10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark one)

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

For the fiscal year ended October 28, 2012

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, P.O. Box 58039 Santa Clara, California	95052-8039 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(408) 727-5555

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ        No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨        No  þ

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  þ        No  ¨

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  þ        No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

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. (Check one):

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

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

Aggregate market value of the voting stock held by non-affiliates of the registrant as of April 29, 2012, based upon the closing sale price reported by the NASDAQ Global Select Market on that date: $15,382,534,908

Number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of November 21, 2012: 1,197,659,704

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the definitive Proxy Statement for Applied Materials, Inc.’s 2013 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

Caution Regarding Forward-Looking Statements

Certain information in this Annual Report on Form 10-K (report or Form 10-K) of Applied Materials, Inc. and its subsidiaries (Applied or the Company), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, is forward-looking in nature. All statements in this report, including those made by the management of Applied, other than statements of historical fact, are forward-looking statements.

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. Examples of forward-looking statements include statements regarding Applied’s future financial or operating results, as well as its plans or expectations regarding cash flows and cash deployment strategies, declaration of dividends, share repurchases, business strategies and priorities, costs and cost controls, products, competitive positions, future operations, research and development, acquisitions and joint ventures, growth opportunities, the nature and impact of restructuring activities, backlog, working capital, liquidity, investment portfolio and policies, taxes, supply chain, manufacturing, properties, legal proceedings and claims, customer demand and spending, end-use demand, market and industry trends and outlooks, and general economic conditions. 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 these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in Part I, 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.

The following information should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in this report.

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APPLIED MATERIALS, INC.

FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 28, 2012

TABLE OF CONTENTS

		Page
	PART I
Item 1:	Business	4
Item 1A:	Risk Factors	18
Item 1B:	Unresolved Staff Comments	28
Item 2:	Properties	29
Item 3:	Legal Proceedings	30
Item 4:	Mine Safety Disclosures	30
	PART II
Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6:	Selected Financial Data	33
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	59
Item 8:	Financial Statements and Supplementary Data	59
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59
Item 9A:	Controls and Procedures	60
Item 9B:	Other Information	60
	PART III
Item 10:	Directors, Executive Officers and Corporate Governance	61
Item 11:	Executive Compensation	61
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13:	Certain Relationships and Related Transactions, and Director Independence	63
Item 14:	Principal Accounting Fees and Services	63
	PART IV
Item 15:	Exhibits and Financial Statements	64
	Signatures	119

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PART I

Item 1: Business

Incorporated in 1967, Applied, a Delaware corporation, 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 displays (LCDs), 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’s fiscal year ends on the last Sunday in October.

Applied is one of the world’s largest semiconductor fabrication equipment suppliers based on revenue, with the capability to provide global deployment and support services. Applied also is a leading supplier of LCD fabrication equipment to the flat panel display industry, and a leading supplier of solar PV manufacturing systems to the solar industry, based on revenue.

Applied operates in four reportable segments: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. Applied manages its business based upon these segments. A summary of financial information for each reportable segment is found in Note 16 of Notes to Consolidated Financial Statements. A discussion of factors that could affect operations is set forth under “Risk Factors” in Item 1A, which is incorporated herein by reference.

In November 2011, Applied completed the acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian), the leading supplier of ion implantation equipment to the semiconductor and solar industries. The acquisition broadened Applied's extensive portfolio of technologies for chip and solar module manufacturing. The acquired business is included in consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.

Net sales by reportable segment for the past three fiscal years were as follows:

	2012				2011				2010
	(In millions, except percentages)
Silicon Systems Group	$	5,536	64	%	$	5,415	51	%	$	5,304	56	%
Applied Global Services	2,285		26	%	2,413		23	%	1,865		20	%
Display	473		5	%	699		7	%	899		9	%
Energy and Environmental Solutions	425		5	%	1,990		19	%	1,481		15	%
Total	$	8,719	100	%	$	10,517	100	%	$	9,549	100	%

Silicon Systems Group Segment

The Silicon Systems Group segment develops, manufactures and sells a wide range of manufacturing equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs). Most chips are built on a silicon wafer base and include a variety of circuit components, such as transistors and other devices, that are connected by multiple layers of wiring (interconnects). Applied offers systems that perform most of the primary processes used in chip fabrication, including atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), electrochemical deposition (ECD), rapid thermal processing (RTP), ion implantation, chemical mechanical planarization (CMP), wet cleaning, and wafer metrology and inspection, as well as systems that etch or inspect circuit patterns on masks used in the photolithography process. Applied’s semiconductor manufacturing systems are used by integrated device manufacturers and foundries to build and package memory, logic and other types of chips.

