third quarter of fiscal 2013.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Aggregate Price Paid		Total Number of Shares Purchased as Part of Publicly Announced Program*	Maximum Dollar Value of Shares That May Yet be Purchased Under the Program*
	(In millions, except per share amounts)
Month #1
(April 29, 2013 to May 26, 2013)	0.8	$	14.72	$	12	0.8	$	1,670
Month #2
(May 27, 2013 to June 23, 2013)	1.3	$	15.37	20		1.3	$	1,650
Month #3
(June 24, 2013 to July 28, 2013)	1.2	$	15.69	18		1.2	$	1,632
Total	3.3	$	15.33	$	50	3.3

* On March 5, 2012, the Board of Directors approved a stock repurchase program authorizing up to $3.0 billion in repurchases over the next three years, ending March 2015.

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Item 6.    Exhibits

Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K:

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
10.1	Extension Agreement, dated as of May 25, 2013, to Credit Agreement, dated as of May 25, 2011, as amended, among Applied Materials, Inc., JPMorgan Chase Bank, N.A. as administrative agent and the lenders parties thereto	8-K	000-06920	10.1	5/28/2013
10.2	Offer Letter, dated August 14, 2013, between Applied Materials, Inc. and Gary E. Dickerson†
10.3	Offer Letter, dated August 15, 2013, between Applied Materials, Inc. and Michael R. Splinter†
10.4	Form of Non-Qualified Stock Option Agreement for Employees for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended†
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡
101.INS	XBRL Instance Document‡
101.SCH	XBRL Taxonomy Extension Schema Document‡
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document‡
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document‡
101.LAB	XBRL Taxonomy Extension Label Linkbase Document‡
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document‡

† Filed herewith.

‡ Furnished herewith.

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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 thereunto duly authorized.

APPLIED MATERIALS, INC.
By:	/s/    ROBERT J. HALLIDAY
	Robert J. Halliday Senior Vice President, Chief Financial Officer (Principal Financial Officer)

August 22, 2013

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EX-10.2

Exhibit 10.2

August 13, 2013

Gary Dickerson

3225 Oakmead Village Drive, M/S 1223

P.O. Box 58039

Santa Clara, CA 95052-8039

Dear Gary:

We thank you for your many contributions to Applied Materials, Inc. (“Applied”) since your joining Applied following the successful merger of Varian Semiconductor Equipment Associates, Inc. with Applied. I am very pleased to extend an offer of employment (the “Offer”) to you in the role of President and Chief Executive Officer of Applied (“CEO”), as described in this letter.

I. POSITION

Your employment with Applied in your new capacity will begin on September 1, 2013 (the “Effective Date”). You will be employed on a full-time basis as the CEO and will report to Applied’s Board of Directors (the “Board”). In addition, as Applied’s CEO, you will be appointed to serve as a member of the Board, subject to any required Board and/or stockholder approval. Your primary work location will be Applied’s Santa Clara, California campus.

II. COMPENSATION

A. Cash Compensation

Beginning on the Effective Date, your annual base salary in your new position will be $980,000, payable in accordance with Applied’s bi-weekly payroll practices. You will be eligible to continue participating in Applied’s Senior Executive Bonus Plan (the “SEBP”) and your target bonus for Applied’s fiscal year 2013 will be equal to 175% of your base salary. Any actual bonus amounts and any future adjustments to your salary and/or target bonus are subject to approval by the Human Resources and Compensation Committee of the Board (the “HRCC”).

Gary Dickerson

August 13, 2013

Page 2

B. Equity Awards

(i)Equity Award Eligibility

You will be eligible to continue participating in Applied’s Employee Stock Incentive Plan (or its successor plan, as applicable) (the “ESIP”), at target amounts that reflect your expected duties and responsibilities as CEO, as determined by the HRCC in its discretion. Any equity awards will be subject to the terms and conditions of the ESIP and an award agreement under the ESIP.

(ii)Stock Option Award

In connection with your appointment as CEO, on the Effective Date, you will be granted stock options under the ESIP covering 1,000,000 shares of Applied Common Stock (“Shares”), subject to the terms and conditions of the ESIP and an award agreement based on Applied’s standard form of stock option agreement (the “Option”). The Option will be scheduled to vest as to twenty-five percent (25%) of the Shares on each of September 1, 2014, September 1, 2015, September 1, 2016, and September 1, 2017, subject to your continued employment through each applicable vesting date and subject to the vesting acceleration provisions included in the ESIP as currently in effect. The Option will have a maximum term of seven years, subject to earlier termination under Section 4.5 of the ESIP.

C. Benefits

You will be eligible to participate in Applied’s existing generally available benefit plans at the same levels as Applied’s senior executives (including medical, dental, vision and 401(k) plans), subject to eligibility and other requirements of such plans, as determined by Applied. As an Applied employee, you also will continue to accrue time off under Applied’s Paid Time Off (PTO) program. Applied may modify or terminate its benefits programs and arrangements from time to time as necessary or appropriate.

III. SEVERANCE

A. Qualifying Termination

You may be eligible to receive certain severance payments and benefits if Applied terminates your employment other than for “cause” and other than due to your death or disability, as described below. In addition, as CEO, you will be eligible to participate in any severance plans or programs that Applied may establish in the future and that apply to you as a senior executive of Applied.

(i)Cash Severance. If Applied terminates your employment for a reason other than “cause” and other than due to your death or disability, you will receive a lump sum cash payment

Gary Dickerson

August 13, 2013

Page 3

equal to 275% of your then-current annual base salary (the “Severance Benefits”), subject to the requirements under subsection (ii) below.

(ii)Release Agreement. In order to receive the Severance Benefits, you must sign and not revoke a release of claims, non-solicitation and non‑disparagement agreement in a form supplied by Applied (the “Release Agreement”) and the Release Agreement must become effective within 60 days after your employment termination date (the “Release Deadline Date”). You will not receive any of the Severance Benefits if the Release Agreement does not become effective by the Release Deadline Date. If you become entitled to receive the Severance Benefits, then subject to any further delay required under the Section 409A provisions below, the Severance Benefits will be provided to you on the 61^st day following your employment termination date.

(iii)Cause Definition. For purposes of this letter, “cause” means: (a) your continued willful failure to perform your duties to Applied (other than any such failure resulting from your incapacity due to physical or mental illness) after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to you by the Board or its committee; (b) the willful commission by you of a wrongful act that caused or was reasonably likely to cause substantial damage to Applied, or an act of fraud in the performance of your duties on behalf of Applied; (c) your conviction for the commission of a felony in connection with the performance of your duties on behalf of Applied; or (d) the order of a federal or state regulatory authority having jurisdiction over Applied or its operations or by a court of competent jurisdiction requiring the termination of your employment by Applied.

B. Other Terminations

You acknowledge and agree that if you voluntarily terminate your employment for any reason or Applied terminates your employment for “cause” or as a result of your death or disability, you will not be eligible to receive the Severance Benefits or any severance or other benefits, other than any severance or other benefits that you may be eligible to receive under Applied’s then‑existing severance and benefits plans and practices or other written agreements with Applied, or otherwise as determined at the Board’s discretion.

IV. MISCELLANEOUS

A. At Will Employment

Your employment with Applied will be “at will,” meaning that it can be terminated by you or Applied at any time, with or without cause or advance notice. This at will employment relationship may not be modified by any oral or implied agreement and can be modified only by an express written contract for a specified term.

Gary Dickerson

August 13, 2013

Page 4

B. Section 409A

(i)General. It is the intent of the parties that all severance and other payments and benefits under this letter comply with or are exempt from Section 409A, and any ambiguities in this letter will be interpreted in that manner. For all purposes of this letter, to the extent required to be exempt from or comply with Section 409A, references to your “termination of employment” or similar phrases will be references to your “separation from service” within the meaning of Section 409A.

(ii)Required Delay. If and to the extent it is necessary to avoid subjecting you to an additional tax under Section 409A, payment of all or a portion of the termination-related payments or benefits described in this letter or otherwise will be delayed until the date that is six months and one day following your employment termination. However, in the event that your death occurs after your employment termination but prior to the six month anniversary of your employment termination, any payments and/or benefits delayed under the prior sentence will be payable to you in a lump sum as soon as administratively practicable after the date of your death and any other separation pay and/or benefits will be payable according to the payment schedule applicable to each payment. In addition, each payment and benefit payable under this letter is intended to be a separate payment for purposes of the Section 409A-related Treasury Regulations. You and Applied agree to work together in good faith to consider amendments to this letter and to take reasonable actions to avoid subjecting you to an additional tax or income recognition under Section 409A before actual payment of the payments and benefits under this letter, as applicable. In all cases, Applied will not reimburse you for any taxes that may be imposed on you as a result of Section 409A.

(iii)Section 409A Definition. For purposes of this letter, “Section 409A” will mean Section 409A of the Internal Revenue Code of 1986, as amended, and any regulations and other guidance promulgated thereunder and any applicable state law equivalent.

C. Withholdings

Applied has the right to withhold from any payments or benefits under this letter all applicable federal, state and local taxes required to be withheld and any other required payroll deductions.

D. Other Employment Matters

You agree that, during the term of your employment with Applied, you will devote your full business efforts and time to Applied and you will not engage in any other employment, occupation, consulting or other business activity for any direct or indirect remuneration without the Board’s prior approval and you will not engage in any other activities that conflict with your obligations to Applied. If you serve on the board of directors of any other company or entity, please provide us with a list of such companies or entities; if the list you have previously provided remains accurate, there is no need for you to provide an updated list at this time. If the Board determines that such companies or entities are competitors, customers or suppliers of

Gary Dickerson

August 13, 2013

Page 5

Applied or your service on such board otherwise may represent a conflict of interest with your obligations to Applied, you will be required to resign your directorship with such companies or entities at the Board’s request.

E. Entire Agreement

This letter, the Employee Agreement dated November 15, 2011, the Noncompetition Agreement between you and Applied dated May 2, 2011, the plans and agreements relating to your Equity Awards, and the documents incorporated herein by reference (together, the “Documents”), set forth the terms of your employment with Applied and supersede and replace any prior or concurrent representations or agreements including, but not limited to, the Offer Letter to you from Applied dated June 14, 2012, and the Amended and Restated Change in Control Agreement by and between you and Varian Semiconductor Equipment Associates, Inc. dated October 18, 2004, as amended on December 8, 2005, December 31, 2008, and June 14, 2012. In addition, you acknowledge that the Documents supersede and replace all other prior understandings and agreements, whether oral or written, regarding the terms and conditions of your employment with Applied or any of its subsidiaries, including any other agreements or understandings regarding compensation and severance matters, acceleration of equity awards and any notice of termination.

F. Governing Law

This letter will be governed by the internal substantive laws, but not the choice of law rules, of the State of California. If any provision under this letter becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this letter will continue in full force and effect without such provision.

G. Amendments

This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by you and a member of the Board.

H. Headings

The headings in this letter are for purposes of reference only and will not limit or otherwise affect the meaning of this letter.

* * *

Gary Dickerson

August 13, 2013

Page 6

If you agree to accept the terms of this Offer, please sign and return it to me or to Mary Humiston. This Offer will expire on August 15, 2013, at 5:00 p.m. Pacific Daylight Time.

We look forward to the next steps of this exciting opportunity, and your contributions to the future of Applied’s success.

Sincerely,

/s/ Willem P. Roelandts

Willem P. Roelandts

Chair, Human Resources and Compensation Committee of the Board of Directors

Applied Materials, Inc.

I accept the employment Offer as stated above.

Signature: /s/ Gary Dickerson

Date: August 14, 2013

Start Date: September 1, 2013

Please return one signed, original copy of this letter to:

Mary Humiston

Applied Materials, Inc.

3225 Oakmead Village Drive

Santa Clara, CA 95052

Phone: 408.563.6160

EX-10.3

Exhibit 10.3

August 14, 2013

Michael R. Splinter

3225 Oakmead Village Drive, M/S 1223

P.O. Box 58039

Santa Clara, CA 95052-8039

Dear Mike:

We thank you for your leadership and many contributions to the success of Applied Materials, Inc. (“Applied”), and we look forward to your continued dedication to Applied as the Executive Chairman (“Executive Chairman”) of Applied’s Board of Directors (the “Board”). This letter (the “Agreement”) summarizes the terms of your continuing employment with Applied as Executive Chairman.

I. POSITION

You will be employed on a full-time basis as Executive Chairman beginning on September 1, 2013 (the “Effective Date”), and ending on March 31, 2015 or such earlier or later employment end date mutually agreed upon between you and Applied (the “Scheduled End Date”). The period while you are employed as Executive Chairman is the “Employment Period.” You will be considered to have resigned your position as Applied’s Chief Executive Officer (“CEO”) effective as of September 1, 2013. Your responsibilities as Executive Chairman will be determined jointly by you, the Human Resources and Compensation Committee of the Board (the “HRCC”) and the CEO, and primarily will be focused on major policy issues, industry-wide initiatives and strategic projects, as well as continuing to support Gary Dickerson as he assumes the role of President and Chief Executive Officer. You will report directly to the Board. Your primary work location will be Applied’s Santa Clara, California campus.

II. COMPENSATION

A. Cash Compensation

While you are Executive Chairman, your annual base salary will be $980,000 and you will be eligible to participate in Applied’s Senior Executive Bonus Plan (or other Applied bonus plan) at a target bonus opportunity equal to 175% of your base salary. Your base salary and target bonus may be adjusted only by mutual agreement between you and Applied if you and Applied agree to adjust your role.

Michael Splinter

August 14, 2013

Page 2

B. Equity Awards

(i)Continued Vesting. While you are an Applied employee, you will remain eligible to continue vesting in each of your equity awards covering shares of Applied’s common stock (each, an “Equity Award”), subject to the terms and conditions of the plan and award agreement under which the Equity Award was granted. Nothing in this Agreement will impair any rights you may have in connection with any Equity Awards, including without limitation, any Change of Control rights set forth in Sections 4.5 and 13.10 of the ESIP. Any benefits provided to you pursuant to the governing Equity Award documents will supersede any benefits provided for in this Agreement to the extent the benefits under the Equity Award documents are more favorable to you (but in no event will you be entitled to any duplication of benefits).

(ii)Future Awards. In addition, you will be eligible to continue participating in Applied’s Employee Stock Incentive Plan (or its successor plan, as applicable) (the “ESIP”), at target amounts that reflect your expected duties and responsibilities as Executive Chairman and as determined by the Board or the HRCC, in its discretion. Any Equity Awards will be subject to the terms and conditions of the ESIP and an award agreement under the ESIP.

C. Benefits

(i)Benefits During Employment. As Executive Chairman, you will receive an Applied email account, computer, Internet access, and executive support to the same extent you received them while CEO. You also will be eligible to participate in Applied’s existing generally available benefit plans at the same levels as Applied’s senior executives (including medical, dental, vision and 401(k) plans), subject to eligibility and other requirements of such plans, as determined by Applied. As an Applied employee, you also will continue to accrue time off under Applied’s Paid Time Off (PTO) program. Applied may modify or terminate its benefits programs and arrangements from time to time as necessary or appropriate, but may not do so in a manner that has a materially negative effect on your benefits in particular as compared to other executives of Applied.

(ii)Benefits After Employment Termination. When your employment with Applied ends, you will be entitled to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), and any applicable state law, at your expense, to the extent that you are eligible for COBRA coverage. In addition, for one year after your termination of employment, other than a termination due to your death or disability or that is for “Cause” (as defined below), you will continue to receive an Applied email account, computer, Internet access, and executive support to the same extent you received them while Executive Chairman.

Michael Splinter

August 14, 2013

Page 3

III. SEVERANCE

When your employment as Executive Chairman ends, you will receive certain severance payments and benefits, as described below. In addition, as Executive Chairman, you will be eligible to participate in any severance plans or programs that Applied may establish in the future and on comparable terms provided to other senior executives of Applied.

A. Cash Severance

(i)Termination On or Before the Scheduled End Date Without Cause, or Resignation for Good Reason. You will receive a lump sum cash payment equal to the sum of (x) 275% of your then-current annual base salary, and (y) an amount equal to 18 months of COBRA coverage premiums (calculated based on the first month’s premium) for coverage under Applied’s health plans (i.e., medical, dental and/or vision coverage) based on your plan elections in effect immediately before your employment ends (the “Cash Severance”), if:

(a)Your employment terminates on the Scheduled End Date; or

(b)Before the Scheduled End Date, Applied terminates your employment without “Cause” (as defined below); or

(c)Before the Scheduled End Date, you resign your employment for “Good Reason” (as defined below).

For purposes of clarity, a termination of your employment without “Cause” will not include termination of your employment due to your death or disability.

(ii)Payment Timing. If you become entitled to receive the Cash Severance under subsection (i) above, then subject to Section V.B., the Cash Severance will be paid to you within 30 days of your employment termination date.

(iii)Termination Before the Scheduled End Date for Cause, Due to a Resignation Without Good Reason, or Due to Death or Disability. If, before the Scheduled End Date: (a) Applied terminates your employment for “Cause” (as defined below); or (b) you resign your employment without “Good Reason” (as defined below); or (c) your employment ends due to your death or disability; then you will not be eligible to receive the Cash Severance or any other cash severance, other than any cash severance benefits that you may be eligible to receive under Applied’s then-existing severance and benefits plans and practices or other written agreements with Applied, or otherwise as determined at the discretion of the Board.

Michael Splinter

August 14, 2013

Page 4

B. Equity Award Severance

If you terminate employment due to your Retirement (as defined in Applied’s Employee Stock Incentive Plan, as amended and restated on March 6, 2012), then subject to subsection (d) below, you will be receive the following:

(a)Time-based Vesting. All of your then-unvested and outstanding Equity Awards that are subject to time-based vesting but not subject to any performance-based vesting will become fully vested (and if applicable, exercisable for the period indicated in the applicable award agreement and governing ESIP).

(b)Performance-based Vesting. All of your then‑unvested and outstanding Equity Awards that are subject to performance-based vesting will remain outstanding and be eligible to become earned and vested based on actual performance until the applicable performance period(s) are completed. For purposes of clarity, any time-based vesting requirements under any performance-based Equity Awards will be considered fully satisfied as of your Retirement date. For purposes of clarity, if the performance objectives under an Equity Award are determined not to have been achieved pursuant to the governing Equity Award documents, the Equity Award (or applicable portion of the Equity Award) automatically will be forfeited permanently and never will become vested.

