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Applied Materials Announces Record Results

  • Applied delivers record EPS of $0.46 and record non-GAAP EPS of $0.50 in its third quarter
  • Generates $3.66 billion in new orders and reports $4.95 billion in backlog, both all-time highs
  • Expects record non-GAAP EPS in its fourth quarter

SANTA CLARA, Calif., Aug. 18, 2016 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ:AMAT) today reported results for its third quarter ended July 31, 2016.

New orders were $3.66 billion, up 6 percent sequentially and up 26 percent year over year. Backlog of $4.95 billion was up 19 percent sequentially and up 60 percent year over year. Net sales of $2.82 billion were up 15 percent sequentially and up 13 percent year over year.

The company recorded gross margin of 42.3 percent, operating margin of 21.1 percent, and net income of $505 million or $0.46 per diluted share. On a non-GAAP adjusted basis, the company reported third quarter gross margin of 43.7 percent, operating margin of 22.8 percent, and net income of $550 million or $0.50 per diluted share.

The company generated $981 million in cash from operations, paid dividends of $108 million and used $196 million to repurchase 9 million shares of common stock at an average price of $21.88.

“With earnings and orders at an all-time high, Applied is performing better than ever and in a great position to sustainably outperform our markets,” said Gary Dickerson, president and CEO. “We are in the early stages of large, multi-year industry inflections that are driving our business today and creating new opportunities for future growth.”

Quarterly Results Summary

Change
Q3 FY2016 Q2 FY2016 Q3 FY2015 Q3 FY2016
vs.
Q2 FY2016
Q3 FY2016
vs.
Q3 FY2015
(In millions, except per share amounts and percentages)
New orders$3,658 $3,451 $2,892 6% 26%
Net sales$2,821 $2,450 $2,490 15% 13%
Gross margin42.3% 41.0% 40.9% 1.3points 1.4points
Operating margin21.1% 17.3% 15.9% 3.8points 5.2points
Net income$505 $320 $329 58% 53%
Diluted earnings per share (EPS)$0.46 $0.29 $0.27 59% 70%


Change
Non-GAAP Adjusted ResultsQ3 FY2016 Q2 FY2016 Q3 FY2015 Q3 FY2016
vs.
Q2 FY2016
Q3 FY2016
vs.
Q3 FY2015
(In millions, except per share amounts and percentages)
Non-GAAP adjusted gross margin43.7% 42.7% 43.9% 1.0points (0.2) points
Non-GAAP adjusted operating margin22.8% 19.2% 20.8% 3.6points 2.0points
Non-GAAP adjusted net income$550 $376 $410 46% 34%
Non-GAAP adjusted diluted EPS$0.50 $0.34 $0.33 47% 52%

A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Adjusted Financial Measures” section.

Business Outlook

In the fourth quarter of fiscal 2016, Applied expects net sales to be up 15 percent to 19 percent sequentially. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.61 to $0.69.

This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.04 per share and any additional charges related to completed or future acquisitions or other non-operational or unusual items that are unknown at this time, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Third Quarter Reportable Segment Information

Effective in the third quarter of fiscal 2016, Applied has expanded its Display segment to now include roll-to-roll web coating systems (previously in Energy and Environmental Solutions) and display upgrade equipment (previously in Applied Global Services). The Display segment is now named Display and Adjacent Markets. Applied no longer reports Energy and Environmental Solutions as a segment and its solar business is now included in Corporate and Other. The Silicon Systems segment is now named Semiconductor Systems and is otherwise unchanged. Applied Global Services continues to include 200-millimeter semiconductor equipment sales. Segment operating results for previous periods have been recast to conform to the current presentation in the table below and in the supplemental historical information accompanying this release.

