APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
| Three Months Ended | Nine Months Ended | ||||||||||||||
| (In millions, except percentages) | July 28,
2019 | July 29,
2018 | July 28,
2019 | July 29,
2018 | |||||||||||
| Non-GAAP Adjusted Gross Profit | |||||||||||||||
| Reported gross profit - GAAP basis | $ | 1,557 | $ | 1,864 | $ | 4,752 | $ | 5,860 | |||||||
| Certain items associated with acquisitions1 | 9 | 45 | 28 | 134 | |||||||||||
| Non-GAAP adjusted gross profit | $ | 1,566 | $ | 1,909 | $ | 4,780 | $ | 5,994 | |||||||
| Non-GAAP adjusted gross margin | 44.0 | % | 45.9 | % | 44.0 | % | 46.3 | % | |||||||
| Non-GAAP Adjusted Operating Income | |||||||||||||||
| Reported operating income - GAAP basis | $ | 802 | $ | 1,093 | $ | 2,486 | $ | 3,600 | |||||||
| Certain items associated with acquisitions1 | 13 | 49 | 41 | 147 | |||||||||||
| Acquisition integration and deal costs | 5 | — | 12 | 2 | |||||||||||
| Non-GAAP adjusted operating income | $ | 820 | $ | 1,142 | $ | 2,539 | $ | 3,749 | |||||||
| Non-GAAP adjusted operating margin | 23.0 | % | 27.4 | % | 23.4 | % | 29.0 | % | |||||||
| Non-GAAP Adjusted Net Income | |||||||||||||||
| Reported net income - GAAP basis | $ | 571 | $ | 1,016 | $ | 2,008 | $ | 2,281 | |||||||
| Certain items associated with acquisitions 1 | 13 | 49 | 41 | 147 | |||||||||||
| Acquisition integration and deal costs | 5 | — | 12 | 2 | |||||||||||
| Impairment (gain on sale) of strategic investments, net | — | (14 | ) | — | (10 | ) | |||||||||
| Loss (gain) on strategic investments, net | (8 | ) | — | (31 | ) | — | |||||||||
| Income tax effect of share-based compensation 2 | — | 13 | (4 | ) | (13 | ) | |||||||||
| Income tax effect of changes in applicable U.S. tax laws 3 | — | 12 | (24 | ) | 1,089 | ||||||||||
| Income tax effects related to amortization of intra-entity intangible asset transfers | 115 | — | 56 | — | |||||||||||
| Resolution of prior years’ income tax filings and other tax items | (1 | ) | (29 | ) | 75 | (32 | ) | ||||||||
| Income tax effect of non-GAAP adjustments 4 | (3 | ) | 1 | (2 | ) | (7 | ) | ||||||||
| Non-GAAP adjusted net income | $ | 692 | $ | 1,048 | $ | 2,131 | $ | 3,457 | |||||||