(c)Termination for Cause. For purposes of clarity, if Applied terminates your employment for “Cause,” your employment will not be considered to have terminated due to Retirement.

(d)Release Agreement. In order to receive your Equity Award severance benefits described in subsections (a) and (b) above (the “Equity Severance”), you must sign and not revoke a release of claims, non‑solicitation of employees and non‑disparagement agreement in a form supplied by Applied (the “Release Agreement”) and the Release Agreement must become effective within 60 days after your employment termination date (the “Release Deadline Date”). You will not receive any of the Equity Severance if the Release Agreement does not become effective by the Release Deadline Date.

(e)Payment Timing. If you become entitled to receive the Equity Severance, then subject to any further delay required under the Section 409A provisions below, the Equity Severance will be provided to you, with respect to options, upon the Release Agreement becoming effective, and for all other Equity Awards, on the 61st day following your Retirement date.

C. Good Reason Definition

For purposes of this Agreement, your resignation for “Good Reason” means that you terminate your employment with Applied on or after the Effective Date but within 30

Michael Splinter

August 14, 2013

Page 5

days following the end of the cure period described below, after the occurrence, without your written consent, of  (1) a material reduction by Applied in your base salary and/or your target bonus opportunity that was in effect immediately prior to such reduction, and/or (2) a material reduction in your duties or responsibilities as Executive Chairman as in effect immediately prior to such reduction. However, in order for an event to qualify as “Good Reason,” you must not terminate your employment with Applied without first providing Applied with written notice of the acts or omissions that would be considered grounds for “Good Reason” within 90 days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of 30 days after the date of written notice, and such grounds must not have been cured during such time.

D. Cause Definition

For purposes of this Agreement, “Cause” means (a) your continued willful failure to perform your duties to Applied (other than any such failure resulting from your incapacity due to physical or mental illness) after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to you by the Board or its committee; (b) the willful commission by you of a wrongful act that caused or was reasonably likely to cause substantial damage to Applied, or an act of fraud in the performance of your duties on behalf of Applied; (c) your conviction for the commission of a felony in connection with the performance of your duties on behalf of Applied; or (d) the order of a federal or state regulatory authority having jurisdiction over Applied or its operations or by a court of competent jurisdiction requiring the termination of your employment by Applied.

IV. OBLIGATIONS DURING EMPLYOYMENT PERIOD

A. Full Business Efforts; Other Activities

You agree that, during the Employment Period, you will devote your full business efforts and time to Applied and you will not engage in any other employment, occupation, consulting or other business activity for any direct or indirect remuneration without the Board’s prior approval and you will not engage in any other activities that conflict with your obligations to Applied. Subject to the Board’s consent, during the Employment Period, you may serve on the boards of directors of up to three non-profit and charitable organizations and up to two for-profit companies or entities, including the continuation of your service on the boards of the NASDAQ OMX Group, Inc., Semiconductor Equipment and Materials International (SEMI), Pica8, Inc., University of Wisconsin Foundation, and Santa Clara University, all of which the Board is deemed to have consented to with this Agreement. If you serve on the board of directors of any other company or entity, please provide us with a list of such companies or entities; if the list you previously have provided remains accurate, there is no need for you to provide an updated list at this time. If the Board determines

Michael Splinter

August 14, 2013

Page 6

that such companies or entities are Applied’s competitors, customers or suppliers or your service on such board otherwise may represent a conflict of interest with your obligations to Applied, you will be required to resign your directorship with such companies or entities at the Board’s request.

B. Investments

You agree that, during the Employment Period, you will not, without the HRCC’s prior written approval, acquire securities of or any other ownership interest in a corporation or other entity that potentially may conflict with Applied’s interests.

V. MISCELLANEOUS

A. At Will Employment

Your employment with Applied will be “at will,” meaning that it can be terminated by you or Applied at any time, with or without cause or advance notice. This at will employment relationship may not be modified by any oral or implied agreement and can be modified only by an express written contract for a specified term. However, you will receive certain severance benefits under this Agreement if your employment terminates in certain circumstances as described in this Agreement.

B. Section 409A

(i)General. It is the intent of the parties that all severance and other payments and benefits under this Agreement comply with or are exempt from Section 409A, and any ambiguities in this Agreement will be interpreted in that manner. For all purposes of this Agreement, to the extent required to be exempt from or comply with Section 409A, references to your “termination of employment” or similar phrases will be references to your “separation from service” within the meaning of Section 409A.

(ii)Reimbursements and In-Kind Benefits. To the extent that the reimbursement of attorneys’ fees under Section V.C. of this Agreement, continuation of executive support and other benefits under Section II.C.(ii) of this Agreement or under any other reimbursement or in-kind benefit plan or arrangement in which you participate provides for a “deferral of compensation” within the meaning of Section 409A and otherwise does not comply with Section 409A, (a) the amount eligible for reimbursement or in-kind benefit in one calendar year may not affect the amount eligible for reimbursement or in-kind benefit in any other calendar year, (b) the right to the applicable reimbursement or benefit is not subject to liquidation or exchange for another benefit or payment, (c) to the extent there is any reimbursement of an expense, such reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (d) except as specifically provided in this Agreement or in the applicable reimbursement

Michael Splinter

August 14, 2013

Page 7

arrangement, in-kind benefits will be provided, and reimbursements will be made for expenses incurred, only during your lifetime. The prior sentence assumes that the calendar year is your taxable year; if not, reference to “calendar year” in the prior sentence will relate to your taxable year.

(iii)Required Delay. If and to the extent it is necessary to avoid subjecting you to an additional tax under Section 409A, payment of all or a portion of the termination-related payments or benefits described in this Agreement or otherwise will be delayed until the date that is six months and one day following your employment termination. However, in the event that your death occurs after your employment termination but prior to the six month anniversary of your employment termination, any payments and/or benefits delayed under the prior sentence will be payable to you in a lump sum as soon as administratively practicable after the date of your death and any other separation pay and/or benefits will be payable according to the payment schedule applicable to each payment. In addition, each payment and benefit payable under this Agreement is intended to be a separate payment for purposes of the Section 409A-related Treasury Regulations. You and Applied agree to work together in good faith to consider amendments to this Agreement and to take reasonable actions to avoid subjecting you to an additional tax or income recognition under Section 409A before actual payment of the payments and benefits under this Agreement, as applicable. In all cases, Applied will not reimburse you for any taxes that may be imposed on you as a result of Section 409A.

(iv)Section 409A Definition. For purposes of this Agreement, “Section 409A” will mean Section 409A of the Internal Revenue Code of 1986, as amended, and any regulations and other guidance promulgated thereunder and any applicable state law equivalent.

C. Attorneys’ Fees

If you are required to incur attorneys’ fees in order to obtain any payments or benefits under this Agreement, and provided that you prevail on at least one material issue related to your claim(s) under this Agreement, then Applied will reimburse the attorneys’ fees incurred by you. Subject to Section V.B. of this Agreement, the reimbursements will be made in compliance with Applied’s normal reimbursement policies as the expenses are incurred and proper documentation is provided to Applied. However, if you do not prevail on at least one material issue related to your claim(s) under this Agreement, then no later than 30 days following the final adjudication of those claim(s), you agree to return the gross amount of all reimbursements previously provided by Applied pursuant to this Section V.C. You will be reimbursed for your attorneys’ fees and costs incurred in connection with the preparation and signing of this Agreement up to a maximum of $10,000, which will be paid no later than December 31, 2013, and subject to Applied’s receipt of proper documentation from you.

Michael Splinter

August 14, 2013

Page 8

D. Withholdings

Applied has the right to withhold from any payments or benefits under this Agreement all applicable federal, state and local taxes required to be withheld and any other required payroll deductions.

E. Entire Agreement

This Agreement, the plans and agreements relating to your Equity Awards (including without limitation the ESIP), the Employee Agreement you previously executed, and the documents incorporated herein by reference (together, the “Documents”), set forth the terms of your employment with Applied and supersede and replace any prior or concurrent representations or agreements including, but not limited to, the Term Sheet that you and Applied entered into, as amended on December 8, 2008. Except as expressly provided herein, you acknowledge that the Documents supersede and replace all other prior understandings and agreements, whether oral or written, regarding the terms and conditions of your employment with Applied or any of its subsidiaries, including any other agreements or understandings regarding compensation and severance matters, acceleration of equity awards and any notice of termination.

F. Governing Law

This Agreement will be governed by the internal substantive laws, but not the choice of law rules, of the State of California. If any provision under this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without such provision.

G. Amendments

This Agreement, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by you and a member of the Board.

H. Headings

The headings in this Agreement are for purposes of reference only and will not limit or otherwise affect the meaning of this Agreement.

* * *

Michael Splinter

August 14, 2013

Page 9

If you agree to accept the terms of this Agreement, please sign and return it to me or to Mary Humiston. This Agreement offer will expire on August 15, 2013, at 5:00 p.m. Pacific Daylight Time.

We look forward to your continued contributions to Applied’s future success.

Sincerely,

/s/ Willem P. Roelandts
Willem P. Roelandts

Chair, Human Resources and Compensation Committee of the Board of Directors

Applied Materials, Inc.

I accept the employment offer as stated above.

Signature: /s/ Michael R. Splinter

Date: August 15, 2013

Start Date: September 1, 2013

Please return one signed, original copy of this Agreement to:

Mary Humiston

Applied Materials, Inc.

3225 Oakmead Village Drive

Santa Clara, CA 95052

Phone: 408.563.6160

EX-10.4

Exhibit 10.4

[EMPL_NAME]  Employee ID: [EMPLID]  Grant Number: [GRANT_ID]
APPLIED MATERIALS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT NOTICE OF GRANT
Applied Materials, Inc. (the “Company”) hereby grants you, [EMPL_NAME] (the “Employee”), an Option under the Company’s Employee Stock Incentive Plan (the “Plan”) to purchase shares of common stock of the Company (the “Option”). The date of this Non-Qualified Stock Option Agreement (the “Agreement”) is [GRANT_DT] (the “Grant Date”). The terms used and not defined in this Agreement have the meaning set forth in the Plan. Subject to the provisions of the Terms and Conditions of the Non-Qualified Stock Option Grant (the “Terms and Conditions”), which constitute part of this Agreement and of the Plan, the principal features of this Option are as follows:
Maximum Number of Shares Purchasable with this Option: [MAX_SHARES]		Exercise Price per Share: US[PRICE]
Vesting of Option: Please refer to the UBS One Source website for the vesting schedule related to this Option grant (click on the specific grant under the tab labeled “Grants/Awards/Units”) or its successor, as well as the Terms and Conditions.* *  Except as otherwise provided in the Terms and Conditions, on any scheduled vesting date, vesting actually will occur only if the Employee has been continuously employed by the Company or one of its Affiliates from the Grant Date through the scheduled vesting date. Expiration Date of Option: In general, the latest date this Option will terminate is (a) [EXPR_DT], provided that [EXPR_DT] is a day on which the Nasdaq U.S. stock trading market is open for trading (a “Nasdaq trading day”) or (b) if [EXPR_DT] is not a Nasdaq trading day, then the Nasdaq trading day immediately preceding [EXPR_DT] (the “Expiration Date”). However, this Option may terminate earlier than the Expiration Date, as set forth immediately below and in the Terms and Conditions.
Event Triggering Option Termination:	Maximum Time to Exercise After Triggering Event:**
Termination of Service (except as shown below)	30 days
Termination of Service due to Retirement (Age 65 or over, or age 60 or over with at least 10 Years of Service)	1 year
Termination of Service due to Death	1 year
**This Option may not be exercised after the Expiration Date (except in certain cases of the death of the Employee). In addition, the maximum time to exercise this Option may be further limited by the Company where required by applicable law.

1

IMPORTANT:

IT IS YOUR RESPONSIBILITY TO EXERCISE THIS OPTION, IF VESTED, BEFORE IT OTHERWISE TERMINATES.

Your electronic signature below indicates your agreement and understanding that this Option is subject to all of the rules and other provisions contained in the Terms and Conditions to this Agreement and the Plan. For example, important additional information on vesting and termination of this Option is contained in Paragraphs 1 through 5 of the Terms and Conditions and in Sections 4.5 and 13.10 of the Plan. PLEASE BE SURE TO READ ALL OF THE TERMS AND CONDITIONS, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION, INCLUDING INFORMATION CONCERNING CANCELLATION AND TERMINATION OF THIS OPTION. CLICK HERE TO READ THE TERMS AND CONDITIONS.

By clicking the “ACCEPT” button below, you agree that:

“This electronic contract contains my electronic signature, which I have executed with the intent to sign this Agreement.”

[VIEW_ACCEPT_STATEMENT]

Please be sure to print and retain a copy of your electronically signed Agreement (although the electronic version will be available for you to access at any time). You may obtain a paper copy at any time and at the Company’s expense by requesting one from Stock Programs (see Paragraph 13 of the Terms and Conditions). If you prefer not to electronically sign this Agreement, you may accept this Option by signing a paper copy of the Agreement and delivering it to Stock Programs.

2

Exhibit 10.4

TERMS AND CONDITIONS OF THE

NON-QUALIFIED STOCK OPTION GRANT

1.Vesting Schedule. Except as provided in Paragraphs 2 and 4 of this Agreement, and Sections 4.5 and 13.10 of the Plan, this Option is scheduled to become exercisable (vest) as to the number of Shares, and on the dates shown, in accordance with the vesting schedule set forth on the UBS One Source website (click on the specific grant under the tab labeled “Grants/Awards/Units”) or its successor (the “Vesting Schedule”). However, on any such scheduled vesting date, vesting actually will occur only if the Employee has been continuously employed by the Company or an Affiliate from the Grant Date until the scheduled vesting date (except to the limited extent provided in Paragraph 4 below and in Sections 4.5 and 13.10 of the Plan).

2.Modifications to Vesting Schedule. In the event that the Employee takes a personal leave of absence (“PLOA”), the Shares subject to this Option that are scheduled to become exercisable shall be modified as follows:

(a)    if the duration of the Employee’s PLOA is six (6) months or less, the Vesting Schedule shall not be affected by the Employee’s PLOA.

(b)    if the duration of the Employee’s PLOA is greater than six (6) months but not more than twelve (12) months, the scheduled exercisability of any Shares subject to this Option that are not then exercisable shall be deferred for a period of time equal to the duration of the Employee’s PLOA less six (6) months.

(c)    if the duration of the Employee’s PLOA is greater than twelve (12) months, any Shares subject to this Option that are not then exercisable immediately will terminate.

(d)    Examples.

(i)    Example 1. Assume Shares subject to the Option are scheduled to vest on January 1, 2015. On May 1, 2014, Employee begins a 6-month PLOA. Such Shares still will be scheduled to vest on January 1, 2015.

(ii)    Example 2. Assume Shares subject to the Option are scheduled to vest on January 1, 2015. On May 1, 2014, Employee begins a 9-month PLOA. The Shares subject to the Option that are scheduled to vest after November 2, 2014, will be modified (November 2, 2014, is the date on which Employee’s PLOA exceeds 6 months). Such Shares now will be scheduled to vest on April 1, 2015 (or 3 months after the originally scheduled date).

(iii)    Example 3. Assume Shares subject to the Option are scheduled to vest on January 1, 2015. On May 1, 2014, Employee begins a 13-month PLOA. Such Shares will terminate on May 2, 2015 (which is the date on which Employee’s PLOA exceeds 12 months).

In general, a PLOA does not include any legally required leave of absence. The duration of the Employee’s PLOA, if any, will be determined over a rolling twelve (12) month measurement period. Shares subject to this Option that are scheduled to vest during the first six (6) months of the Employee’s PLOA will continue to vest as scheduled. However, Shares subject to this Option that are scheduled to vest after the first six (6) months of the Employee’s PLOA will be deferred or terminated depending on the length of the Employee’s PLOA. The Employee’s right to exercise all Shares subject to this Option that remain unexercisable shall be modified as soon as the duration of the Employee’s PLOA exceeds six (6) months.

3.Termination of Option. In the event of the Employee’s Termination of Service for any reason other than Retirement or death, the Employee may, within thirty (30) days after the date of the Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this Option. However, in the event the date that is thirty (30) days after the date of the Termination of Service is not a Nasdaq trading day, the Employee may exercise the vested but unexercised portion of this Option only until the Nasdaq trading day immediately preceding such date or prior

to the Expiration Date, whichever shall first occur. In the event of the Employee’s Termination of Service due to Retirement, the Employee may, within one (1) year after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this Option. However, in the event the date that is one (1) year after the date of the Termination of Service due to Retirement is not a Nasdaq trading day, the Employee may exercise the vested but unexercised portion of this Option only until the Nasdaq trading day immediately preceding such date or prior to the Expiration Date, whichever shall first occur. Upon the Employee’s Termination of Service, any unvested portion of this Option (after applying the rules of Paragraph 4 of this Agreement and/or Sections 4.5 or 13.10 of the Plan, as applicable) shall immediately terminate. For purposes of this Agreement, “Retirement” is defined in the Plan and generally means (a) a Termination of Service by an Employee occurring on or after the date the Employee reaches age sixty-five (65), or (b) a Termination of Service by an Employee occurring on or after the date the Employee reaches age sixty (60) with the Employee having completed at least ten (10) full Years of Service. For purposes of this Agreement, “Years of Service” is defined in the Plan and generally means the number of full years of employment since the Employee’s last hire date with the Company or an Affiliate (but giving credit for prior service under the non-401(k) Plan principles of the Company’s U.S. Human Resources Policy No. 2-06, Re‑Employment of Former Employees/Bridging of Service, or any successor thereto).