Semiconductor SystemsQ3 FY2016 Q2 FY2016 Q3 FY2015
(In millions, except percentages)
New orders$2,215 $1,966 $2,007
Foundry57% 23% 32%
DRAM14% 17% 18%
Flash15% 49% 39%
Logic and other14% 11% 11%
Net sales1,786 1,587 1,635
Operating income511 364 411
Operating margin28.6% 22.9% 25.1%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$556 $410 $455
Non-GAAP adjusted operating margin31.1% 25.8% 27.8%


Applied Global ServicesQ3 FY2016 Q2 FY2016 Q3 FY2015
(In millions, except percentages)
New orders$590 $636 $543
Net sales657 633 646
Operating income175 165 162
Operating margin26.6% 26.1% 25.1%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$176 $165 $165
Non-GAAP adjusted operating margin26.8% 26.1% 25.5%


Display and Adjacent MarketsQ3 FY2016 Q2 FY2016 Q3 FY2015
(In millions, except percentages)
New orders$803 $762 $318
Net sales313 187 185
Operating income63 31 35
Operating margin20.1% 16.6% 18.9%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$63 $31 $36
Non-GAAP adjusted operating margin20.1% 16.6% 19.5%

Backlog Information

Applied's backlog increased 19 percent to $4.95 billion and included negative adjustments of $56 million, primarily consisting of order cancellations, partially offset by favorable foreign currency impacts. Backlog composition by reportable segment was as follows:

Semiconductor Systems50%
Applied Global Services15%
Display and Adjacent Markets33%
Corporate and Other2%

Use of Non-GAAP Adjusted Financial Measures

Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted to exclude the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring charges and any associated adjustments; impairments of assets, or investments; gain or loss on sale of strategic investments; income tax items and certain other discrete adjustments. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of our performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

Webcast Information

Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.

Forward-Looking Statements

This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks, technology transitions, our business and financial performance and market share positions, our earnings expectations, our business outlook for the fourth quarter of fiscal 2016, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; and other risks and uncertainties described in our SEC filings, including our most recent Forms 10-Q and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.

About Applied Materials

Applied Materials, Inc. (Nasdaq:AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible the technology shaping the future. Learn more at www.appliedmaterials.com.

Contact:

Kevin Winston (editorial/media) 408.235.4498
Michael Sullivan (financial community) 408.986.7977

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
(In millions, except per share amounts)July 31,
2016
May 1,
2016
July 26,
2015
July 31,
2016
July 26,
2015
Net sales$2,821 $2,450 $2,490 $7,528 $7,291
Cost of products sold1,629 1,446 1,472 4,416 4,298
Gross profit1,192 1,004 1,018 3,112 2,993
Operating expenses:
Research, development and engineering386 386 372 1,146 1,088
Marketing and selling107 102 112 315 332
General and administrative103 91 135 276 392
Loss (gain) on derivatives associated with terminated business combination 3 (89)
Total operating expenses596 579 622 1,737 1,723
Income from operations596 425 396 1,375 1,270
Interest expense38 37 24 117 71
Interest income and other income, net6 7 3 15 2
Income before income taxes564 395 375 1,273 1,201
Provision for income taxes59 75 46 162 160
Net income$505 $320 $329 $1,111 $1,041
Earnings per share:
Basic$0.47 $0.29 $0.27 $1.00 $0.85
Diluted$0.46 $0.29 $0.27 $0.99 $0.84
Weighted average number of shares:
Basic1,083 1,113 1,221 1,115 1,225
Diluted1,093 1,119 1,231 1,123 1,238


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)July 31,
2016
May 1,
2016
October 25,
2015
ASSETS
Current assets:
Cash and cash equivalents$2,828 $2,470 $4,797
Short-term investments438 170 168
Accounts receivable, net1,852 1,913 1,739
Inventories2,026 1,924 1,833
Other current assets255 251 724
Total current assets7,399 6,728 9,261
Long-term investments960 934 946
Property, plant and equipment, net905 904 892
Goodwill3,305 3,304 3,302
Purchased technology and other intangible assets, net621 668 762
Deferred income taxes and other assets509 537 145
Total assets$13,699 $13,075 $15,308
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt$ $ $1,200
Accounts payable and accrued expenses1,800 1,630 1,833
Customer deposits and deferred revenue1,164 981 765
Total current liabilities2,964 2,611 3,798
Long-term debt3,343 3,343 3,342
Other liabilities573 556 555
Total liabilities6,880 6,510 7,695
Total stockholders’ equity6,819 6,565 7,613
Total liabilities and stockholders’ equity$13,699 $13,075 $15,308


APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)Three Months Ended Nine Months Ended
July 31,
2016
May 1,
2016
July 26,
2015
July 31,
2016
July 26,
2015
Cash flows from operating activities:
Net income$505 $320 $329 $1,111 $1,041
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization97 96 93 289 275
Share-based compensation48 48 46 150 141
Excess tax benefits from share-based compensation(5) (3) (3) (18) (54)
Deferred income taxes21 (22) 18 14 25
Other5 5 43 20 64
Net change in operating assets and liabilities310 37 (192) 103 (800)
Cash provided by operating activities981 481 334 1,669 692
Cash flows from investing activities:
Capital expenditures(50) (47) (49) (165) (162)
Cash paid for acquisitions, net of cash acquired3 (8) (2) (5) (2)
Proceeds from sales and maturities of investments208 232 583 681 900
Purchases of investments(483) (182) (616) (947) (960)
Cash used in investing activities(322) (5) (84) (436) (224)
Cash flows from financing activities:
Debt repayments(2) (1,207)
Proceeds from common stock issuances and others 42 1 44 43
Common stock repurchases(196) (900) (625) (1,721) (625)
Excess tax benefits from share-based compensation5 3 3 18 54
Payments of dividends to stockholders(108) (113) (123) (336) (368)
Cash used in financing activities(301) (968) (744) (3,202) (896)
Effect of exchange rate changes on cash and cash equivalents 1
Increase (decrease) in cash and cash equivalents358 (492) (493) (1,969) (428)
Cash and cash equivalents — beginning of period2,470 2,962 3,067 4,797 3,002
Cash and cash equivalents — end of period$2,828 $2,470 $2,574 $2,828 $2,574
Supplemental cash flow information:
Cash payments for income taxes$49 $51 $51 $144 $258
Cash refunds from income taxes$1 $98 $5 $104 $10
Cash payments for interest$34 $42 $39 $110 $85


APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Corporate and Other
(In millions)Q3 FY2016 Q2 FY2016 Q3 FY2015
New orders$50 $87 $24
Unallocated net sales$65 $43 $24
Unallocated cost of products sold and expenses(170) (130) (186)
Share-based compensation(48) (48) (46)
Certain items associated with terminated business combination (1)
Loss on derivatives associated with terminated business combination, net (3)
Total$(153) $(135) $(212)


Additional Information
Q3 FY2016 Q2 FY2016 Q3 FY2015
New Orders and Net Sales by Geography
(In $ millions)New
Orders
Net
Sales
New
Orders
Net
Sales
New
Orders
Net
Sales
United States259 289 386 272 262 488
% of Total7% 10% 11% 11% 9% 20%
Europe212 124 194 97 142 148
% of Total6% 5% 6% 4% 5% 6%
Japan270 321 339 260 727 283
% of Total7% 11% 10% 10% 25% 11%
Korea689 472 792 506 349 343
% of Total19% 17% 23% 21% 12% 14%
Taiwan1,240 741 445 311 828 825
% of Total34% 26% 13% 13% 29% 33%
Southeast Asia139 303 392 252 142 101
% of Total4% 11% 11% 10% 5% 4%
China849 571 903 752 442 302
% of Total23% 20% 26% 31% 15% 12%
Employees (In thousands)
Regular Full Time15.2 14.8 14.5


APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended Nine Months Ended
(In millions, except percentages)July 31,
2016
May 1,
2016
July 26,
2015
July 31,
2016
July 26,
2015
Non-GAAP Adjusted Gross Profit
Reported gross profit - GAAP basis$1,192 $1,004 $1,018 $3,112 $2,993
Certain items associated with acquisitions142 41 41 125 120
Inventory charges (reversals) related to restructuring3, 5(1) 34 (2) 34
Non-GAAP adjusted gross profit$1,233 $1,045 $1,093 $3,235 $3,147
Non-GAAP adjusted gross margin43.7% 42.7% 43.9% 43.0% 43.2%
Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$596 $425 $396 $1,375 $1,270
Certain items associated with acquisitions147 46 47 141 138
Acquisition integration and deal costs2 1 2 2
Loss (gain) on derivatives associated with terminated business combination, net 3 (89)
Certain items associated with terminated business combination2 1 50
Inventory charges (reversals) related to restructuring and asset impairments, net3, 4, 5(1) (1) 50 (3) 50
Foreign exchange loss due to functional currency change6 19 19
Non-GAAP adjusted operating income$644 $470 $517 $1,515 $1,440
Non-GAAP adjusted operating margin22.8% 19.2% 20.8% 20.1% 19.8%
Non-GAAP Adjusted Net Income
Reported net income - GAAP basis7$505 $320 $329 $1,111 $1,041
Certain items associated with acquisitions147 46 47 141 138
Acquisition integration and deal costs2 1 2 2
Loss (gain) on derivatives associated with terminated business combination, net 3 (89)
Certain items associated with terminated business combination2 1 50
Inventory charges (reversals) related to restructuring and asset impairments, net3, 4, 5(1) (1) 50 (3) 50
Impairment (gain on sale) of strategic investments, net (1) (1) (3) 6
Foreign exchange loss due to functional currency change6 19 19
Loss on early extinguishment of debt 5
Reinstatement of federal R&D tax credit, resolution of prior years’ income tax filings and other tax items71 16 (21) (12) (92)
Income tax effect of non-GAAP adjustments8(4) (4) (18) (13) (15)
Non-GAAP adjusted net income$550 $376 $410 $1,228 $1,110