Most chips are currently fabricated using 32 nanometer (nm) and larger linewidth dimensions, although Applied is also working with customers on leading-edge technology for advanced nodes using 28nm and smaller dimensions. To build a chip, the transistors, capacitors and other circuit components are first created on the surface of the wafer by performing a series of processes to deposit and selectively remove portions of successive film layers. Similar processes are then used to build the layers of wiring structures on the wafer. As the density of the circuit components increases to enable greater computing capability in the same or smaller physical area, the complexity of building the chip also increases, necessitating more process steps to form smaller structures and more intricate wiring schemes. A typical, simplified process sequence for building the wiring or interconnect portion of a chip involves initially depositing a dielectric film layer onto the base layer of circuit components using a CVD system. An etch system is then used to create openings and patterns in the dielectric layer. To form the metal interconnects, these openings and patterns are filled with conducting material using PVD and ECD technologies. A CMP step then polishes the wafer to achieve a flat surface. Additional deposition, etch and CMP steps are then performed to build up the layers needed to complete the interconnection of the circuit elements. Advanced chip designs require more than 500 steps involving these and other processes to complete the manufacturing cycle.

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Today's advanced interconnects are made using copper as the main wiring material. Copper has low resistance and can carry a large amount of current in a small area, which allows signals to travel quickly. Applied is the leading supplier of systems for manufacturing copper-based interconnects, including equipment for depositing, etching and planarizing these multi-layer structures. In 2012, the Company introduced the Applied Endura Amber™ PVD system, which uses innovative copper reflow technology to achieve rapid, void-free fill of interconnect structures at virtually any device node.

To increase the speed of interconnect signals even further, low dielectric constant (low k) films are used to insulate the copper wiring. Applied also leads the industry in providing systems for depositing low k dielectric films. In 2012, the Company launched the Applied Producer^® Onyx™ process, an innovative film treatment that optimizes the molecular structure of low k films to enable higher device performance and longer battery life.

The transistor is another key area of the chip where semiconductor manufacturers are improving their device designs to enhance performance. Applied has the industry’s largest portfolio of technically advanced products for building smaller and faster transistors. One method of enhancing chip performance is strain engineering, a technique that stretches or compresses the space between atoms, allowing electrical current to flow more quickly. Multiple strain films are typically used in advanced devices since they have an additive effect on increasing transistor speed. Applied has a comprehensive portfolio of systems to enable these applications using CVD and epitaxial deposition technologies.

Major chipmakers are integrating new high dielectric constant (high-k) and metal materials and processes in their transistor gate structures to increase chip performance and reduce power consumption. Applied has a comprehensive portfolio of fully characterized processes for building these high-k/metal gates. These solutions include an integrated dielectric gate stack tool that combines four critical processes in a single system, a portfolio of metallization technologies using ALD and PVD, and an innovative high temperature etch system.

To address the need for higher performance in a smaller space driven by new consumer products, a new type of chip packaging is emerging, known as three-dimensional (3D) ICs. Providing greater functionality in a smaller footprint, 3D ICs stack multiple chips together and electrically connect them using deep holes, called through-silicon via (TSV) structures. Applied has the industry’s most comprehensive line of production-proven systems and processes required for the majority of advanced packaging manufacturing steps, including etch, CVD, PVD, ECD, wafer cleaning and CMP systems. In 2012, the Company introduced the Applied Producer Optiva™ CVD system, which employs ultra-low process temperatures to deposit conformal insulating liner films for TSVs. The Optiva system is also used to manufacture advanced image sensors used in smartphones, tablet PCs and high-end cameras, covering the microlens with a tough, thin, transparent film layer that boosts the low-light performance of the sensor while improving its durability.

Some chip manufacturers have announced that they will be employing new manufacturing methods to enhance chip performance, one of which is based on new transistor designs that replace the traditional two-dimensional gate with a thin 3D gate. This new structure, targeted for the 22nm technology node and below, improves the performance and energy efficiency of the chip. The Applied Centura Conforma™ system uses conformal plasma doping technology to modify the electrical properties of 3D and planar transistor structures. Chip manufacturers are also beginning to employ 3D architectures in advanced memory chips to provide higher-density storage capability. These structures require the precise etching of exceptionally deep and narrow structures. In 2012, the Company launched its Applied Centura® Avatar™ dielectric etch system that can etch holes and trenches with up to 80:1 depth-to-width aspect ratios.