4.Death of Employee. In the event that the Employee incurs a Termination of Service due to his or her death, the right to exercise one hundred percent (100%) of the Shares subject to this Option shall vest on the date of the Employee’s death. In the event that the Employee incurs a Termination of Service due to his or her death or in the event the Employee dies after incurring a Termination of Service but before any vested portion of this Option terminates in accordance with Paragraph 3 above, the administrator or executor of the Employee’s estate, may, within one (1) year after the date of the Employee’s death, exercise any vested but unexercised portion of this Option. However, in the event the date that is one (1) year after the date of a death described in the preceding sentence is not a Nasdaq trading day, the administrator or executor of the Employee’s estate may exercise the vested but unexercised portion of this Option only until the Nasdaq trading day immediately preceding such date. Notwithstanding any contrary provision of this Agreement, if the Employee is a resident of France and the Employee incurs a Termination of Service due to his or her death or in the event the Employee dies after incurring a Termination of Service but before any vested portion of this Option terminates in accordance with Paragraph 3 above, the administrator or executor of the Employee’s estate, may, within six (6) months after the date of the Employee’s death, exercise any vested but unexercised portion of this Option; however, if the date that is six (6) months after the date of such a death is not a Nasdaq trading day, the administrator or executor of the Employee’s estate may exercise the vested but unexercised portion of this Option only until the Nasdaq trading day immediately preceding such date. Any transferee under this Paragraph 4 must furnish the Company in such form or manner as the Company may designate (a) written notice of his or her status as a transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of this Option and compliance with any applicable law pertaining to the transfer, and (c) written acceptance of the terms and conditions of this Option as set forth in this Agreement. In the event that any applicable law limits the Committee’s ability to accelerate the vesting of this Option or to extend the exercise period of this Option, this Paragraph 4 shall be limited to the extent required to comply with applicable law. Notwithstanding any contrary provision of this Agreement, if the Employee is subject to Hong Kong’s ORSO provisions, the first sentence of this Paragraph 4 (relating to accelerated vesting upon death) shall not apply to this Option.

5.Change of Control. In the event of a Change of Control, this Option will be treated in accordance with Section 4.5 of the Plan. In addition, in the event the Employee experiences a qualifying Termination of Service within 12 months following a Change of Control, the vesting of this Option may be accelerated to the extent provided under Section 13.10 of the Plan.

6.Persons Eligible to Exercise Option. Except as provided in Paragraph 4 above or as otherwise determined by the Committee in its discretion, this Option shall be exercisable during the Employee’s lifetime only by the Employee.

7.Option is Not Transferable. Except as provided in Paragraph 4 above or in the Plan, this Option and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this Option and the rights and privileges conferred hereby immediately shall become null and void.

2

8.Exercise of Option. This Option may be exercised by the person then entitled to do so as to any Shares which may then be purchased by (a) giving notice in such form or manner as the Company may designate, (b) providing full payment of the Exercise Price and any applicable fees and required Tax Obligations (as defined in Paragraph 11 below), and (c) giving satisfactory assurances in the form or manner requested by the Company that the Shares to be purchased upon the exercise of this Option are being purchased for investment and not with a view to the distribution thereof. Exercise of this option will be permitted only in the form and manner specified by the Company’s Stock Programs department in Santa Clara, California (or such successor as the Company may later designate) from time to time. This Option may be exercised only on Nasdaq trading days. However, if Nasdaq is scheduled to be open for trading on a particular day but does not so open or closes substantially early due to an unforeseen event (for example, a natural or man-made catastrophic event), as determined by the Committee, and that day otherwise would be the last day this Option is exercisable, the Option shall remain exercisable through the next Nasdaq trading day. If the Employee receives a hardship withdrawal from his or her account (if any) under the Company’s Employee Savings and Retirement Plan (the “401(k) Plan”), this Option may not be exercised during the six (6) month period following the hardship withdrawal (unless the Company determines that such exercise would not jeopardize the tax-qualification of the 401(k) Plan).

9.Cashless Exercise Required. If the Committee determines that a cashless exercise of this Option is necessary or advisable, any Shares to be acquired pursuant to the exercise of the Option shall be sold immediately upon exercise and the Employee shall receive the proceeds from the sale, less the Exercise Price and any applicable fees and required Tax Obligations (as defined in Paragraph 11 below).

10.Conditions to Exercise. Except as provided in Paragraph 9 above or as otherwise required as a matter of law, the Exercise Price for this Option may be paid in one (1) (or a combination of two (2) or more) of the following forms:

(a)    Personal check, a cashier’s check or a money order.

(b)    Irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares subject to the Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price and any applicable fees and required Tax Obligations (as defined in Paragraph 11 below). (The balance of the sale proceeds, if any, will be delivered to Employee.)

(c)    Irrevocable directions to a securities broker or lender approved by the Company to pledge all or part of the Shares subject to the Option as security for a loan and to deliver to the Company from the loan proceeds an amount sufficient to pay the Exercise Price and any applicable fees and required Tax Obligations (as defined in Paragraph 11 below).

11.Tax Withholding and Payment Obligations. Before the delivery of any Shares or cash pursuant to the exercise of this Option or at such earlier time as the Tax Obligations (as defined below) are due, the Employee acknowledges and agrees that the Company shall have the power and the right to deduct or withhold, or require the Employee to remit to the Company, an amount sufficient to satisfy all Tax Obligations. “Tax Obligations” for this purpose means all taxes and social insurance liability obligations and other requirements in connection with this Option, including, without limitation, (a) all federal, state and local income, employment and any other applicable taxes that are required to be withheld by the Company (or the employing Affiliate), (b) the Employee’s and, to the extent required by the Company (or the employing Affiliate), the Company’s (or the employing Affiliate’s) fringe benefit tax liability, if any, associated with the grant, vesting or exercise of the Option or the sale or other transfer of Shares acquired pursuant to the exercise of the Option, and (c) all other taxes or social insurance liabilities with respect to which the Employee has agreed to bear responsibility.

The Employee agrees as a condition of the grant of this Option to make arrangements satisfactory to the Company to enable it to satisfy all withholding or remitting requirements related to any and all Tax Obligations. The Employee authorizes the Company (or the employing Affiliate) to withhold all applicable Tax Obligations from the Employee’s wages. Furthermore, the Employee agrees to pay the Company (or the employing Affiliate) any amount of Tax Obligations the Company (or the employing Affiliate) may be required to withhold or with respect to which the Employee has agreed to bear as a result of the Employee’s participation in the Plan that cannot be satisfied by deduction from the Employee’s wages or other amounts payable to the Employee. All Tax Obligations related to this Option grant are the sole responsibility of the Employee and the Employee acknowledges that he or she may not exercise this Option unless all Tax Obligations are

3

satisfied. Further, the Employee shall be bound by any additional withholding requirements included in the Notice of Grant of this Agreement.

12.Suspension of Exercisability. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of Shares upon any securities exchange or under any applicable law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of the purchase of Shares hereunder, this Option may not be exercised, in whole or in part, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. The Company shall make reasonable efforts to meet the requirements of any applicable law or securities exchange and to obtain any required consent or approval of any governmental authority.

13.Address for Notices. Any notice to be given to the Company under the terms of this Agreement shall be addressed to the Company, in care of Stock Programs, at Applied Materials, Inc., 3225 Oakmead Village Drive, M/S 1213, P.O. Box 58039, Santa Clara, CA 95054, U.S.A. or at such other address as the Company may hereafter designate in writing.

14.No Rights of Stockholder. Neither the Employee (nor any transferee) shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable pursuant to the exercise of this Option, unless and until certificates representing such Shares (which may be in book entry form), shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Employee (or transferee) (including through electronic delivery to a brokerage account). Nothing in the Plan or this Agreement shall create an obligation on the part of the Company to repurchase any Shares purchased hereunder.

15.No Effect on Employment. Subject to any employment contract with the Employee, the terms of the Employee’s employment with the Company and its Affiliates shall be determined from time to time by the Company or the Affiliate employing the Employee (as the case may be), and the Company or the Affiliate employing the Employee, as the case may be, shall have the right, which is hereby expressly reserved, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause (subject to the provisions of applicable law). The transactions contemplated hereunder and the Option’s Vesting Schedule do not constitute any express or implied promise of continued employment for any period of time. A leave of absence or an interruption in service (including an interruption during military service) authorized or acknowledged by the Company or the Affiliate employing the Employee, as the case may be, will not be deemed a Termination of Service for purposes of this Agreement.

16.Plan Governs. This Agreement is subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Terms used and not defined in this Agreement shall have the meaning set forth in the Plan. This Option is not an incentive stock option as defined in Section 422 of the U.S. Internal Revenue Code. The Company may, in its discretion, issue newly issued Shares or treasury Shares pursuant to this Option.

17.Maximum Term of Option. Except as provided in Paragraph 4 above, this Option is not exercisable after the Expiration Date.

18.Binding Agreement. Subject to the limitation on the transferability of this Option contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

19.Clawback. The Board, in its sole discretion, may require the Employee to forfeit, return and/or reimburse the Company for all or a portion of his or her Option, the Shares issued thereunder, and/or proceeds derived with respect to the Shares issued under the Option (“Clawback Amount”), in accordance with the Company’s clawback policy as may be established and/or amended from time to time or as necessary or appropriate to comply with Applicable Laws. To the extent Tax Obligations on such Clawback Amount were paid or due, the forfeiture, return or reimbursement shall be limited to the after-tax portion of the Clawback Amount, unless otherwise required by Applicable Laws.

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20.Committee Authority. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. The Committee may delegate certain of its authority and powers with respect to the Plan and this Agreement in accordance with the terms of the Plan. All actions taken and all interpretations and determinations made by the Committee or its delegates in good faith shall be final and binding upon the Employee, the Company and all other interested persons, and shall be given the maximum deference permitted by law. The Committee and its delegates shall not be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.

21.Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of this Option as it may deem advisable, including, but not limited to, restrictions related to applicable federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws. The Employee’s sale or other transfer of the Shares may be subject to any market blackout period that may be imposed by the Company and must comply with the Company’s insider trading policies and any other applicable securities laws.

22.Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

23.Agreement Severable. In the event that any provision in this Agreement shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Agreement.

24.Modifications to the Agreement. This Agreement constitutes the entire understanding of the parties on the subjects covered. The Employee expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Agreement can be made only in an express written contract executed by a duly authorized officer of the Company.

25.Amendment, Suspension, Termination. By accepting this Option, the Employee expressly warrants that he or she has received an Option to purchase Shares under the Plan as set forth in this Agreement, and has received, read and understood a description of the Plan. The Employee understands that the Plan is discretionary in nature and may be modified, suspended or terminated by the Company at any time in accordance with the terms of the Plan.

26.Labor Law. By accepting this Option, the Employee acknowledges that: (a) the grant of this Option is a one-time benefit which does not create any contractual or other right to receive any future grants of stock options or other awards, or any benefits in lieu of such awards; (b) all determinations with respect to any future grants, including, but not limited to, the times when any awards shall be granted, the number of Shares subject to any awards, the Exercise Price or purchase price of any awards, and the time or times when any awards shall be exercisable or vested, will be at the sole discretion of the Committee; (c) the Employee’s participation in the Plan is voluntary; (d) the value of this Option is an extraordinary item of compensation which is outside the scope of the Employee’s employment contract, if any; (e) this Option is not part of the Employee’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or any similar payments; (f) the vesting of this Option shall cease upon the Employee’s termination of employment for any reason except as may otherwise be explicitly provided in the Plan or this Agreement; (g) the future value of the underlying Shares is unknown and cannot be predicted with any certainty; (h) if the underlying Shares do not increase in value during term of this Option, the Option will have no value; (i) this Option has been granted to the Employee in the Employee’s status as an employee of the Company or its Affiliate; (j) any claims resulting from this Option shall be enforceable, if at all, solely against the Company; and (k) there shall be no additional obligations for any Affiliate employing the Employee as a result of this Option.

27.Disclosure of Employee Information. By accepting this Option, the Employee consents to the collection, use and transfer of personal data as described in this Paragraph. The Employee understands that the Company and its Affiliates hold certain personal information about him or her, including his or her name, home address and telephone number, date of

5

birth, social security or identity number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all stock options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in his or her favor, for the purpose of managing and administering the Plan (collectively, “Data”).

The Employee further understands that the Company and/or its Affiliates will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of his or her participation in the Plan, and that the Company and/or any of its Affiliates may each further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. The Employee understands that these recipients may be located in the European Economic Area, or elsewhere, such as in the U.S. or Asia.

The Employee authorizes the Company to receive, possess, use, retain and transfer the Data in electronic or other form, for the purposes of implementing, administering and managing his or her participation in the Plan, including any requisite transfer to a broker or other third party with whom he or she may elect to deposit any Shares acquired upon exercise of this Option of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on his or her behalf. The Employee understands that he or she may, at any time, view the Data, require any necessary amendments to the Data or withdraw the consent herein in writing by contacting the Human Resources department and/or the Stock Programs Administrator for the Company and/or its applicable Affiliates.

28.Notice of Governing Law. This Option shall be governed by, and construed in accordance with, the laws of the State of California in the U.S.A. without regard to principles of conflict of laws.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Michael R. Splinter, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Materials, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 22, 2013

/s/ MICHAEL R. SPLINTER

Michael R. Splinter

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Robert J. Halliday, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Materials, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 22, 2013

/s/ ROBERT J. HALLIDAY

Robert J. Halliday

Senior Vice President, Chief Financial Officer

EX-32.1

EXHIBIT 32.1

APPLIED MATERIALS, INC.

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with the Quarterly Report on Form 10-Q of Applied Materials, Inc. for the period ended July 28, 2013, I, Michael R. Splinter, Chief Executive Officer of Applied Materials, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Form 10-Q for the period ended July 28, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Form 10-Q for the period ended July 28, 2013 fairly presents, in all material respects, the financial condition and results of operations of Applied Materials, Inc. for the periods presented therein.

Date: August 22, 2013

/s/ MICHAEL R. SPLINTER

Michael R. Splinter

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

APPLIED MATERIALS, INC.

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with the Quarterly Report on Form 10-Q of Applied Materials, Inc. for the period ended July 28, 2013, I, Robert J. Halliday, Senior Vice President, Chief Financial Officer of Applied Materials, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Form 10-Q for the period ended July 28, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Form 10-Q for the period ended July 28, 2013 fairly presents, in all material respects, the financial condition and results of operations of Applied Materials, Inc. for the periods presented therein.

Date: August 22, 2013

/s/ ROBERT J. HALLIDAY

Robert J. Halliday

Senior Vice President, Chief Financial Officer

XML

Industry Segment Operations (Details Textual)	9 Months Ended
	Jul. 28, 2013 Segment
Segment Reporting [Abstract]
Number of reportable segments	4

XML

Restructuring Charges and Asset Impairments

9 Months Ended

Jul. 28, 2013

Restructuring and Related Activities [Abstract]

Restructuring Charges and Asset Impairments

Restructuring Charges and Asset Impairments

From time to time, Applied initiates restructuring activities to appropriately align its cost structure relative to prevailing economic and industry conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with restructuring actions can include termination benefits and related charges, in addition to facility closure, contract termination and other related activities.

The following table summarizes major components of the restructuring and asset impairment charges during the three and nine months ended July 28, 2013:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs1	$	4	$	—	$	12	$	—
2012 EES Restructuring Plan
Severance and other employee-related costs2	3		24		5		24
Contract cancellation and other costs	1		—		3		—
Asset impairments	6		11		11		11
Others
Severance and other employee-related costs	—		9		2		9
	$	14	$	44	$	33	$	44

______________________________

¹ Includes share-based compensation expense which was recorded in additional paid-in capital.

² Includes post-retirement benefit expense which was recorded in accumulated other comprehensive loss.

Restructuring and asset impairment charges were recorded as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	—	$	1	$	1	$	1
Applied Global Services	—		11		2		11
Energy and Environmental Solutions	10		32		18		32
Corporate Unallocated	4		—		12		—
Total	$	14	$	44	$	33	$	44

Global Restructuring Plan

On October 3, 2012, Applied announced a restructuring plan (the 2012 Global Restructuring Plan) to realign its global workforce and enhance its ability to invest for growth. Under this plan, Applied implemented a voluntary retirement program and other workforce reduction actions that were expected to affect approximately 900 to 1,300 positions, or 6 percent to 9 percent of its global workforce. The voluntary retirement program was available to certain U.S. employees who met minimum age and length of service requirements, as well as other business-specific criteria. Applied implemented other workforce reduction actions globally across multiple business segments and functions, the extent of which depended on the number of employees who participated in the voluntary retirement program and other considerations.

In connection with the 2012 Global Restructuring Plan, Applied expects to incur aggregate pre-tax restructuring charges comprised of severance and other termination benefits in the range of $120 million to $160 million (including costs incurred to date of $118 million discussed below). Applied expected to substantially complete this plan by the end of the third quarter of fiscal 2013. Applied has extended this plan and expects to substantially complete it by the end of the first quarter of fiscal 2014.

During the third quarter and first nine months of fiscal 2013, Applied recognized $4 million and $12 million, respectively, of employee-related costs in connection with the 2012 Global Restructuring Plan. These costs were not allocated to the segments. Applied has incurred aggregate pre-tax restructuring charges comprised of severance and other termination benefits of $118 million under this plan.

2012 EES Restructuring Plan

On May 10, 2012, Applied announced a plan (the 2012 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and light-emitting diode (LED) equipment markets. As part of this plan, Applied relocated certain manufacturing, business operations and customer support functions of its precision wafering systems business and ceased LED development activities. This plan also impacted certain LED support activities in the Applied Global Services segment. The total estimated pre-tax cost of implementing this plan is expected to be in the range of approximately $70 million to $100 million, which will be incurred over a period of up to 18 months beginning in the third quarter of fiscal 2012, and reported primarily in the Energy and Environmental Solutions segment. This estimate consists of: (i) up to $30 million in fixed asset impairment charges; (ii) up to $15 million of inventory-related charges; (iii) up to $15 million in charges arising from lease terminations and other obligations, and (iv) up to $40 million in severance and other employee-related costs. The 2012 EES Restructuring Plan has impacted approximately 250 positions globally. As the Energy and Environmental Solutions segment continues to consolidate infrastructure and reduce its operating expenses, Applied expects approximately 150 additional positions to be impacted globally. No changes in the estimated pre-tax cost of the implementation of this plan are anticipated. During the third quarter and first nine months of fiscal 2013, Applied recognized $10 million and $19 million, respectively, of restructuring and asset impairment charges in connection with this plan, which were primarily reported in the Energy and Environmental Solutions segment. As of July 28, 2013, total costs incurred in implementing this plan were $80 million, of which $13 million were inventory-related charges.

Integration of Varian Semiconductor Associates, Inc. (Varian)

During the first nine months of fiscal 2013, Applied recognized $2 million of severance and other employee-related costs in connection with the integration of Varian, acquired in the first quarter of fiscal 2012, which costs were reported in the Silicon Systems Group and Applied Global Services segments. As of July 28, 2013, the remaining severance accrual associated with restructuring reserves under this program was $2 million.