1These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2These items are incremental charges related to the terminated business combination agreement with Tokyo Electron Limited, consisting of acquisition-related and integration planning costs.
3Results for the three and nine months ended July 31, 2016 primarily included benefit from sales of solar equipment tools for which inventory had been previously reserved related to the cost reductions in the solar business.
4Results for the three months ended May 1, 2016 included a $1 million favorable adjustment of employee-related costs associated with the cost reductions in the solar business.
5Results for the three and nine months ended July 26, 2015 primarily included $34 million of inventory charges and $17 million of restructuring charges and asset impairments related to cost reductions in the solar business.
6Results for the three and nine months ended July 26, 2015 included a $19 million foreign exchange loss due to an immaterial correction of an error related to functional currency change.
7Amounts for nine months ended July 26, 2015 included an adjustment to decrease the provision for income taxes by $35 million with a corresponding increase in net income, resulting in an increase in diluted earnings per share of $0.03. The adjustment was excluded in Applied's non-GAAP adjusted results and was made primarily to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales, which resulted in overstating profitability in the U.S. and the provision for income taxes in immaterial amounts in each year since fiscal 2010.
8These amounts represent non-GAAP adjustments above multiplied by the effective tax rate within the jurisdictions the adjustments affect.


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 31,
2016
May 1,
2016
July 26,
2015
July 31,
2016
July 26,
2015
Non-GAAP Adjusted Earnings Per Diluted Share
Reported earnings per diluted share - GAAP basis1$0.46 $0.29 $0.27 $0.99 $0.84
Certain items associated with acquisitions0.04 0.04 0.03 0.11 0.10
Certain items associated with terminated business combination 0.03
Gain on derivatives associated with terminated business combination, net (0.05)
Restructuring, inventory charges and asset impairments 0.03 0.03
Reinstatement of federal R&D tax credit, resolution of prior years’ income tax filings and other tax items1 0.01 (0.02) (0.01) (0.07)
Foreign exchange loss due to functional currency change 0.02 0.02
Non-GAAP adjusted earnings per diluted share$0.50 $0.34 $0.33 $1.09 $0.90
Weighted average number of diluted shares1,093 1,119 1,231 1,123 1,238


1Amounts for nine months ended July 26, 2015 included an adjustment to decrease the provision for income taxes by $35 million with a corresponding increase in net income, resulting in an increase in diluted earnings per share of $0.03. The adjustment was excluded in Applied's non-GAAP adjusted results and was made primarily to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales, which resulted in overstating profitability in the U.S. and the provision for income taxes in immaterial amounts in each year since fiscal 2010.


APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended Nine Months Ended
(In millions, except percentages)July 31,
2016
May 1,
2016
July 26,
2015
July 31,
2016
July 26,
2015
Semiconductor Systems Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$511 $364 $411 $1,140 $1,092
Certain items associated with acquisitions145 46 44 138 131
Non-GAAP adjusted operating income$556 $410 $455 $1,278 $1,223
Non-GAAP adjusted operating margin31.1% 25.8% 27.8% 26.9% 26.4%
AGS Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$175 $165 $162 $489 $470
Certain items associated with acquisitions11 1 1
Inventory charges related to restructuring2 3 3
Non-GAAP adjusted operating income$176 $165 $165 $490 $474
Non-GAAP adjusted operating margin26.8% 26.1% 25.5% 25.8% 25.8%
Display and Adjacent Markets Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$63 $31 $35 $142 $163
Certain items associated with acquisitions1 1 3
Non-GAAP adjusted operating income$63 $31 $36 $142 $166
Non-GAAP adjusted operating margin20.1% 16.6% 19.5% 18.8% 23.4%


1These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2Results for the three and nine months ended July 26, 2015 included $3 million of inventory charges related to cost reduction in the solar business.
Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.


APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED OPERATING EXPENSES
Three Months Ended
(In millions)July 31, 2016 May 1, 2016
Operating expenses - GAAP basis$596 $579
Reversals related to restructuring, net 1
Certain items associated with acquisitions(5) (5)
Acquisition integration and deal costs(2)
Non-GAAP adjusted operating expenses$589 $575


UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
Three Months Ended
(In millions, except percentages)July 31, 2016
Provision for income taxes - GAAP basis (a)$59
Reinstatement of federal R&D tax credit, resolutions of prior years’ income tax filings and other tax items(1)
Income tax effect of non-GAAP adjustments4
Non-GAAP adjusted provision for income taxes (b)$62
Income before income taxes - GAAP basis (c)$564
Certain items associated with acquisitions47
Reversals related to restructuring, net(1)
Acquisition integration costs2
Non-GAAP adjusted income before income taxes (d)$612
Effective income tax rate - GAAP basis (a/c)10.5%
Non-GAAP adjusted effective income tax rate (b/d)10.1%


APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL HISTORICAL INFORMATION
Semiconductor SystemsQ2 FY2016 Q1 FY2016 Q4 FY2015 Q3 FY2015 Q2 FY2015 Q1 FY2015 FY2014
(In millions, except percentages)
New orders$1,966 $1,275 $1,444 $2,007 $1,704 $1,426 $6,132
Net sales 1,587 1,373 1,494 1,635 1,560 1,446 5,978
Operating income 364 265 318 411 374 307 1,391
Operating margin 22.9% 19.3% 21.3% 25.1% 24.0% 21.2% 23.3%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$410 $312 $365 $455 $418 $350 $1,565
Non-GAAP adjusted operating margin25.8% 22.7% 24.4% 27.8% 26.8% 24.2% 26.2%


Applied Global ServicesQ2 FY2016 Q1 FY2016 Q4 FY2015 Q3 FY2015 Q2 FY2015 Q1 FY2015 FY2014
(In millions, except percentages)
New orders$636 $755 $743 $543 $620 $676 $2,345
Net sales633 606 611 646 627 563 2,114
Operating income165 149 160 162 162 146 538
Operating margin26.1% 24.6% 26.2% 25.1% 25.8% 25.9% 25.4%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$165 $149 $159 $165 $162 $147 $541
Non-GAAP adjusted operating margin26.1% 24.6% 26.0% 25.5% 25.8% 26.1% 25.6%


Display and Adjacent MarketsQ2 FY2016 Q1 FY2016 Q4 FY2015 Q3 FY2015 Q2 FY2015 Q1 FY2015 FY2014
(In millions, except percentages)
New orders$762 $208 $219 $318 $159 $132 $1,066
Net sales187 254 235 185 208 316 848
Operating income31 48 28 35 49 79 202
Operating margin16.6% 18.9% 11.9% 18.9% 23.6% 25.0% 23.8%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$31 $48 $28 $36 $50 $80 $206
Non-GAAP adjusted operating margin16.6% 18.9% 11.9% 19.5% 24.0% 25.3% 24.3%


Corporate and OtherQ2 FY2016 Q1 FY2016 Q4 FY2015 Q3 FY2015 Q2 FY2015 Q1 FY2015 FY2014
(In millions)
New orders$87 $37 $18 $24 $32 $39 $105
Unallocated net sales$43 $24 $28 $24 $47 $34 $132
Unallocated cost of products sold and expenses(130) (78) (65) (186) (154) (118) (523)
Share-based compensation(48) (54) (46) (46) (47) (48) (177)
Certain items associated with terminated business combination (1) (29) (20) (73)
Gain (loss) on derivatives associated with terminated business combination, net (3) 14 78 30
Total$(135) $(108) $(83) $(212) $(169) $(74) $(611)


Source:Applied Materials, Inc.