Most of Applied’s semiconductor equipment products are single-wafer systems with multiple process chambers attached to a base platform. This enables each wafer to be processed separately in its own environment, allowing precise process control, while the system’s multiple chambers enable simultaneous, high productivity manufacturing. Applied sells most of its single-wafer, multi-chamber systems on six basic platforms: the Endura^®,, Centura^®, Producer^®, Raider^®, VIISta^® and Vantage^® platforms. These platforms support ALD, CVD, ECD, PVD, etch, ion implantation, and RTP technologies.

Over time, the semiconductor industry has migrated to increasingly larger wafers to build chips. The predominant or common wafer size used today for volume production of advanced chips is 300 millimeter (mm), or 12-inch, wafers. Applied offers a comprehensive range of 300mm systems through its Silicon Systems Group segment. Applied also offers earlier-generation 200mm systems, as well as products and services to support all of its systems, which are reported under its Applied Global Services segment.

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The following summarizes the portfolio of products and their associated process technology areas reported under the Silicon Systems Group segment.

Deposition

Deposition is a fundamental step in fabricating a chip. During deposition, layers of dielectric (an insulator), barrier, or electrically conductive (typically metal) films are deposited or grown on a wafer. Applied provides equipment to perform four types of deposition: ALD, CVD, ECD and PVD. In addition, Applied’s RTP systems can be used to perform certain types of dielectric deposition.

Atomic Layer Deposition

ALD is an advanced technology in which atoms are deposited one layer at a time to build chip structures. This technology enables customers to fabricate thin films of either conducting or insulating material with uniform coverage in nanometer-sized structures. One of the most critical areas of the transistor is its gate, which is built by depositing layers of dielectric films. At the 22nm node and below, these film layers are so thin that they must be atomically engineered. The Applied Centura Integrated Gate Stack system features advanced ALD technology that builds ultrathin high-k film layers less than 2nm in thickness — about one hundred thousandth the width of a human hair.

Chemical Vapor Deposition

CVD is used to deposit dielectric and metal films on a wafer. During the CVD process, gases that contain atoms of the material to be deposited react on the wafer surface, forming a thin film of solid material. Films deposited by CVD may be silicon oxide, single-crystal epitaxial silicon, amorphous silicon, silicon nitride, dielectric anti-reflective coatings, low k dielectric (for highly-efficient insulating materials), aluminum, titanium, titanium nitride, polysilicon, tungsten, refractory metals or silicides. Applied offers the following CVD products and technologies:

The Applied Producer CVD platform — This high-throughput platform features Twin-Chamber^® modules that have two single-wafer process chambers per unit. Up to three Twin-Chamber modules can be mounted on each Producer platform, giving it a simultaneous processing capacity of six wafers. Many dielectric CVD processes can be performed on this platform. The highest productivity model of this system is the Applied Producer GT, which features fast wafer handling performance and compact design.

Low k Dielectric Films — Low k dielectric materials are used in copper-based chip designs to further improve interconnect speed. Using conventional CVD equipment, the Applied Producer Black Diamond^® family of low k systems provides customers with a proven, cost-effective way to integrate a variety of low k films into advanced interconnect structures. The Company's latest third-generation low k technologies are featured on the Applied Producer Black Diamond 3 system and Applied Producer Nanocure 3 system. Together, these products are designed to enable smaller, higher performance and more power-efficient devices at 22nm and below.

Lithography-Enabling Solutions — Applied offers several technologies on the Producer system to help chipmakers extend their current 193nm lithography tools, including a line of Applied APF^® (advanced patterning film) films and Applied DARC^® (dielectric anti-reflective coating) films. Together, they provide a film stack with the precise dimensional control and compatibility needed to cost-effectively pattern nano-scale features without additional integration complexity.

Gap Fill Films — There are many steps during the chipmaking process in which very small and deep, or high aspect ratio (HAR), structures must be filled void-free with a dielectric film. Many of these applications include the deposition of silicon oxides in substrate isolation structures, contacts, and interconnects. Applied's most advanced gap fill system is its Applied Producer Eterna™ FCVD system. Targeted for 20nm and below chips, the Eterna system delivers a liquid-like film that flows freely into virtually any structure to provide void-free dielectric fill.

Strain Engineering Solutions — The Applied Producer HARP™ system plays a key role in enhancing transistor performance, enabling chipmakers to boost chip speed by depositing strain-inducing dielectric films. Offering the industry’s first integrated stress nitride deposition and ultraviolet (UV) cure solution, the Applied Producer Celera CVD delivers benchmark levels of high-stress tensile silicon nitride films. The Company also offers the Applied Centura SiNgenPlus low pressure CVD system for low temperature silicon nitride films. Used together, and in conjunction with silicon germanium (SiGe) films using Applied’s epitaxial deposition technologies, these systems can provide additive strain engineering benefits.

