Applied adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), as of the first day of fiscal 2019 using the full retrospective method. Applied also adopted Accounting Standards Update 2017-07, Compensation—Retirement Benefits, as of the first day of fiscal 2019 using the retrospective method. All prior periods included in the unaudited consolidated condensed balance sheet as of Oct. 28, 2018, and the unaudited consolidated condensed statements of operations and cash flows for the three and nine months ended July 29, 2018, were restated under the new standards.

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 2019, Applied expects net sales to be approximately $3.685 billion, plus or minus $150 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.72 to $0.80.

This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes net income tax benefit related to intra-entity intangible asset transfers of $0.03 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, 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

Semiconductor Systems	Q3 FY2019				Q3 FY2018
	(In millions, except percentages)
Net sales	$	2,273			$	2,578
Foundry, logic and other	49		%		36		%
DRAM	27		%		25		%
Flash	24		%		39		%
Operating income	613				831
Operating margin	27.0		%		32.2		%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	624			$	876
Non-GAAP adjusted operating margin	27.5		%		34.0		%

 

Applied Global Services	Q3 FY2019				Q3 FY2018
	(In millions, except percentages)
Net sales	$	931			$	952
Operating income	259				280
Operating margin	27.8		%		29.4		%
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income	$	259			$	280
Non-GAAP adjusted operating margin	27.8		%		29.4		%

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