Restructuring Reserves

Changes in restructuring reserves during the nine months ended July 28, 2013 were as follows:

	2012 Global Restructuring Plan			2012 EES Restructuring Plan						Others
	Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 28, 2012	$	106		$	16		$	1		$	5		$	5	$	133
Provision for restructuring reserves	8			4			3			2			—		17
Consumption of reserves	(106		)	(16		)	(2		)	(5		)	—		(129		)
Reclassification of restructuring reserves1	(4		)	—			—			—			—		(4		)
Balance, July 28, 2013	$	4		4			2			$	2		$	5	$	17

______________________________

¹ Includes reclassification of post-retirement benefit liability to other liabilities.

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Goodwill, Purchased Technology and Other Intangible Assets (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 28, 2013 Energy and Environmental Solutions [Member]	Jul. 28, 2013 Minimum [Member]	Jul. 28, 2013 Maximum [Member]
Indefinite-lived Intangible Assets [Line Items]
Impairment of goodwill	$ 224
Impairment of intangible assets	54
Intangible assets, useful life			1 year	15 years
Change in gross carrying amount of finite-lived intangible assets		(317)
Change in accumulated amortization of finite-lived intangible assets		$ (262)

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Consolidated Condensed Balance Sheets (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Current assets:
Cash and cash equivalents (Notes 3 and 4)	$ 1,745	$ 1,392
Short-term investments (Notes 3 and 4)	230	545
Accounts receivable, net (Note 6)	1,170	1,220
Inventories (Note 7)	1,358	1,272
Other current assets (Note 7)	734	673
Total current assets	5,237	5,102
Long-term investments (Notes 3 and 4)	1,055	1,055
Property, plant and equipment, net (Note 7)	872	910
Goodwill (Note 8)	3,294	3,518
Purchased technology and other intangible assets, net (Note 8)	1,148	1,355
Deferred income taxes and other assets (Note 13)	145	162
Total assets	11,751	12,102
Current liabilities:
Accounts payable and accrued expenses (Note 7)	1,446	1,510
Customer deposits and deferred revenue (Note 7)	756	755
Total current liabilities	2,202	2,265
Long-term debt (Note 9)	1,946	1,946
Other liabilities (Note 7)	649	656
Total liabilities	4,797	4,867
Stockholders' equity (Note 11):
Common stock	12	12
Additional paid-in capital	6,055	5,863
Retained earnings	12,425	12,700
Treasury stock	(11,477)	(11,279)
Accumulated other comprehensive loss	(61)	(61)
Total stockholders' equity	6,954	7,235
Total liabilities and stockholders' equity	$ 11,751	$ 12,102

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Cash, Cash Equivalents and Investments

9 Months Ended

Jul. 28, 2013

Cash, Cash Equivalents, and Investments [Abstract]

Cash, Cash Equivalents and Investments

Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarize Applied’s cash, cash equivalents and investments by security type:

July 28, 2013	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	600	$	—	$	—	$	600
Cash equivalents:
Money market funds	1,145		—		—		1,145
Total Cash equivalents	1,145		—		—		1,145
Total Cash and Cash equivalents	$	1,745	$	—	$	—	$	1,745
Short-term and long-term investments:
U.S. Treasury and agency securities	$	229	$	1	$	1	$	229
Non-U.S. government securities*	11		—		—		11
Municipal securities	378		1		1		378
Commercial paper, corporate bonds and medium-term notes	257		2		1		258
Asset-backed and mortgage-backed securities	281		2		2		281
Total fixed income securities	1,156		6		5		1,157
Publicly traded equity securities	30		27		—		57
Equity investments in privately-held companies	71		—		—		71
Total short-term and long-term investments	$	1,257	$	33	$	5	$	1,285
Total Cash, Cash equivalents and Investments	$	3,002	$	33	$	5	$	3,030

 _________________________

* Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Australia, Canada and Germany.

October 28, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	876	$	—	$	—	$	876
Cash equivalents:
Money market funds	483		—		—		483
Municipal securities	33		—		—		33
Total Cash equivalents	516		—		—		516
Total Cash and Cash equivalents	$	1,392	$	—	$	—	$	1,392
Short-term and long-term investments:
U.S. Treasury and agency securities	$	373	$	1	$	—	$	374
Non-U.S. government securities	29		—		—		29
Municipal securities	396		2		—		398
Commercial paper, corporate bonds and medium-term notes	381		3		—		384
Asset-backed and mortgage-backed securities	294		4		—		298
Total fixed income securities	1,473		10		—		1,483
Publicly traded equity securities	32		15		—		47
Equity investments in privately-held companies	70		—		—		70
Total short-term and long-term investments	$	1,575	$	25	$	—	$	1,600
Total Cash, Cash equivalents and Investments	$	2,967	$	25	$	—	$	2,992

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 28, 2013:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	195	$	195
Due after one through five years	681		682
No single maturity date**	381		408
	$	1,257	$	1,285

 _________________________

** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

Gains and Losses on Investments

At July 28, 2013 and October 28, 2012, gross unrealized losses related to Applied's investment portfolio were not material. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at July 28, 2013 and July 29, 2012 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three and nine months ended July 28, 2013 or July 29, 2012. Applied recognized $3 million and $5 million of impairment charges on its equity investments in privately-held companies during the three and nine months ended July 28, 2013, respectively, and $3 million of impairment charges during the nine months ended July 29, 2012.

Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations.

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Earnings Per Share (Tables)

9 Months Ended

Jul. 28, 2013

Earnings Per Share [Abstract]

Elements used in computing both basic and diluted net earnings per share

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Numerator:
Net income	$	168	$	218	$	73	$	624
Denominator:
Weighted average common shares outstanding	1,203		1,257		1,201		1,282
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	17		11		17		10
Denominator for diluted earnings per share	1,220		1,268		1,218		1,292
Basic earnings per share	$	0.14	$	0.17	$	0.06	$	0.49
Diluted earnings per share	$	0.14	$	0.17	$	0.06	$	0.48
Potentially dilutive securities	1		11		1		12

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 7) (Employee Stock [Member])	9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012
Employee Stock [Member]
ESPP:
Dividend yield	2.94%	2.94%
Expected volatility	24.30%	33.00%
Risk-free interest rate	0.12%	0.12%
Expected life	6 months	6 months

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Restructuring Charges and Asset Impairments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended
	Jul. 28, 2013		Jul. 29, 2012		Jul. 28, 2013		Jul. 29, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 14		$ 44		$ 33		$ 44
2012 Global Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	4	[1]	0	[1]	12	[1]	0	[1]
2012 EES Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	10				19
2012 EES Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	3	[2]	24	[2]	5	[2]	24	[2]
2012 EES Restructuring Plan [Member] | Contract cancellation and other costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	1		0		3		0
2012 EES Restructuring Plan [Member] | Asset impairments [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	6		11		11		11
Others [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 0		$ 9		$ 2		$ 9

[1] Includes share-based compensation expense which was recorded in additional paid-in capital.

[2] Includes post-retirement benefit expense which was recorded in accumulated other comprehensive loss.

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation

9 Months Ended

Jul. 28, 2013

Equity [Abstract]

Stockholders' Equity, Comprehensive Income and Share-Based Compensation

Stockholders’ Equity, Comprehensive Income and Share-Based Compensation

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss), on an after-tax basis where applicable, were as follows:

	July 28, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	19		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	6			1
Pension liability	(92		)	(90		)
Cumulative translation adjustments	6			12
	$	(61	)	$	(61	)

Stock Repurchase Program

On March 5, 2012, Applied's Board of Directors approved a stock repurchase program authorizing up to $3.0 billion in repurchases over the next three years ending in March 2015. Under this authorization, Applied purchases shares of its common stock under a systematic stock repurchase program and may also make supplemental stock repurchases from time to time, depending on market conditions, stock price and other factors. At July 28, 2013, $1.6 billion remained available for future stock repurchases under this repurchase program.

The following table summarizes Applied’s stock repurchases for the periods indicated:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Shares of common stock repurchased	3		47		15		81
Cost of stock repurchased	$	50	$	500	$	198	$	900
Average price paid per share	$	15.33	$	10.71	$	13.18	$	11.09

Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings.

Dividends

In June 2013, March 2013 and December 2012, Applied's Board of Directors declared a quarterly cash dividend in the amount of $0.10, $0.10 and $0.09 per share, respectively. Dividends declared during the nine months ended July 28, 2013 and July 29, 2012 were $348 million and $330 million, respectively. Applied currently anticipates 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 Applied’s 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 Applied’s stockholders.

Share-Based Compensation

Applied has a stockholder-approved equity plan, the Employee Stock Incentive Plan, which permits grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made beginning in March 2012 under the plan may be subject to accelerated vesting under certain circumstances in the event of a change in control of Applied. Applied also has two Employee Stock Purchase Plans, one generally for United States employees and a second for employees of international subsidiaries (collectively, ESPP), which enable eligible employees to purchase Applied common stock.

During the three and nine months ended July 28, 2013 and July 29, 2012, Applied recognized share-based compensation expense related to stock options, ESPP shares, restricted stock, restricted stock units, performance shares and performance units. Total share-based compensation and related tax benefits were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Share-based compensation	$	40	$	42	$	121	$	138
Tax benefit recognized	$	11	$	12	$	34	$	39

The effect of share-based compensation on the results of operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	13	$	13	$	37	$	40
Research, development, and engineering	14		14		39		40
Marketing and selling	5		5		15		17
General and administrative	8		10		25		41
Restructuring charge	—		—		5		—
Total	$	40	$	42	$	121	$	138

The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards is recognized for each tranche over the service period, based on an assessment of the likelihood that the applicable performance goals will be achieved.

At July 28, 2013, Applied had $270 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of share-based awards and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.5 years. At July 28, 2013, there were 185 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 44 million shares available for issuance under the ESPP.

Stock Options

Applied grants options to purchase, at future dates, shares of its common stock to employees and consultants. The exercise price of each stock option equals the fair market value of Applied common stock on the date of grant. Options typically vest over three to four years, subject to the grantee’s continued service with Applied through the scheduled vesting date, and expire no later than seven years from the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. Applied employee stock options have characteristics significantly different from those of publicly traded options. There were no stock options granted during the three and nine months ended July 28, 2013 and July 29, 2012. As part of the acquisition of Varian in the first quarter of fiscal 2012, stock options to purchase 5 million shares of Applied common stock were assumed.

Stock option activity for the nine months ended July 28, 2013 was as follows:

	Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding at October 28, 2012	21		$	10.53
Granted	—		$	—
Exercised	(10	)	$	8.00
Canceled and forfeited	(5	)	$	17.63
Outstanding at July 28, 2013	6		$	8.69
Exercisable at July 28, 2013	6		$	8.77

Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units

Restricted stock units are converted into shares of Applied common stock upon vesting on a one-for-one basis. Restricted stock has the same rights as other issued and outstanding shares of Applied common stock except these shares generally have no right to dividends and are held in escrow until the award vests. Performance shares and performance units are awards that result in a payment to a grantee in shares of Applied common stock on a one-for-one basis if performance goals and/or other vesting criteria established by the Human Resources and Compensation Committee of Applied's Board of Directors (the Committee) are achieved or the awards otherwise vest. Restricted stock units, restricted stock, performance shares and performance units typically vest over four years and vesting is usually subject to the grantee’s continued service with Applied and, in some cases, achievement of specified performance goals. The compensation expense related to the service-based awards is determined using the fair market value of Applied common stock on the date of the grant, and the compensation expense is recognized over the vesting period.

Restricted stock, performance shares and performance units granted to certain executive officers are also subject to the achievement of specified performance goals (performance-based awards). These performance-based awards become eligible to vest only if performance goals are achieved and then actually will vest only if the grantee remains employed by Applied through each applicable vesting date. The fair value of these performance-based awards is estimated on the date of grant and assumes that the specified performance goals will be achieved. If the goals are achieved, these awards vest over a specified remaining service period of generally three or four years, provided that the grantee remains employed by Applied through each scheduled vesting date. If the performance goals are not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost of each award is reflected over the service period and is reduced for estimated forfeitures.

For performance-based awards granted during fiscal 2011 and fiscal 2010, the performance goals require (i) the achievement of targeted adjusted annual operating profit margin levels compared to Applied’s peer companies in at least one of the four fiscal years beginning with the fiscal year of the grant, and (ii) that Applied’s annual adjusted operating profit margin is positive in such year. Performance-based awards that do not become eligible to vest in a particular year may become eligible to vest in subsequent years up until the fourth fiscal year after grant, after which they are forfeited if the required performance goals have not been achieved.

In fiscal 2013 and fiscal 2012, the Committee granted performance-based awards that require the achievement of positive and relative adjusted operating profit margin goals in a manner generally similar to the previously granted performance-based awards. For the fiscal 2013 and fiscal 2012 awards, additional shares become eligible for time-based vesting if Applied achieves certain levels of total shareholder return (TSR) relative to a peer group comprised of companies in the Standard & Poor's 500 Information Technology Index measured at the end of a two-year period.

A summary of the performance-based awards approved by the Committee is presented below:

	Number of Performance-Based Awards Granted		Percent of Performance-Based Awards Earned as of July 28, 2013*
Fiscal Year Granted	Performance Shares/Performance Units	Shares of Restricted Stock
	(in millions)
2013	3	—	0%
2012	3	1	14%
2011	2	0.1	100%
2010	2	0.1	82%

___________________

* subject to additional time-based vesting requirements

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the nine months ended July 28, 2013 is presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 years
Granted	18		$	10.36
Vested	(11	)	$	11.46
Canceled	(5	)	$	11.33
Non-vested restricted stock units, restricted stock, performance shares and performance units at July 28, 2013	38		$	11.03	2.7 years

At July 28, 2013, 2 million additional performance-based awards could be earned upon certain levels of achievement of Applied's TSR relative to a peer group at a future date.

Employee Stock Purchase Plans

Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Based on the Black-Scholes option pricing model, the weighted average estimated fair value of purchase rights under the ESPP was $2.90 and $2.89 for the nine months ended July 28, 2013 and July 29, 2012, respectively. The number of shares issued under the ESPP during the nine months ended July 28, 2013 and July 29, 2012 was 3 million. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:

	Nine Months Ended
	July 28, 2013	July 29, 2012
ESPP:
Dividend yield	2.94%	2.94%
Expected volatility	24.3%	33.0%
Risk-free interest rate	0.12%	0.12%
Expected life (in years)	0.5	0.5

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Goodwill, Purchased Technology and Other Intangible Assets (Details 1) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	$ 1,006	$ 1,213
Intangible assets - indefinite-lived	142	142
Total	1,148	1,355
Purchased technology [Member]
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	786	945
Intangible assets [Member]
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	$ 220	$ 268

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Restructuring Charges and Asset Impairments (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 14	$ 44	$ 33	$ 44
Silicon Systems Group [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	0	1	1	1
Applied Global Services [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	0	11	2	11
Energy and Environmental Solutions [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	10	32	18	32
Corporate Unallocated [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 4	$ 0	$ 12	$ 0

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Cash, Cash Equivalents and Investments (Details) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013		Oct. 28, 2012	Jul. 29, 2012	Oct. 30, 2011
Summary of Cash, Cash Equivalents and Investments
Cash	$ 600		$ 876
Cash equivalents:
Money market funds	1,145		483
Municipal securities			33
Total Cash equivalents	1,145		516
Total Cash and Cash equivalents	1,745		1,392	1,529	5,960
Short-term and long-term investments, Cost	1,257		1,575
Short-term and long-term investments, Gross Unrealized Gains	33		25
Short-term and long-term investments, Gross Unrealized Losses	5		0
Short-term and long-term investments, Estimated Fair Value	1,285		1,600
Equity investments in privately-held companies	71		70
Cash, Cash Equivalents and Investments, Cost	3,002		2,967
Cash, Cash Equivalents and Investments, Gross Unrealized Gains	33		25
Cash, Cash Equivalents and Investments, Gross Unrealized Losses	5		0
Cash, Cash Equivalents and Investments, Estimated Fair Value	3,030		2,992
Total fixed income securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	1,156		1,473
Short-term and long-term investments, Gross Unrealized Gains	6		10
Short-term and long-term investments, Gross Unrealized Losses	5		0
Short-term and long-term investments, Estimated Fair Value	1,157		1,483
U.S. Treasury and agency securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	229		373
Short-term and long-term investments, Gross Unrealized Gains	1		1
Short-term and long-term investments, Gross Unrealized Losses	1		0
Short-term and long-term investments, Estimated Fair Value	229		374
Non-US government securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	11	[1]	29
Short-term and long-term investments, Gross Unrealized Gains	0	[1]	0
Short-term and long-term investments, Gross Unrealized Losses	0	[1]	0
Short-term and long-term investments, Estimated Fair Value	11	[1]	29
Municipal securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	378		396
Short-term and long-term investments, Gross Unrealized Gains	1		2
Short-term and long-term investments, Gross Unrealized Losses	1		0
Short-term and long-term investments, Estimated Fair Value	378		398
Commercial paper, corporate bonds and medium-term notes [Member]
Cash equivalents:
Short-term and long-term investments, Cost	257		381
Short-term and long-term investments, Gross Unrealized Gains	2		3
Short-term and long-term investments, Gross Unrealized Losses	1		0
Short-term and long-term investments, Estimated Fair Value	258		384
Asset-backed and mortgage-backed securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	281		294
Short-term and long-term investments, Gross Unrealized Gains	2		4
Short-term and long-term investments, Gross Unrealized Losses	2		0
Short-term and long-term investments, Estimated Fair Value	281		298
Publicly traded equity securities [Member]
Cash equivalents:
Short-term and long-term investments, Cost	30		32
Short-term and long-term investments, Gross Unrealized Gains	27		15
Short-term and long-term investments, Gross Unrealized Losses	0		0
Short-term and long-term investments, Estimated Fair Value	$ 57		$ 47

[1] Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Australia, Canada and Germany.

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Jul. 28, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effect of derivative instruments on the consolidated statement of operations

The effect of derivative instruments on the Consolidated Condensed Statements of Operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

		Three Months Ended July 28, 2013							Three Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	7	$	7	$	(1	)	$	(8	)	$	—		$	(1	)
Foreign exchange contracts	General and administrative	—		3		(1		)	—			(2		)	—
Total		$	7	$	10	$	(2	)	$	(8	)	$	(2	)	$	(1	)

		Nine Months Ended July 28, 2013							Nine Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	29	$	16	$	(2	)	$	(3	)	$	5		$	(1	)
Foreign exchange contracts	General and administrative	—		6		(1		)	—			(3		)	(1		)
Total		$	29	$	22	$	(3	)	$	(3	)	$	2		$	(2	)

Derivatives not designated as hedging instruments in statement of operations

		Amount of Gain or (Loss)  Recognized in Income
		Three Months Ended					Nine Months Ended
	Location of Gain or (Loss) Recognized in Income	July 28, 2013		July 29, 2012			July 28, 2013		July 29, 2012
		(In millions)
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	General and administrative	$	2	$	(11	)	$	31	$	3
Total		$	2	$	(11	)	$	31	$	3

XML

Fair Value Measurements (Tables)

9 Months Ended

Jul. 28, 2013

Fair Value Disclosures [Abstract]

Financial assets/liabilities measured at fair value on a recurring basis

Financial assets and liabilities (excluding cash balances) measured at fair value on a recurring basis are summarized below as of July 28, 2013 and October 28, 2012:

	July 28, 2013						October 28, 2012
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	1,145	$	—	$	1,145	$	483	$	—	$	483
U.S. Treasury and agency securities	105		124		229		128		246		374
Non-U.S. government securities	—		11		11		—		29		29
Municipal securities	—		378		378		—		431		431
Commercial paper, corporate bonds and medium-term notes	—		258		258		—		384		384
Asset-backed and mortgage-backed securities	—		281		281		—		298		298
Publicly traded equity securities	57		—		57		47		—		47
Total	$	1,307	$	1,052	$	2,359	$	658	$	1,388	$	2,046

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Balance Sheet Detail (Details) (USD $) In Millions, unless otherwise specified													9 Months Ended
	Jul. 28, 2013	Oct. 28, 2012	Jul. 28, 2013 Land and improvements [Member]	Oct. 28, 2012 Land and improvements [Member]	Jul. 28, 2013 Building and improvements [Member]	Oct. 28, 2012 Building and improvements [Member]	Jul. 28, 2013 Demonstration and manufacturing equipment [Member]	Oct. 28, 2012 Demonstration and manufacturing equipment [Member]	Jul. 28, 2013 Furniture, fixtures and other equipment [Member]	Oct. 28, 2012 Furniture, fixtures and other equipment [Member]	Jul. 28, 2013 Construction in progress [Member]	Oct. 28, 2012 Construction in progress [Member]	Jul. 28, 2013 Minimum [Member] Building and improvements [Member]	Jul. 28, 2013 Minimum [Member] Demonstration and manufacturing equipment [Member]	Jul. 28, 2013 Minimum [Member] Furniture, fixtures and other equipment [Member]	Jul. 28, 2013 Maximum [Member] Building and improvements [Member]	Jul. 28, 2013 Maximum [Member] Demonstration and manufacturing equipment [Member]	Jul. 28, 2013 Maximum [Member] Furniture, fixtures and other equipment [Member]
Inventories
Customer service spares	$ 270	$ 312
Raw materials	311	331
Work-in-process	267	234
Finished goods	510	395
Total Inventories	1,358	1,272
Balance Sheet Detail (Textuals) [Abstract]
Inventory at customer locations included in finished goods	128	60
Evaluation inventory	175	176
Other Current Assets
Deferred income taxes, net	431	369
Prepaid expenses	127	101
Income taxes receivable	30	87
Other	146	116
Total Other Current Assets	734	673
Property, Plant and Equipment, Net
Property, Plant and Equipment, useful life													3 years	3 years	3 years	30 years	5 years	15 years
Gross property, plant and equipment	2,826	2,917	167	169	1,210	1,196	787	760	607	734	55	58
Accumulated depreciation	(1,954)	(2,007)
Net property, plant and equipment	872	910
Accounts Payable and Accrued Expenses
Accounts payable	515	396
Compensation and employee benefits	394	426
Warranty	100	119
Dividends payable	120	108
Income taxes payable	44	74
Other accrued taxes	28	18
Interest payable	14	30
Restructuring reserve	17	133
Other	214	206
Total Accounts Payable and Accrued Expenses	1,446	1,510
Customer Deposits and Deferred Revenue
Customer deposits	145	143
Deferred revenue	611	612
Total Customer Deposits and Deferred Revenue	756	755
Other Liabilities
Deferred income taxes	146	201
Income taxes payable	153	140
Defined benefit pension plan liability	190	184
Other	160	131
Total Other Liabilities	$ 649	$ 656

XML

Warranty, Guarantees And Contingencies (Tables)

9 Months Ended

Jul. 28, 2013

Commitments and Contingencies Disclosure [Abstract]

Changes in the warranty reserves

Changes in the warranty reserves during the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Beginning balance	$	104		$	152		$	119		$	168
Provisions for warranty	27			25			76			87
Consumption of reserves	(31		)	(40		)	(95		)	(118		)
Ending balance	$	100		$	137		$	100		$	137

XML

Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Total [Member]
Assets:
Investment securities	$ 2,359	$ 2,046
Total [Member] | Money market funds [Member]
Assets:
Investment securities	1,145	483
Total [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	229	374
Total [Member] | Non-US government securities [Member]
Assets:
Investment securities	11	29
Total [Member] | Municipal securities [Member]
Assets:
Investment securities	378	431
Total [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	258	384
Total [Member] | Asset-backed Securities [Member]
Assets:
Investment securities	281	298
Total [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	57	47
Level 1 [Member]
Assets:
Investment securities	1,307	658
Level 1 [Member] | Money market funds [Member]
Assets:
Investment securities	1,145	483
Level 1 [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	105	128
Level 1 [Member] | Non-US government securities [Member]
Assets:
Investment securities	0	0
Level 1 [Member] | Municipal securities [Member]
Assets:
Investment securities	0	0
Level 1 [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	0	0
Level 1 [Member] | Asset-backed Securities [Member]
Assets:
Investment securities	0	0
Level 1 [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	57	47
Level 2 [Member]
Assets:
Investment securities	1,052	1,388
Level 2 [Member] | Money market funds [Member]
Assets:
Investment securities	0	0
Level 2 [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	124	246
Level 2 [Member] | Non-US government securities [Member]
Assets:
Investment securities	11	29
Level 2 [Member] | Municipal securities [Member]
Assets:
Investment securities	378	431
Level 2 [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	258	384
Level 2 [Member] | Asset-backed Securities [Member]
Assets:
Investment securities	281	298
Level 2 [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	$ 0	$ 0

XML

Goodwill, Purchased Technology and Other Intangible Assets (Details 2) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Finite-lived intangible assets
Gross carrying amount	$ 1,788	$ 2,104
Accumulated amortization	(782)	(891)
Carrying amount	1,006	1,213
Silicon Systems Group [Member]
Finite-lived intangible assets
Gross carrying amount	1,553	1,552
Accumulated amortization	(577)	(447)
Applied Global Services [Member]
Finite-lived intangible assets
Gross carrying amount	72	72
Accumulated amortization	(64)	(61)
Display [Member]
Finite-lived intangible assets
Gross carrying amount	143	143
Accumulated amortization	(139)	(133)
Energy and Environmental Solutions [Member]
Finite-lived intangible assets
Gross carrying amount	20	337
Accumulated amortization	(2)	(250)
Purchased technology [Member]
Finite-lived intangible assets
Gross carrying amount	1,444	1,543
Accumulated amortization	(658)	(598)
Carrying amount	786	945
Purchased technology [Member] | Silicon Systems Group [Member]
Finite-lived intangible assets
Gross carrying amount	1,301	1,300
Accumulated amortization	(524)	(411)
Purchased technology [Member] | Applied Global Services [Member]
Finite-lived intangible assets
Gross carrying amount	28	28
Accumulated amortization	(23)	(22)
Purchased technology [Member] | Display [Member]
Finite-lived intangible assets
Gross carrying amount	110	110
Accumulated amortization	(110)	(106)
Purchased technology [Member] | Energy and Environmental Solutions [Member]
Finite-lived intangible assets
Gross carrying amount	5	105
Accumulated amortization	(1)	(59)
Other [Member]
Finite-lived intangible assets
Gross carrying amount	344	561
Accumulated amortization	(124)	(293)
Carrying amount	220	268
Other [Member] | Silicon Systems Group [Member]
Finite-lived intangible assets
Gross carrying amount	252	252
Accumulated amortization	(53)	(36)
Other [Member] | Applied Global Services [Member]
Finite-lived intangible assets
Gross carrying amount	44	44
Accumulated amortization	(41)	(39)
Other [Member] | Display [Member]
Finite-lived intangible assets
Gross carrying amount	33	33
Accumulated amortization	(29)	(27)
Other [Member] | Energy and Environmental Solutions [Member]
Finite-lived intangible assets
Gross carrying amount	15	232
Accumulated amortization	$ (1)	$ (191)

XML

Restructuring Charges and Asset Impairments (Tables)

9 Months Ended

Jul. 28, 2013

Restructuring and Related Activities [Abstract]

Components of the restructuring and asset impairment

The following table summarizes major components of the restructuring and asset impairment charges during the three and nine months ended July 28, 2013:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs1	$	4	$	—	$	12	$	—
2012 EES Restructuring Plan
Severance and other employee-related costs2	3		24		5		24
Contract cancellation and other costs	1		—		3		—
Asset impairments	6		11		11		11
Others
Severance and other employee-related costs	—		9		2		9
	$	14	$	44	$	33	$	44

______________________________

¹ Includes share-based compensation expense which was recorded in additional paid-in capital.

² Includes post-retirement benefit expense which was recorded in accumulated other comprehensive loss.

Restructuring and asset impairment charges were recorded as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	—	$	1	$	1	$	1
Applied Global Services	—		11		2		11
Energy and Environmental Solutions	10		32		18		32
Corporate Unallocated	4		—		12		—
Total	$	14	$	44	$	33	$	44

Changes in restructuring reserves related to other restructuring plans and facilities realignment

Changes in restructuring reserves during the nine months ended July 28, 2013 were as follows:

	2012 Global Restructuring Plan			2012 EES Restructuring Plan						Others
	Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 28, 2012	$	106		$	16		$	1		$	5		$	5	$	133
Provision for restructuring reserves	8			4			3			2			—		17
Consumption of reserves	(106		)	(16		)	(2		)	(5		)	—		(129		)
Reclassification of restructuring reserves1	(4		)	—			—			—			—		(4		)
Balance, July 28, 2013	$	4		4			2			$	2		$	5	$	17

______________________________

¹ Includes reclassification of post-retirement benefit liability to other liabilities.

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 4) (USD $)	3 Months Ended	9 Months Ended
	Jul. 28, 2013	Jul. 28, 2013
Stock options
Beginning Balance		21,000,000
Granted	0	0
Exercised		(10,000,000)
Canceled and forfeited		(5,000,000)
Ending Balance	6,000,000	6,000,000
Stock option weighted average exercise price
Beginning Balance (in dollars per share)		$ 10.53
Granted (in dollars per share)		$ 0.00
Exercised (in dollars per share)		$ 8.00
Canceled and forfeited (in dollars per share)		$ 17.63
Ending Balance (in dollars per share)	$ 8.69	$ 8.69
Exercisable, Shares	6,000,000	6,000,000
Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 8.77	$ 8.77

XML

Warranty, Guarantees and Contingencies (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jul. 28, 2013	Feb. 07, 2013 employee
Commitments and Contingencies Disclosure [Abstract]
Standard product warranty period	12 months
Maximum potential amount of future payments for letters of credit or other guarantee instruments	$ 41
Parent guarantees to banks	$ 102
Number of employees acquitted		9
Number of employees found guilty		1

XML

Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	$ 40	$ 42	$ 121	$ 138
Cost of products sold [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	13	13	37	40
Research, development, and engineering [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	14	14	39	40
Marketing and selling [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	5	5	15	17
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	8	10	25	41
Restructuring charge [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	$ 0	$ 0	$ 5	$ 0

XML

Derivative Instruments and Hedging Activities (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 2	$ (11)	$ 31	$ 3
Foreign exchange contracts [Member] | General and administrative [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 2	$ (11)	$ 31	$ 3

XML

Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Components of net periodic benefit costs of defined and postretirement benefit plans
Service cost	$ 5	$ 4	$ 15	$ 12
Interest cost	4	4	12	11
Expected return on plan assets	(3)	(2)	(9)	(8)
Amortization of actuarial loss	1	0	4	1
Net periodic benefit cost	$ 7	$ 6	$ 22	$ 16

XML

Cash, Cash Equivalents and Investments (Tables)

9 Months Ended

Jul. 28, 2013

Cash, Cash Equivalents, and Investments [Abstract]

Summary of cash, cash equivalents and investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarize Applied’s cash, cash equivalents and investments by security type:

July 28, 2013	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	600	$	—	$	—	$	600
Cash equivalents:
Money market funds	1,145		—		—		1,145
Total Cash equivalents	1,145		—		—		1,145
Total Cash and Cash equivalents	$	1,745	$	—	$	—	$	1,745
Short-term and long-term investments:
U.S. Treasury and agency securities	$	229	$	1	$	1	$	229
Non-U.S. government securities*	11		—		—		11
Municipal securities	378		1		1		378
Commercial paper, corporate bonds and medium-term notes	257		2		1		258
Asset-backed and mortgage-backed securities	281		2		2		281
Total fixed income securities	1,156		6		5		1,157
Publicly traded equity securities	30		27		—		57
Equity investments in privately-held companies	71		—		—		71
Total short-term and long-term investments	$	1,257	$	33	$	5	$	1,285
Total Cash, Cash equivalents and Investments	$	3,002	$	33	$	5	$	3,030

 _________________________

* Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Australia, Canada and Germany.

October 28, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	876	$	—	$	—	$	876
Cash equivalents:
Money market funds	483		—		—		483
Municipal securities	33		—		—		33
Total Cash equivalents	516		—		—		516
Total Cash and Cash equivalents	$	1,392	$	—	$	—	$	1,392
Short-term and long-term investments:
U.S. Treasury and agency securities	$	373	$	1	$	—	$	374
Non-U.S. government securities	29		—		—		29
Municipal securities	396		2		—		398
Commercial paper, corporate bonds and medium-term notes	381		3		—		384
Asset-backed and mortgage-backed securities	294		4		—		298
Total fixed income securities	1,473		10		—		1,483
Publicly traded equity securities	32		15		—		47
Equity investments in privately-held companies	70		—		—		70
Total short-term and long-term investments	$	1,575	$	25	$	—	$	1,600
Total Cash, Cash equivalents and Investments	$	2,967	$	25	$	—	$	2,992

Contractual maturities of investments

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 28, 2013:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	195	$	195
Due after one through five years	681		682
No single maturity date**	381		408
	$	1,257	$	1,285

 _________________________

** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

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Consolidated Condensed Statements of Stockholders' Equity (Parenthetical) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jul. 28, 2013
Statement of Stockholders' Equity [Abstract]
Tax benefit included in issuance under stock plans	$ 3

XML

Basis of Presentation

9 Months Ended

Jul. 28, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Basis of Presentation

In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 28, 2012 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 28, 2012 (2012 Form 10-K). Applied’s results of operations for the three and nine months ended July 28, 2013 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2013 and 2012 each contain 52 weeks, and the first nine months of fiscal 2013 and 2012 each contained 39 weeks.

Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Revenue Recognition

Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment, Applied recognizes revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided.

When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued authoritative guidance that will require an unrecognized tax benefit to be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, with certain exceptions. The authoritative guidance becomes effective for Applied in the first quarter of fiscal 2015, with early adoption permitted. The guidance is not expected to have an impact on Applied's financial position or results of operations.

In February 2013, the FASB issued authoritative guidance that will require a public entity to present in its annual and interim financial statements information about reclassification adjustments from accumulated other comprehensive income in a single note or on the face of the financial statements. The authoritative guidance becomes effective for Applied in the first quarter of fiscal 2014, with early adoption permitted, and is not expected to have an impact on Applied's financial position or results of operations.

XML

Fair Value Measurements

9 Months Ended

Jul. 28, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred.

Fair Value Hierarchy

Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Applied’s investments are comprised primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value.

Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of July 28, 2013, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities (excluding cash balances) measured at fair value on a recurring basis are summarized below as of July 28, 2013 and October 28, 2012:

	July 28, 2013						October 28, 2012
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	1,145	$	—	$	1,145	$	483	$	—	$	483
U.S. Treasury and agency securities	105		124		229		128		246		374
Non-U.S. government securities	—		11		11		—		29		29
Municipal securities	—		378		378		—		431		431
Commercial paper, corporate bonds and medium-term notes	—		258		258		—		384		384
Asset-backed and mortgage-backed securities	—		281		281		—		298		298
Publicly traded equity securities	57		—		57		47		—		47
Total	$	1,307	$	1,052	$	2,359	$	658	$	1,388	$	2,046

There were no transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended July 28, 2013 or July 29, 2012. Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of July 28, 2013 or October 28, 2012.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. At July 28, 2013, equity investments in privately-held companies totaled $71 million, of which $61 million of investments were accounted for under the cost method of accounting and $10 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. At October 28, 2012, equity investments in privately-held companies totaled $70 million, of which $57 million of investments were accounted for under the cost method of accounting and $13 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. Applied recognized $3 million and $5 million of impairment charges on its equity investments in privately-held companies during the three and nine months ended July 28, 2013, respectively, and $3 million of impairment charges during the nine months ended July 29, 2012.

Other

The carrying amounts of Applied’s financial instruments, including cash and cash equivalents, accounts receivable, notes payable, and accounts payable and accrued expenses, approximate fair value due to their short maturities. At July 28, 2013, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.1 billion. At October 28, 2012, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.3 billion. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues.

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Industry Segment Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Net sales and operating income (loss) for each reportable segment
Net Sales	$ 1,975	$ 2,343	$ 5,521	$ 7,073
Operating Income (Loss)	250	322	221	910
Operating Segments [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales	1,975	2,343	5,521	7,073
Operating Income (Loss)	366	457	636	1,375
Operating Segments [Member] | Silicon Systems Group [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales	1,272	1,545	3,532	4,666
Operating Income (Loss)	246	427	663	1,202
Operating Segments [Member] | Applied Global Services [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales	497	579	1,485	1,664
Operating Income (Loss)	114	122	321	338
Operating Segments [Member] | Display [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales	161	142	375	380
Operating Income (Loss)	33	10	55	23
Operating Segments [Member] | Energy and Environmental Solutions [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales	45	77	129	363
Operating Income (Loss)	$ (27)	$ (102)	$ (403)	$ (188)

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Earnings Per Share

9 Months Ended

Jul. 28, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plans shares) outstanding during the period. Net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share as Applied has a non-complex capital structure.

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Numerator:
Net income	$	168	$	218	$	73	$	624
Denominator:
Weighted average common shares outstanding	1,203		1,257		1,201		1,282
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	17		11		17		10
Denominator for diluted earnings per share	1,220		1,268		1,218		1,292
Basic earnings per share	$	0.14	$	0.17	$	0.06	$	0.49
Diluted earnings per share	$	0.14	$	0.17	$	0.06	$	0.48
Potentially dilutive securities	1		11		1		12

Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share because the combined exercise price, average unamortized fair value and assumed tax benefits upon the exercise of options and the vesting of restricted stock units were greater than the average market price of Applied common stock, and therefore their inclusion would have been anti-dilutive.

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Fair Value Measurements (Details Textual) (USD $)	3 Months Ended		9 Months Ended						3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013 Carrying Amount [Member]	Oct. 28, 2012 Carrying Amount [Member]	Jul. 28, 2013 Portion at Cost [Member]	Oct. 28, 2012 Portion at Cost [Member]	Jul. 28, 2013 Equity Investments In Privately Held Companies [Member]	Jul. 29, 2012 Equity Investments In Privately Held Companies [Member]	Jul. 28, 2013 Equity Investments In Privately Held Companies [Member]	Jul. 29, 2012 Equity Investments In Privately Held Companies [Member]	Jul. 28, 2013 Level 2 [Member] Estimated Fair Value [Member]	Oct. 28, 2012 Level 2 [Member] Estimated Fair Value [Member]	Jul. 28, 2013 Fair Value, Measurements, Nonrecurring [Member] Level 3 [Member] Portion at Fair Value Measurement [Member]	Oct. 28, 2012 Fair Value, Measurements, Nonrecurring [Member] Level 3 [Member] Portion at Fair Value Measurement [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Fair value of level one and level two transfers amount	$ 0	$ 0	$ 0	$ 0
Equity investments in privately-held companies measured on non-recurring basis					71,000,000	70,000,000	61,000,000	57,000,000							10,000,000	13,000,000
Investment impairments									3,000,000	0	5,000,000	3,000,000
Long-term debt					$ 1,900,000,000	$ 1,900,000,000							$ 2,100,000,000	$ 2,300,000,000

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Balance Sheet Detail (Tables)

9 Months Ended

Jul. 28, 2013

Balance Sheet Detail [Abstract]

Inventories

	July 28, 2013		October 28, 2012
	(In millions)
Inventories
Customer service spares	$	270	$	312
Raw materials	311		331
Work-in-process	267		234
Finished goods	510		395
	$	1,358	$	1,272

Other current assets

	July 28, 2013		October 28, 2012
	(In millions)
Other Current Assets
Deferred income taxes, net	$	431	$	369
Prepaid expenses	127		101
Income taxes receivable	30		87
Other	146		116
	$	734	$	673

Property, plant and equipment, net

	Useful Life	July 28, 2013			October 28, 2012
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	167		$	169
Buildings and improvements	3-30	1,210			1,196
Demonstration and manufacturing equipment	3-5	787			760
Furniture, fixtures and other equipment	3-15	607			734
Construction in progress		55			58
Gross property, plant and equipment		2,826			2,917
Accumulated depreciation		(1,954		)	(2,007		)
		$	872		$	910

Accounts payable and accrued expenses

	July 28, 2013		October 28, 2012
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	515	$	396
Compensation and employee benefits	394		426
Warranty	100		119
Dividends payable	120		108
Income taxes payable	44		74
Other accrued taxes	28		18
Interest payable	14		30
Restructuring reserve	17		133
Other	214		206
	$	1,446	$	1,510

Customer deposits and deferred revenue

	July 28, 2013		October 28, 2012
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	145	$	143
Deferred revenue	611		612
	$	756	$	755

Other liabilities

	July 28, 2013		October 28, 2012
	(In millions)
Other Liabilities
Deferred income taxes	$	146	$	201
Income taxes payable	153		140
Defined benefit pension plan liability	190		184
Other	160		131
	$	649	$	656

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables)

9 Months Ended

Jul. 28, 2013

Equity [Abstract]

Components of accumulated other comprehensive loss, after-tax basis

Components of accumulated other comprehensive income (loss), on an after-tax basis where applicable, were as follows:

	July 28, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	19		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	6			1
Pension liability	(92		)	(90		)
Cumulative translation adjustments	6			12
	$	(61	)	$	(61	)

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases for the periods indicated:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Shares of common stock repurchased	3		47		15		81
Cost of stock repurchased	$	50	$	500	$	198	$	900
Average price paid per share	$	15.33	$	10.71	$	13.18	$	11.09

Total share-based compensation and related tax benefits

Total share-based compensation and related tax benefits were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Share-based compensation	$	40	$	42	$	121	$	138
Tax benefit recognized	$	11	$	12	$	34	$	39

Effect of share-based compensation on the results of operations

The effect of share-based compensation on the results of operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	13	$	13	$	37	$	40
Research, development, and engineering	14		14		39		40
Marketing and selling	5		5		15		17
General and administrative	8		10		25		41
Restructuring charge	—		—		5		—
Total	$	40	$	42	$	121	$	138

Stock option activity

Stock option activity for the nine months ended July 28, 2013 was as follows:

	Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding at October 28, 2012	21		$	10.53
Granted	—		$	—
Exercised	(10	)	$	8.00
Canceled and forfeited	(5	)	$	17.63
Outstanding at July 28, 2013	6		$	8.69
Exercisable at July 28, 2013	6		$	8.77

Performance-based awards

A summary of the performance-based awards approved by the Committee is presented below:

	Number of Performance-Based Awards Granted		Percent of Performance-Based Awards Earned as of July 28, 2013*
Fiscal Year Granted	Performance Shares/Performance Units	Shares of Restricted Stock
	(in millions)
2013	3	—	0%
2012	3	1	14%
2011	2	0.1	100%
2010	2	0.1	82%

___________________

* subject to additional time-based vesting requirements

Restricted stock units and restricted stock activity

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the nine months ended July 28, 2013 is presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 years
Granted	18		$	10.36
Vested	(11	)	$	11.46
Canceled	(5	)	$	11.33
Non-vested restricted stock units, restricted stock, performance shares and performance units at July 28, 2013	38		$	11.03	2.7 years

Underlying assumptions used in ESPP valuation model

Underlying assumptions used in the model are outlined in the following table:

	Nine Months Ended
	July 28, 2013	July 29, 2012
ESPP:
Dividend yield	2.94%	2.94%
Expected volatility	24.3%	33.0%
Risk-free interest rate	0.12%	0.12%
Expected life (in years)	0.5	0.5

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Warranty, Guarantees and Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Changes in the warranty reserves
Beginning balance	$ 104	$ 152	$ 119	$ 168
Provisions for warranty	27	25	76	87
Consumption of reserves	(31)	(40)	(95)	(118)
Ending balance	$ 100	$ 137	$ 100	$ 137

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Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Numerator:
Net income (in dollars)	$ 168	$ 218	$ 73	$ 624
Denominator:
Weighted average common shares outstanding	1,203	1,257	1,201	1,282
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	17	11	17	10
Denominator for diluted earnings per share	1,220	1,268	1,218	1,292
Basic earnings per share (in dollars per share)	$ 0.14	$ 0.17	$ 0.06	$ 0.49
Diluted earnings per share (in dollars per share)	$ 0.14	$ 0.17	$ 0.06	$ 0.48
Potentially dilutive securities	1	11	1	12

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Income Taxes (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Income Tax Disclosure [Abstract]
Effective income tax rate provision	26.30%	27.80%	53.20%	26.40%
Benefit resulting from the resolution of prior years’ income tax filings			$ 14
Benefit from the reinstatement of the U.S. federal research and development tax credit			$ 13

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Borrowing Facilities and Long-Term Debt (Details Textual) (USD $) In Millions, unless otherwise specified			1 Months Ended
	Jul. 28, 2013	Oct. 28, 2012	May 31, 2013 Revolving Credit [Member]	Jul. 28, 2013 Revolving Credit [Member]	Jul. 28, 2013 Foreign Line of Credit [Member]
Line of Credit Facility [Line Items]
Available revolving credit agreement	$ 1,600			$ 1,500	$ 80
Extension period			1 year
Outstanding credit facilities	$ 0	$ 0

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Goodwill, Purchased Technology and Other Intangible Assets (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 46	$ 54	$ 153	$ 170
Silicon Systems Group [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	42	45	130	138
Applied Global Services [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	1	1	3	8
Display [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	2	2	6	5
Energy and Environmental Solutions [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 1	$ 6	$ 14	$ 19

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Accounts Receivable, Net (Details) (USD $)	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012	Oct. 28, 2012
Receivables [Abstract]
Discounted letters of credit program	$ 0	$ 0	$ 0	$ 0
Factored accounts receivable and discounted promissory notes	0	0	0	70,000,000
Allowance for doubtful accounts	$ 82,000,000		$ 82,000,000		$ 87,000,000

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Consolidated Condensed Statements of Comprehensive Income (Loss) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Statement of Comprehensive Income [Abstract]
Net income	$ 168	$ 218	$ 73	$ 624
Other comprehensive income (loss), net of tax [Abstract]
Change in unrealized net gain on investments	(4)	(9)	3	(6)
Change in unrealized net gain on derivative investments	(2)	(4)	5	(4)
Change in defined benefit plan liability (Note 12)	0	0	(2)	0
Change in cumulative translation adjustments	(1)	1	(6)	(1)
Other comprehensive income (loss), net of tax	(7)	(12)	0	(11)
Comprehensive income	$ 161	$ 206	$ 73	$ 613

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Balance Sheet Detail

9 Months Ended

Jul. 28, 2013

Balance Sheet Detail [Abstract]

Balance Sheet Detail

Balance Sheet Detail

	July 28, 2013		October 28, 2012
	(In millions)
Inventories
Customer service spares	$	270	$	312
Raw materials	311		331
Work-in-process	267		234
Finished goods	510		395
	$	1,358	$	1,272

Included in finished goods inventory are $128 million at July 28, 2013, and $60 million at October 28, 2012, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $175 million and $176 million of evaluation inventory at July 28, 2013 and October 28, 2012, respectively.

	July 28, 2013		October 28, 2012
	(In millions)
Other Current Assets
Deferred income taxes, net	$	431	$	369
Prepaid expenses	127		101
Income taxes receivable	30		87
Other	146		116
	$	734	$	673

	Useful Life	July 28, 2013			October 28, 2012
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	167		$	169
Buildings and improvements	3-30	1,210			1,196
Demonstration and manufacturing equipment	3-5	787			760
Furniture, fixtures and other equipment	3-15	607			734
Construction in progress		55			58
Gross property, plant and equipment		2,826			2,917
Accumulated depreciation		(1,954		)	(2,007		)
		$	872		$	910

	July 28, 2013		October 28, 2012
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	515	$	396
Compensation and employee benefits	394		426
Warranty	100		119
Dividends payable	120		108
Income taxes payable	44		74
Other accrued taxes	28		18
Interest payable	14		30
Restructuring reserve	17		133
Other	214		206
	$	1,446	$	1,510

	July 28, 2013		October 28, 2012
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	145	$	143
Deferred revenue	611		612
	$	756	$	755

Applied typically receives deposits on future deliverables from customers in the Display and Energy and Environmental Solutions segments. In certain instances, customer deposits may be received from customers in the Applied Global Services segment.

	July 28, 2013		October 28, 2012
	(In millions)
Other Liabilities
Deferred income taxes	$	146	$	201
Income taxes payable	153		140
Defined benefit pension plan liability	190		184
Other	160		131
	$	649	$	656

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Consolidated Condensed Statements of Stockholders' Equity (USD $) In Millions, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Oct. 28, 2012	$ 7,235	$ 12	$ 5,863	$ 12,700	$ (11,279)	$ (61)
Beginning Balance, Shares at Oct. 28, 2012		1,197			699
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	73			73
Other comprehensive income, net of tax	0					0
Dividends	(348)			(348)
Share-based compensation	121		121
Issuance under stock plans, net of a tax detriment of $3 and other	71	0	71
Issuance under stock plans, net of a tax detriment of $3 and other, shares		21
Common stock repurchases	(198)	0			(198)
Common stock repurchases, shares	15	(15)			15
Ending Balance at Jul. 28, 2013	$ 6,954	$ 12	$ 6,055	$ 12,425	$ (11,477)	$ (61)
Beginning Balance, Shares at Jul. 28, 2013		1,203			714

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Restructuring Charges and Asset Impairments (Details 2) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jul. 28, 2013
Restructuring Reserve [Roll Forward]
Beginning Balance	$ 133
Provision for restructuring reserves	17
Consumption of reserves	(129)
Reclassification of restructuring reserves	(4)	[1]
Ending Balance	17
2012 Global Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance	106
Provision for restructuring reserves	8
Consumption of reserves	(106)
Reclassification of restructuring reserves	(4)	[1]
Ending Balance	4
2012 EES Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance	16
Provision for restructuring reserves	4
Consumption of reserves	(16)
Reclassification of restructuring reserves	0	[1]
Ending Balance	4
2012 EES Restructuring Plan [Member] | Contract Termination and Other Costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance	1
Provision for restructuring reserves	3
Consumption of reserves	(2)
Reclassification of restructuring reserves	0	[1]
Ending Balance	2
Others [Member] | Severance and other employee-related costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance	5
Provision for restructuring reserves	2
Consumption of reserves	(5)
Reclassification of restructuring reserves	0	[1]
Ending Balance	2
Others [Member] | Contract Termination and Other Costs [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance	5
Provision for restructuring reserves	0
Consumption of reserves	0
Reclassification of restructuring reserves	0	[1]
Ending Balance	$ 5

[1] Includes reclassification of post-retirement benefit liability to other liabilities.

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Consolidated Condensed Statements of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Income Statement [Abstract]
Net sales	$ 1,975	$ 2,343	$ 5,521	$ 7,073
Cost of products sold	1,169	1,413	3,325	4,347
Gross margin	806	930	2,196	2,726
Operating expenses:
Research, development and engineering	334	309	982	933
Marketing and selling	111	118	334	374
General and administrative	97	137	348	465
Impairment of goodwill and intangible assets (Note 8)	0	0	278	0
Restructuring charges and asset impairments (Note 10)	14	44	33	44
Total operating expenses	556	608	1,975	1,816
Income from operations	250	322	221	910
Impairments of strategic investments (Notes 3 and 4)	3	0	5	3
Interest and other expenses (Note 9)	23	24	71	72
Interest and other income, net	4	4	11	13
Income before income taxes	228	302	156	848
Provision for income taxes	60	84	83	224
Net income	$ 168	$ 218	$ 73	$ 624
Earnings per share:
Basic (in dollars per share)	$ 0.14	$ 0.17	$ 0.06	$ 0.49
Diluted (in dollars per share)	$ 0.14	$ 0.17	$ 0.06	$ 0.48
Weighted average number of shares:
Basic (in shares)	1,203	1,257	1,201	1,282
Diluted (in shares)	1,220	1,268	1,218	1,292

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Goodwill, Purchased Technology and Other Intangible Assets (Details 4) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 46	$ 54	$ 153	$ 170
Cost of products sold [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	40	44	126	141
Research, development, and engineering [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	0	0	1	1
Marketing and selling [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	5	8	21	23
General and administrative [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 1	$ 2	$ 5	$ 5

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Industry Segment Operations (Details 2)	9 Months Ended
	Jul. 28, 2013
Taiwan Semiconductor Manufacturing Company Limited [Member]
Entity-Wide Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage	29.00%
Samsung Electronics Co., Ltd. [Member]
Entity-Wide Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage	15.00%

XML

Goodwill, Purchased Technology and Other Intangible Assets (Tables)

9 Months Ended

Jul. 28, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Indefinite-lived intangible assets

Details of goodwill and other indefinite-lived intangible assets as of July 28, 2013 and October 28, 2012 were as follows :

	July 28, 2013						October 28, 2012
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	2,151	$	142	$	2,293
Applied Global Services	1,027		—		1,027		1,027		—		1,027
Display	116		—		116		116		—		116
Energy and Environmental Solutions	—		—		—		224		—		224
Carrying amount	$	3,294	$	142	$	3,436	$	3,518	$	142	$	3,660

Summary of purchased technology and intangible assets

A summary of Applied's purchased technology and intangible assets is set forth below:

	July 28, 2013		October 28, 2012
	(In millions)
Purchased technology, net	$	786	$	945
Intangible assets - finite-lived, net	220		268
Intangible assets - indefinite-lived	142		142
Total	$	1,148	$	1,355

Finite-lived intangible assets

Details of finite-lived intangible assets were as follows as of July 28, 2013 and October 28, 2012:

	July 28, 2013									October 28, 2012
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,301		$	252		$	1,553		$	1,300		$	252		$	1,552
Applied Global Services	28			44			72			28			44			72
Display	110			33			143			110			33			143
Energy and Environmental Solutions	5			15			20			105			232			337
Gross carrying amount	$	1,444		$	344		$	1,788		$	1,543		$	561		$	2,104
Accumulated amortization:
Silicon Systems Group	$	(524	)	$	(53	)	$	(577	)	$	(411	)	$	(36	)	$	(447	)
Applied Global Services	(23		)	(41		)	(64		)	(22		)	(39		)	(61		)
Display	(110		)	(29		)	(139		)	(106		)	(27		)	(133		)
Energy and Environmental Solutions	(1		)	(1		)	(2		)	(59		)	(191		)	(250		)
Accumulated amortization	$	(658	)	$	(124	)	$	(782	)	$	(598	)	$	(293	)	$	(891	)
Carrying amount	$	786		$	220		$	1,006		$	945		$	268		$	1,213

Summary of amortization expense

Details of amortization expense by segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	42	$	45	$	130	$	138
Applied Global Services	1		1		3		8
Display	2		2		6		5
Energy and Environmental Solutions	1		6		14		19
Total	$	46	$	54	$	153	$	170

Schedule of categories amortization expense was charged to

For the three and nine months ended July 28, 2013 and July 29, 2012, amortization expense was charged to the following categories:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	40	$	44	$	126	$	141
Research, development and engineering	—		—		1		1
Marketing and selling	5		8		21		23
General and administrative	1		2		5		5
Total	$	46	$	54	$	153	$	170

Future estimated amortization expense

As of July 28, 2013, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	46
2014	180
2015	175
2016	168
2017	165
Thereafter	272
Total	$	1,006

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Basis of Presentation (Policies)

9 Months Ended

Jul. 28, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 28, 2012 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 28, 2012 (2012 Form 10-K). Applied’s results of operations for the three and nine months ended July 28, 2013 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2013 and 2012 each contain 52 weeks, and the first nine months of fiscal 2013 and 2012 each contained 39 weeks.

Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Revenue Recognition

Revenue Recognition

Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment, Applied recognizes revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided.

When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue.

Investments

Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments.

Fair Value Measurements

Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred.

Fair Value Hierarchy

Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Applied’s investments are comprised primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value.

Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of July 28, 2013, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs.

Cost Method Investments

Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data.

Derivative Financial Instruments

Derivative Financial Instruments

Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel, Taiwanese dollar and Swiss franc. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically up to the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Derivative instruments and hedging activities, including foreign currency exchange contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses.

Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income or loss (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to derivative instruments included in AOCI at July 28, 2013 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in general and administrative expenses. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for the three and nine months ended July 28, 2013 and July 29, 2012.

Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair v

Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.

Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results.

To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would in the first step compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. Applied’s reporting units are consistent with the reportable segments identified in Note 15, Industry Segment Operations, which are based on the manner in which Applied operates its business and the nature of those operations.

Finite-Lived Purchased Intangible Assets

Finite-Lived Purchased Intangible Assets

Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years.

Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach.

Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure.

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Derivative Instruments and Hedging Activities (Details Textual)	9 Months Ended
	Jul. 28, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Time period for hedging of foreign currency transactions	24 months
Time period over which majority of after tax gain loss related to derivatives to be reclassified into earnings	12 months

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Borrowing Facilities and Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Schedule of Long term debt
Total long-term debt	$ 1,946	$ 1,946
Senior Notes [Member]
Schedule of Long term debt
Principal amount	1,950	1,950
Less unamortized discount	(4)	(4)
Total long-term debt	1,946	1,946
Senior Notes [Member] | 2.650% Unsecured Senior Notes Due 2016, Interest Payable June 15 and December 15 [Member]
Schedule of Long term debt
Debt, interest rate, stated percentage	2.65%	2.65%
Debt, interest rate, effective percentage	2.666%	2.666%
Principal amount	400	400
Senior Notes [Member] | 7.125% Unsecured Senior Notes Due 2017, Interest Payable April 15 and October 15 [Member]
Schedule of Long term debt
Debt, interest rate, stated percentage	7.125%	7.125%
Debt, interest rate, effective percentage	7.19%	7.19%
Principal amount	200	200
Senior Notes [Member] | 4.300% Unsecured Senior Notes Due 2021, Interest Payable June 15 and December 15 [Member]
Schedule of Long term debt
Debt, interest rate, stated percentage	4.30%	4.30%
Debt, interest rate, effective percentage	4.326%	4.326%
Principal amount	750	750
Senior Notes [Member] | 5.850% Unsecured Senior Notes Due 2041, Interest Payable June 15 and December 15 [Member]
Schedule of Long term debt
Debt, interest rate, stated percentage	5.85%	5.85%
Debt, interest rate, effective percentage	5.879%	5.879%
Principal amount	$ 600	$ 600

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 5) In Millions, unless otherwise specified			9 Months Ended				12 Months Ended				12 Months Ended				12 Months Ended
	Jul. 28, 2013 Performance Based Awards 2013 [Member]		Jul. 28, 2013 Performance Based Awards 2013 [Member] Performance Shares/Performance Units [Member]	Jul. 28, 2013 Performance Based Awards 2013 [Member] Shares of Restricted Stock [Member]	Jul. 28, 2013 Performance Based Awards 2012 [Member]		Oct. 28, 2012 Performance Based Awards 2012 [Member] Performance Shares/Performance Units [Member]	Oct. 28, 2012 Performance Based Awards 2012 [Member] Shares of Restricted Stock [Member]	Jul. 28, 2013 Performance Based Awards 2011 [Member]		Oct. 30, 2011 Performance Based Awards 2011 [Member] Performance Shares/Performance Units [Member]	Oct. 30, 2011 Performance Based Awards 2011 [Member] Shares of Restricted Stock [Member]	Jul. 28, 2013 Performance Based Awards 2010 [Member]		Oct. 31, 2010 Performance Based Awards 2010 [Member] Performance Shares/Performance Units [Member]	Oct. 31, 2010 Performance Based Awards 2010 [Member] Shares of Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Performance-Based Awards Granted			3.0	0			3.0	1.0			2.0	0.1			2.0	0.1
Percentage of performance based awards earned	0.00%	[1]			14.00%	[1]			100.00%	[1]			82.00%	[1]

[1] subject to additional time-based vesting requirements

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Cash, Cash Equivalents and Investments (Details 1) (USD $)	3 Months Ended			9 Months Ended
	Jul. 28, 2013		Jul. 29, 2012	Jul. 28, 2013		Jul. 29, 2012
Contractual maturities of investments
Due in one year or less, Cost	$ 195,000,000			$ 195,000,000
Due after one through five years, Cost	681,000,000			681,000,000
No single maturity date, Cost	381,000,000	[1]		381,000,000	[1]
Investments maturities, Cost	1,257,000,000			1,257,000,000
Due in one year or less, Estimated Fair Value	195,000,000			195,000,000
Due after one through five years, Estimated Fair Value	682,000,000			682,000,000
No single maturity date, Estimated Fair Value	408,000,000	[1]		408,000,000	[1]
Investments maturities, Estimated Fair Value	1,285,000,000			1,285,000,000
Marketable securities [Member]
Contractual maturities of investments
Investment impairments	0		0	0		0
Equity investments in privately-held companies [Member]
Contractual maturities of investments
Investment impairments	$ 3,000,000		$ 0	$ 5,000,000		$ 3,000,000

[1] Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

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Industry Segment Operations (Tables)

9 Months Ended

Jul. 28, 2013

Segment Reporting [Abstract]

Net sales and operating income (loss) for each reportable segment

Net sales and operating income (loss) for each reportable segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended					Nine Months Ended
	Net Sales		Operating Income  (Loss)			Net Sales		Operating Income  (Loss)
	(In millions)
July 28, 2013:
Silicon Systems Group	$	1,272	$	246		$	3,532	$	663
Applied Global Services	497		114			1,485		321
Display	161		33			375		55
Energy and Environmental Solutions	45		(27		)	129		(403		)
Total Segment	$	1,975	$	366		$	5,521	$	636
July 29, 2012:
Silicon Systems Group	$	1,545	$	427		$	4,666	$	1,202
Applied Global Services	579		122			1,664		338
Display	142		10			380		23
Energy and Environmental Solutions	77		(102		)	363		(188		)
Total Segment	$	2,343	$	457		$	7,073	$	1,375

Reconciliations of total segment operating income to Applied's consolidated operating income (loss)

Reconciliations of total segment operating results to Applied consolidated totals for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Total segment operating income	$	366		$	457		$	636		$	1,375
Corporate and unallocated costs	(112		)	(135		)	(403		)	(465		)
Restructuring charges and asset impairments	(4		)	—			(12		)	—
Income from operations	$	250		$	322		$	221		$	910

Companies accounted for at least 10 percent of Applied's net sales

The following companies accounted for at least 10 percent of Applied’s net sales for the nine months ended July 28, 2013, which were for products in multiple reportable segments.

	Percentage of Net Sales
Taiwan Semiconductor Manufacturing Company Limited	29	%
Samsung Electronics Co., Ltd.	15	%

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Basis of Presentation (Details)	9 Months Ended		12 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Oct. 27, 2013	Oct. 28, 2012
Accounting Policies [Abstract]
Operating cycle	273 days	273 days	364 days	364 days

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Accounts Receivable, Net

9 Months Ended

Jul. 28, 2013

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied sells its accounts receivable without recourse. Applied, from time to time, also discounts 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.

There was no factoring of accounts receivable or discounting of promissory notes during the three and nine months ended July 28, 2013 or the three months ended July 29, 2012. Applied factored accounts receivable and discounted promissory notes of $70 million during the nine months ended July 29, 2012. Applied did not utilize programs to discount letters of credit issued by customers during the three and nine months ended July 28, 2013 and July 29, 2012.Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operations and were not material for all periods presented.

Accounts receivable are presented net of allowance for doubtful accounts of $82 million at July 28, 2013 and $87 million at October 28, 2012. Applied sells principally to manufacturers within the semiconductor, display and solar industries. While Applied believes that its allowance for doubtful accounts is adequate and represents Applied’s best estimate as of July 28, 2013, Applied continues to closely monitor customer liquidity and other economic conditions, which may result in changes to Applied’s estimates regarding collectability.

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Total share-based compensation and related tax benefits
Share-based compensation	$ 40	$ 42	$ 121	$ 138
Tax benefit recognized	$ 11	$ 12	$ 34	$ 39

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Borrowing Facilities and Long-Term Debt (Tables)

9 Months Ended

Jul. 28, 2013

Debt Disclosure [Abstract]

Long Term Debt Outstanding

Long-term debt outstanding as of July 28, 2013 and October 28, 2012 was as follows:

	Principal Amount			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			5.879%	June 15, December 15
	1,950
Total unamortized discount	(4		)
Total long-term debt	$	1,946

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Derivative Instruments and Hedging Activities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized in AOCI, Effective Portion	$ 7	$ (8)	$ 29	$ (3)
Gain or (Loss) Reclassified from AOCI into Income, Effective Portion	10	(2)	22	2
Gain or (Loss) Reclassified in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing	(2)	(1)	(3)	(2)
Foreign exchange contracts [Member] | Cost of products sold [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized in AOCI, Effective Portion	7	(8)	29	(3)
Gain or (Loss) Reclassified from AOCI into Income, Effective Portion	7	0	16	5
Gain or (Loss) Reclassified in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing	(1)	(1)	(2)	(1)
Foreign exchange contracts [Member] | General and administrative [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain or (Loss) Recognized in AOCI, Effective Portion	0	0	0	0
Gain or (Loss) Reclassified from AOCI into Income, Effective Portion	3	(2)	6	(3)
Gain or (Loss) Reclassified in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing	$ (1)	$ 0	$ (1)	$ (1)

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Borrowing Facilities and Long-Term Debt

9 Months Ended

Jul. 28, 2013

Debt Disclosure [Abstract]

Borrowing Facilities and Long Term-Debt

Borrowing Facilities and Long-Term Debt

Applied has credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement with a group of banks that was extended by one year in May 2013 and is scheduled to expire in May 2017. This agreement provides for borrowings in United States dollars at interest rates keyed to one of the two rates selected by Applied for each advance and includes financial and other covenants with which Applied was in compliance at July 28, 2013. Remaining credit facilities in the amount of approximately $80 million are with Japanese banks. Applied’s 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. No amounts were outstanding under any of these facilities at both July 28, 2013 and October 28, 2012 and Applied has not utilized these credit facilities.

Long-term debt outstanding as of July 28, 2013 and October 28, 2012 was as follows:

	Principal Amount			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			5.879%	June 15, December 15
	1,950
Total unamortized discount	(4		)
Total long-term debt	$	1,946

Applied has debt agreements that contain financial and other covenants. These covenants require Applied to maintain certain minimum financial ratios. At July 28, 2013, Applied was in compliance with all such covenants.

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Industry Segment Operations (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income from operations	$ 250	$ 322	$ 221	$ 910
Total segment operating income [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income from operations	366	457	636	1,375
Corporate and unallocated costs [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income from operations	(112)	(135)	(403)	(465)
Restructuring charges and asset impairments [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Income from operations	$ 4	$ 0	$ 12	$ 0

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Derivative Instruments and Hedging Activities

9 Months Ended

Jul. 28, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Derivative Financial Instruments

Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel, Taiwanese dollar and Swiss franc. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically up to the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Derivative instruments and hedging activities, including foreign currency exchange contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses.

Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income or loss (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to derivative instruments included in AOCI at July 28, 2013 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in general and administrative expenses. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for the three and nine months ended July 28, 2013 and July 29, 2012.

Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged.

The fair values of derivative instruments at July 28, 2013 and October 28, 2012 were not material.

The effect of derivative instruments on the Consolidated Condensed Statements of Operations for the three and nine months ended July 28, 2013 and July 29, 2012 was as follows:

		Three Months Ended July 28, 2013							Three Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	7	$	7	$	(1	)	$	(8	)	$	—		$	(1	)
Foreign exchange contracts	General and administrative	—		3		(1		)	—			(2		)	—
Total		$	7	$	10	$	(2	)	$	(8	)	$	(2	)	$	(1	)

		Nine Months Ended July 28, 2013							Nine Months Ended July 29, 2012
		Effective Portion				Ineffective Portion and Amount Excluded from Effectiveness Testing			Effective Portion						Ineffective Portion and Amount Excluded from Effectiveness Testing
	Location of Gain or (Loss) Reclassified from AOCI into Income	Gain or (Loss) Recognized in AOCI		Gain or (Loss) Reclassified from AOCI into Income		Gain or (Loss) Recognized in Income			Gain or (Loss) Recognized in AOCI			Gain or (Loss) Reclassified from AOCI into Income			Gain or (Loss) Recognized in Income
		(In millions)
Derivatives in Cash Flow Hedging Relationships
Foreign exchange contracts	Cost of products sold	$	29	$	16	$	(2	)	$	(3	)	$	5		$	(1	)
Foreign exchange contracts	General and administrative	—		6		(1		)	—			(3		)	(1		)
Total		$	29	$	22	$	(3	)	$	(3	)	$	2		$	(2	)

		Amount of Gain or (Loss)  Recognized in Income
		Three Months Ended					Nine Months Ended
	Location of Gain or (Loss) Recognized in Income	July 28, 2013		July 29, 2012			July 28, 2013		July 29, 2012
		(In millions)
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	General and administrative	$	2	$	(11	)	$	31	$	3
Total		$	2	$	(11	)	$	31	$	3

Credit Risk Contingent Features

If Applied’s credit rating were to fall below investment grade, it would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was immaterial as of July 28, 2013.

Entering into foreign exchange contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant.

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Consolidated Condensed Statements of Cash Flows (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012
Cash flows from operating activities:
Net income	$ 73	$ 624
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization	312	325
Impairment of goodwill and intangible assets	278	0
Restructuring charges and asset impairments	33	44
Deferred income taxes and other	(102)	144
Share-based compensation	121	138
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	51	183
Inventories	(85)	571
Other assets	18	47
Accounts payable and accrued expenses	(132)	(405)
Customer deposits and deferred revenue	0	(230)
Other liabilities	37	(1)
Cash provided by operating activities	604	1,440
Cash flows from investing activities:
Capital expenditures, net	(140)	(121)
Cash paid for acquisitions, net of cash acquired	(1)	(4,189)
Proceeds from sales and maturities of investments	737	765
Purchases of investments	(438)	(1,152)
Cash provided by (used in) investing activities	158	(4,697)
Cash flows from financing activities:
Proceeds from common stock issuances and others, net	125	51
Common stock repurchases	(198)	(900)
Payments of dividends to stockholders	(336)	(323)
Cash used in financing activities	(409)	(1,172)
Effect of exchange rate changes on cash and cash equivalents	0	(2)
Increase (decrease) in cash and cash equivalents	353	(4,431)
Cash and cash equivalents - beginning of year	1,392	5,960
Cash and cash equivalents - end of year	1,745	1,529
Supplemental cash flow information:
Cash payments for income taxes	184	233
Cash refunds from income taxes	67	5
Cash payments for interest	$ 85	$ 87

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Goodwill, Purchased Technology and Other Intangible Assets (Details 5) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Future estimated amortization expense
2013	$ 46
2014	180
2015	175
2016	168
2017	165
Thereafter	272
Carrying amount	$ 1,006	$ 1,213

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Goodwill, Purchased Technology and Other Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Indefinite-lived intangible assets
Goodwill	$ 3,294	$ 3,518
Other Intangible Assets	142	142
Total	3,436	3,660
Silicon Systems Group [Member]
Indefinite-lived intangible assets
Goodwill	2,151	2,151
Other Intangible Assets	142	142
Total	2,293	2,293
Applied Global Services [Member]
Indefinite-lived intangible assets
Goodwill	1,027	1,027
Other Intangible Assets	0	0
Total	1,027	1,027
Display [Member]
Indefinite-lived intangible assets
Goodwill	116	116
Other Intangible Assets	0	0
Total	116	116
Energy and Environmental Solutions [Member]
Indefinite-lived intangible assets
Goodwill	0	224
Other Intangible Assets	0	0
Total	$ 0	$ 224

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Employee Benefit Plans (Tables)

9 Months Ended

Jul. 28, 2013

Compensation and Retirement Disclosure [Abstract]

Components of net periodic benefit costs of defined and postretirement benefit plans

A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three and nine months ended July 28, 2013 and July 29, 2012 is presented below:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Service cost	$	5		$	4		$	15		$	12
Interest cost	4			4			12			11
Expected return on plan assets	(3		)	(2		)	(9		)	(8		)
Amortization of actuarial loss	1			—			4			1
Net periodic benefit cost	$	7		$	6		$	22		$	16

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 6) (Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member], USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Jul. 28, 2013	Oct. 28, 2012
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Restricted stock units, restricted stock, performance shares and performance units
Beginning Balance	36
Granted	18.0
Vested	(11)
Canceled	(5)
Ending Balance	38	36
Weighted Average Grant Date Fair Value
Beginning of Period (in dollars per share)	$ 11.53
Granted (in dollars per share)	$ 10.36
Vested (in dollars per share)	$ 11.46
Canceled (in dollars per share)	$ 11.33
Ending Balance (in dollars per share)	$ 11.03	$ 11.53
Weighted Average Remaining Contractual Term
Weighted average remaining contractual term	2 years 8 months 12 days	2 years 7 months 6 days

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Restructuring Charges and Asset Impairments (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended			0 Months Ended		3 Months Ended				9 Months Ended				10 Months Ended		3 Months Ended	9 Months Ended	15 Months Ended	0 Months Ended		3 Months Ended				9 Months Ended					0 Months Ended	3 Months Ended		9 Months Ended		0 Months Ended	15 Months Ended	0 Months Ended		3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012	Oct. 28, 2012	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Minimum [Member] positions	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Maximum [Member] positions	Jul. 28, 2013 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 29, 2012 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 28, 2013 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 29, 2012 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 28, 2013 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]	Oct. 28, 2012 2012 Global Restructuring Plan [Member] Severance and other employee-related costs [Member]	Jul. 28, 2013 2012 EES Restructuring Plan [Member]	Jul. 28, 2013 2012 EES Restructuring Plan [Member] positions	Jul. 28, 2013 2012 EES Restructuring Plan [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Minimum [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Maximum [Member] positions	Jul. 28, 2013 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 29, 2012 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 28, 2013 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member]		Jul. 29, 2012 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member]		Oct. 28, 2012 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Severance and other employee-related costs [Member] Maximum [Member]	Jul. 28, 2013 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	Jul. 29, 2012 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	Jul. 28, 2013 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	Jul. 29, 2012 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Asset Impairments [Member] Maximum [Member]	Jul. 28, 2013 2012 EES Restructuring Plan [Member] Inventory-related charges [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Inventory-related charges [Member] Maximum [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Lease termination and other obligations [Member] Maximum [Member]	Jul. 28, 2013 Others [Member] Severance and other employee-related costs [Member]	Jul. 29, 2012 Others [Member] Severance and other employee-related costs [Member]	Jul. 28, 2013 Others [Member] Severance and other employee-related costs [Member]	Jul. 29, 2012 Others [Member] Severance and other employee-related costs [Member]	Oct. 28, 2012 Others [Member] Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Reduction in Global Workforce (in positions)						900	1,300												150			250
Reduction in Global Workforce in percent						6.00%	9.00%
Expected restructuring charges						$ 120	$ 160														$ 70	$ 100										$ 40					$ 30		$ 15	$ 15
Restructuring charges and asset impairments	14	44	33	44				4	[1]	0	[1]	12	[1]	0	[1]			10	19				3	[2]	24	[2]	5	[2]	24	[2]			6	11	11	11					0	9	2	9
Costs incurred to date																118				80																		13
Term of restructuring plan (in months)																						18 months
Restructuring reserve	$ 17		$ 17		$ 133			$ 4				$ 4				$ 4	$ 106						$ 4				$ 4				$ 16										$ 2		$ 2		$ 5

[1] Includes share-based compensation expense which was recorded in additional paid-in capital.

[2] Includes post-retirement benefit expense which was recorded in accumulated other comprehensive loss.

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Employee Benefit Plans

9 Months Ended

Jul. 28, 2013

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Applied sponsors a number of employee benefit plans, including defined benefit plans of certain foreign subsidiaries, and a plan that provides certain medical and vision benefits to eligible retirees. A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three and nine months ended July 28, 2013 and July 29, 2012 is presented below:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Service cost	$	5		$	4		$	15		$	12
Interest cost	4			4			12			11
Expected return on plan assets	(3		)	(2		)	(9		)	(8		)
Amortization of actuarial loss	1			—			4			1
Net periodic benefit cost	$	7		$	6		$	22		$	16

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Goodwill, Purchased Technology and Other Intangible Assets

9 Months Ended

Jul. 28, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Purchased Technology and Other Intangible Assets

Goodwill, Purchased Technology and Other Intangible Assets

Goodwill and Purchased Intangible Assets

Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.

Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results.

To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would in the first step compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. Applied’s reporting units are consistent with the reportable segments identified in Note 15, Industry Segment Operations, which are based on the manner in which Applied operates its business and the nature of those operations.

During the second quarter of fiscal 2013, the solar industry experienced further deterioration of market conditions associated with continued manufacturing overcapacity and weaker operating performance and outlook, resulting in increased uncertainties regarding the timing and nature of a recovery in solar capital equipment expenditures. Taking these factors into account, Applied reassessed its financial outlook for the Energy and Environmental Solutions reporting unit and consequently reevaluated the recoverability of this reporting unit's goodwill. Applied performed the two-step impairment test and concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value. Based on Applied's analyses, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the reporting unit. As a result, in the second quarter of fiscal 2013, Applied recorded a goodwill impairment charge of $224 million, representing all of the remaining goodwill for this reporting unit. Applied also performed an impairment test for long-lived assets associated with the reporting unit and determined that the majority of intangible assets were impaired mostly due to the lower long-term revenue and profitability outlook associated with products related to these intangible assets. Accordingly, during the second quarter of fiscal 2013, Applied recorded an impairment charge of $54 million related to these intangible assets, which was the amount by which the carrying value of these intangible assets exceeded their estimated fair value, based on discounted projected cash flows.

The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time.

Details of goodwill and other indefinite-lived intangible assets as of July 28, 2013 and October 28, 2012 were as follows :

	July 28, 2013						October 28, 2012
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	2,151	$	142	$	2,293
Applied Global Services	1,027		—		1,027		1,027		—		1,027
Display	116		—		116		116		—		116
Energy and Environmental Solutions	—		—		—		224		—		224
Carrying amount	$	3,294	$	142	$	3,436	$	3,518	$	142	$	3,660

Other intangible assets that are not subject to amortization consist primarily of in-process technology, which will be subject to amortization upon commercialization. The fair value assigned to in-process technology was determined using the income approach taking into account estimates and judgments regarding risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. If an in-process technology project is abandoned, the acquired technology attributable to the project will be written off.

A summary of Applied's purchased technology and intangible assets is set forth below:

	July 28, 2013		October 28, 2012
	(In millions)
Purchased technology, net	$	786	$	945
Intangible assets - finite-lived, net	220		268
Intangible assets - indefinite-lived	142		142
Total	$	1,148	$	1,355

Finite-Lived Purchased Intangible Assets

Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years.

Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach.

Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure.

Details of finite-lived intangible assets were as follows as of July 28, 2013 and October 28, 2012:

	July 28, 2013									October 28, 2012
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,301		$	252		$	1,553		$	1,300		$	252		$	1,552
Applied Global Services	28			44			72			28			44			72
Display	110			33			143			110			33			143
Energy and Environmental Solutions	5			15			20			105			232			337
Gross carrying amount	$	1,444		$	344		$	1,788		$	1,543		$	561		$	2,104
Accumulated amortization:
Silicon Systems Group	$	(524	)	$	(53	)	$	(577	)	$	(411	)	$	(36	)	$	(447	)
Applied Global Services	(23		)	(41		)	(64		)	(22		)	(39		)	(61		)
Display	(110		)	(29		)	(139		)	(106		)	(27		)	(133		)
Energy and Environmental Solutions	(1		)	(1		)	(2		)	(59		)	(191		)	(250		)
Accumulated amortization	$	(658	)	$	(124	)	$	(782	)	$	(598	)	$	(293	)	$	(891	)
Carrying amount	$	786		$	220		$	1,006		$	945		$	268		$	1,213

During the second quarter of fiscal 2013, the impact of the impairment of certain intangible assets associated with the Energy and Environmental Solutions segment on the gross carrying amount and accumulated amortization of the finite-lived intangible assets was approximately $317 million and $262 million, respectively.

Details of amortization expense by segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Silicon Systems Group	$	42	$	45	$	130	$	138
Applied Global Services	1		1		3		8
Display	2		2		6		5
Energy and Environmental Solutions	1		6		14		19
Total	$	46	$	54	$	153	$	170

For the three and nine months ended July 28, 2013 and July 29, 2012, amortization expense was charged to the following categories:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	40	$	44	$	126	$	141
Research, development and engineering	—		—		1		1
Marketing and selling	5		8		21		23
General and administrative	1		2		5		5
Total	$	46	$	54	$	153	$	170

As of July 28, 2013, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	46
2014	180
2015	175
2016	168
2017	165
Thereafter	272
Total	$	1,006

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details Textual) (USD $)	0 Months Ended		1 Months Ended			3 Months Ended		9 Months Ended
	Jul. 28, 2013	Mar. 05, 2012	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jul. 28, 2013	Jan. 29, 2012	Jul. 28, 2013 employee_stock_purchase_plans	Jul. 29, 2012
Equity [Line Items]
Amount authorized by Board of directors to repurchase shares		$ 3,000,000,000
Period of stock repurchase program		3 years
Remaining amount authorized to be repurchased	1,600,000,000
Cash dividend declared			$ 0.10	$ 0.10	$ 0.09
Dividend declared, amount								348,000,000	330,000,000
Number of employee stock purchase plans								2
Granted (in shares)						0		0
Assumed in Varian acquisition (in shares)							5,000,000
Additional performance-based awards to be earned upon certain levels of achievement (in shares)	2,000,000					2,000,000		2,000,000
Number of shares issued under the ESPP								3,000,000	3,000,000
Employee Stock Purchase Plan [Member]
Equity [Line Items]
Number of shares available for grant (in shares)	44,000,000					44,000,000		44,000,000
Purchase price in percent of the lower of the fair market value of Applied common stock								85.00%
Purchase period for ESPP (in months)								6-month
Weighted Average Estimated Fair Value Of Purchase Rights Under Espp								$ 2.90	$ 2.89
Restricted Stock [Member]
Equity [Line Items]
Award conversion ratio to common stock								1
Performance Shares/Performance Units [Member]
Equity [Line Items]
Award conversion ratio to common stock								1
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member]
Equity [Line Items]
Stock options scheduled to be vested								4 years
Employee Stock Option [Member]
Equity [Line Items]
Stock options scheduled to expire								7 years
Employee Stock [Member]
Equity [Line Items]
Total unrecognized compensation expense	$ 270,000,000					$ 270,000,000		$ 270,000,000
Weighted average period for unrecognized compensation expense to be recognized (in years)								2 years 6 months
Number of shares available for grant (in shares)	185,000,000					185,000,000		185,000,000
Minimum [Member] | Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member] | Certain Executive Officers [Member]
Equity [Line Items]
Stock options scheduled to be vested								3 years
Minimum [Member] | Employee Stock Option [Member]
Equity [Line Items]
Stock options scheduled to be vested								3 years
Maximum [Member] | Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member] | Certain Executive Officers [Member]
Equity [Line Items]
Stock options scheduled to be vested								4 years
Maximum [Member] | Employee Stock Option [Member]
Equity [Line Items]
Stock options scheduled to be vested								4 years
United States [Member]
Equity [Line Items]
Number of employee stock purchase plans								1
International [Member]
Equity [Line Items]
Number of employee stock purchase plans								1

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Industry Segment Operations

9 Months Ended

Jul. 28, 2013

Segment Reporting [Abstract]

Industry Segment Operations

Industry Segment Operations

Applied’s four reportable segments are: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. As defined in the accounting literature, Applied’s chief operating decision-maker are its Chief Executive Officer and its President, who both review operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of July 28, 2013 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments.

Each reportable segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker.

Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level, which include costs related to share-based compensation; certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments.

The Silicon Systems Group segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation.

The Applied Global Services segment includes technically differentiated products and services to improve operating efficiency, reduce operating costs and lessen the environmental impact of semiconductor, display and solar customers’ factories. Applied Global Services’ products consist of spares, services, certain earlier generation products, remanufactured equipment, and products that have reached a particular stage in the product lifecycle. Customer demand for these products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites.

The Display segment includes products for manufacturing LCDs, organic light-emitting diodes (OLEDs), and other display technologies for TVs, personal computers, tablets, smart phones, and other consumer-oriented devices.

The Energy and Environmental Solutions segment includes products for fabricating crystalline-silicon (c-Si) solar photovoltaic cells and modules. This segment also includes products for high throughput roll-to-roll deposition equipment for flexible electronics and other applications.

With the acquisition of Varian, Applied acquired ion implantation technology for semiconductor as well as for c-Si solar cell manufacturing, which was recorded under the Silicon Systems Group segment in fiscal 2012. In fiscal 2013, Applied began marketing the solar implant products commercially through its Energy and Environmental Solutions segment. Accordingly, effective in the first quarter of fiscal 2013, Applied accounts for its solar implant products under the Energy and Environmental Solutions segment. The effect of the solar implant products was not material to the operations of either the Silicon Systems Group or Energy and Environmental Solutions segments.

Net sales and operating income (loss) for each reportable segment for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended					Nine Months Ended
	Net Sales		Operating Income  (Loss)			Net Sales		Operating Income  (Loss)
	(In millions)
July 28, 2013:
Silicon Systems Group	$	1,272	$	246		$	3,532	$	663
Applied Global Services	497		114			1,485		321
Display	161		33			375		55
Energy and Environmental Solutions	45		(27		)	129		(403		)
Total Segment	$	1,975	$	366		$	5,521	$	636
July 29, 2012:
Silicon Systems Group	$	1,545	$	427		$	4,666	$	1,202
Applied Global Services	579		122			1,664		338
Display	142		10			380		23
Energy and Environmental Solutions	77		(102		)	363		(188		)
Total Segment	$	2,343	$	457		$	7,073	$	1,375

Operating results for the three and nine months ended July 28, 2013 and July 29, 2012 included restructuring charges and asset impairments as discussed in detail in Note 10, Restructuring Charges and Asset Impairments.

Reconciliations of total segment operating results to Applied consolidated totals for the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Total segment operating income	$	366		$	457		$	636		$	1,375
Corporate and unallocated costs	(112		)	(135		)	(403		)	(465		)
Restructuring charges and asset impairments	(4		)	—			(12		)	—
Income from operations	$	250		$	322		$	221		$	910

The following companies accounted for at least 10 percent of Applied’s net sales for the nine months ended July 28, 2013, which were for products in multiple reportable segments.

	Percentage of Net Sales
Taiwan Semiconductor Manufacturing Company Limited	29	%
Samsung Electronics Co., Ltd.	15	%

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Income Taxes

9 Months Ended

Jul. 28, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Applied’s effective tax rates for the third quarter of fiscal 2013 and 2012 were 26.3 percent and 27.8 percent, respectively. The effective tax rate for the third quarter of fiscal 2013 decreased compared to the same period in the prior year primarily due to changes in the geographic composition of income, including jurisdictions with tax incentives, and benefits resulting from resolution of prior years’ income tax filings.

Applied’s effective tax rates for the first nine months of fiscal 2013 and 2012 were 53.2 percent and 26.4 percent, respectively. The effective tax rate for the first nine months of fiscal 2013 increased compared to the same period in the prior year primarily due to the goodwill impairment charge recorded in the second quarter of fiscal 2013 that was not deductible. The effective tax rate for the first nine months of fiscal 2013 also reflected a $14 million benefit resulting from the resolution of prior years’ income tax filings and a $13 million benefit from the reinstatement of the U.S. federal research and development tax credit retroactive to January 1, 2012 during fiscal 2013. The effective tax rates were further affected by changes in the geographic composition of income, including jurisdictions with tax incentives. Applied’s future effective income tax rate depends on various factors, such as tax legislation and the geographic composition of Applied’s pre-tax income. Management carefully monitors these factors and timely adjusts the interim effective income tax rate accordingly.

The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be made as part of the resolution process, is highly uncertain and could cause an impact to Applied’s consolidated results of operations. This could also cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. Applied does not expect a material change in unrecognized tax benefits in the next 12 months.

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Document and Entity Information	9 Months Ended
	Jul. 28, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	APPLIED MATERIALS INC /DE
Entity Central Index Key	0000006951
Current Fiscal Year End Date	--10-27
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jul. 28, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock Shares Outstanding	1,202,826,487

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Warranty, Guarantees and Contingencies

9 Months Ended

Jul. 28, 2013

Commitments and Contingencies Disclosure [Abstract]

Warranty, Guarantees and Contingencies

Warranty, Guarantees and Contingencies

Warranty

Changes in the warranty reserves during the three and nine months ended July 28, 2013 and July 29, 2012 were as follows:

	Three Months Ended						Nine Months Ended
	July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
	(In millions)
Beginning balance	$	104		$	152		$	119		$	168
Provisions for warranty	27			25			76			87
Consumption of reserves	(31		)	(40		)	(95		)	(118		)
Ending balance	$	100		$	137		$	100		$	137

Applied products are generally sold with a warranty for a 12-month period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales.

Guarantees

In the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of July 28, 2013, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $41 million. Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does 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.

Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of July 28, 2013, Applied Materials, Inc. has provided parent guarantees to banks for approximately $102 million to cover these arrangements.

Legal Matters

Jusung

Applied has been engaged in several lawsuits and patent and administrative proceedings with Jusung Engineering Co., Ltd. and/or Jusung Pacific Co., Ltd. (Jusung) in Asia since 2003 involving technology used in manufacturing liquid crystal displays (LCDs), including the following. In 2004, Applied filed a complaint for patent infringement against Jusung in the Hsinchu District Court in Taiwan seeking damages and a permanent injunction for infringement of a patent related to chemical vapor deposition (CVD) equipment, and Jusung filed a counterclaim. On December 31, 2010, the Hsinchu District Court dismissed both actions. Both parties appealed to the Taiwan Intellectual Property Court, and on August 12, 2013, the Court dismissed both appeals. In 2009, Jusung filed an action seeking invalidation of Applied's CVD patent in the Taiwan Intellectual Property Office which remains pending but which Applied does not believe is material.

Korea Criminal Proceedings

In 2010, the Seoul Eastern District Court began hearings on indictments brought by the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) alleging that employees of several companies improperly received and used confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The individuals charged included the former head of Applied Materials Korea (AMK), who at the time of the indictment was a vice president of Applied Materials, Inc., and certain other AMK employees. Neither Applied nor any of its subsidiaries was named as a party to the proceedings. Hearings on these matters concluded in November 2012 and the Court issued its decision on February 7, 2013. As part of the ruling, nine AMK employees (including the former head of AMK) were acquitted of all charges, while one AMK employee was found guilty on some of the charges and received a suspended jail sentence. The Prosecutor's Office has filed notices of appeal.

Other Matters

From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business.

Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material adverse effect on its consolidated financial condition or results of operations.

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 1) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 28, 2013	Jul. 29, 2012	Jul. 28, 2013	Jul. 29, 2012
Summary of stock repurchases
Common stock repurchases, shares	3	47	15	81
Cost of stock repurchased	$ 50	$ 500	$ 198	$ 900
Average price paid per share (in dollars per share)	$ 15.33	$ 10.71	$ 13.18	$ 11.09

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details) (USD $) In Millions, unless otherwise specified	Jul. 28, 2013	Oct. 28, 2012
Components of accumulated other comprehensive loss, after-tax basis
Unrealized gain on investments, net	$ 19	$ 16
Unrealized gain on derivative instruments qualifying as cash flow hedges	6	1
Pension liability	(92)	(90)
Cumulative translation adjustments	6	12
Accumulated other comprehensive loss	$ (61)	$ (61)