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Through-Silicon Via Films — Applied has a comprehensive portfolio of products for TSV fabrication, including the Applied Producer InVia™ system. This product uses a unique process to deposit the critical oxide liner film layer in HAR TSV structures, enabling robust electrical isolation of the TSV, which is vital for reliable device performance. For applications where higher temperatures can damage the manufacturing process, the Applied Producer Avila™ CVD system and Applied Producer Optiva CVD system allow high quality dielectric film deposition at stable substrate temperatures at a low cost of ownership.

Epitaxial Deposition — Epitaxial silicon (epitaxy or epi) is a layer of pure silicon grown in a uniform crystalline structure on the wafer to form a high quality base for the device circuitry. Epi technology is used in an increasing number of integrated circuit devices in both the wafer substrate and transistor areas of a chip to enhance speed. The Applied Centura Epi system integrates pre- and post-epi processes on the same system to improve film quality and reduce production costs. This system is also used for SiGe epi technology, which reduces power usage and increases speed in certain types of advanced chips. For emerging transistor designs, the Applied Centura RP Epi system offers selective epi processes to enable faster transistor switching through strain engineering techniques.

Polysilicon Deposition — Polysilicon is a type of silicon used to form portions of the transistor structure within the integrated circuit device. The Applied Centura Polygen™ LPCVD system is a single-wafer, multi-chamber product that deposits thin polysilicon films at high temperatures to create transistor gate structures. To address the challenging requirements of shrinking gate dimensions, the Applied Centura DPN Gate Stack system integrates chambers for decoupled plasma nitridation (DPN), RTP anneal, and polysilicon deposition on one platform to enable superior film quality and material properties.

Tungsten Deposition — Tungsten is used in the contact area of a chip that connects the transistors to the wiring circuitry. In aluminum-based devices, tungsten is also used in the structures that connect the multiple layers of aluminum wiring. Applied has two products for depositing tungsten: the Applied Centura Sprint^® Tungsten CVD system for 90nm and below devices and the Applied Centura iSprint ALD/CVD system for more advanced applications. The latter product combines ALD technology and CVD chambers on the same platform.

Electrochemical Deposition

Electrochemical deposition is a process by which metal atoms from a chemical fluid (an electrolyte) are deposited on the surface of an immersed object. Its main application in the semiconductor industry is to deposit copper in interconnect wiring structures. This process step follows the deposition of barrier and seed layers which prevent the copper from contaminating other areas of the device, improve the adhesion of the copper film and enable electrodeposition to occur. Applied offers two ECD systems: the Applied Raider GT ECD system for electroplating advanced chip interconnect structures, and the Applied Raider S ECD system for advanced TSV packaging applications.

Physical Vapor Deposition

PVD is a physical process in which atoms of a gas, such as argon, are accelerated toward a metal target. The metal atoms chip off, or sputter away, and are then deposited on the wafer. The Applied Endura PVD system offers a broad range of advanced metal deposition processes, including aluminum, aluminum alloys, cobalt, titanium/titanium nitride, tantalum/tantalum nitride, tungsten/tungsten nitride, nickel, vanadium and copper. Introduced 22 years ago, the Company's Applied Endura platform is the most successful metal deposition system in the history of the semiconductor industry.

The Applied Endura CuBS (copper barrier/seed) PVD system is widely used by customers for fabricating copper-based chips. Using PVD technology, the system deposits a tantalum-based barrier film that prevents copper material from entering other areas of the device and then a copper seed layer that primes the structure for the subsequent deposition of bulk copper. The Applied Endura CuBS RFX PVD system extends cost-effective CuBS technology to the 22nm node. The Applied Endura Avenir™ RF PVD system sequentially deposits the multiple metal film layers that form the heart of the industry’s new, faster, metal gate transistors. The Applied Endura iLB PVD/ALD system advances the state-of-the-art in ALD technology, enabling customers to shrink their speed-critical contact structures for 20nm and below devices.

Applied’s Endura system has also been used for many years in back-end applications to deposit metal layers before final bump or wire bonding packaging steps are performed. Additionally, the Applied Charger™ UBM PVD system, which is specifically designed for under-bump metallization (UBM) and other back-end processes, features linear architecture for reliable performance and very high productivity at a low cost per wafer.

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Etch

Etching is used many times throughout the integrated circuit manufacturing process to selectively remove material from the surface of a wafer. Before etching begins, the wafer is coated with a light-sensitive film, called photoresist. A photolithography process then projects the circuit pattern onto the wafer. Etching removes material only from areas dictated by the photoresist pattern. Applied offers a wide range of systems for etching dielectric, metal, and silicon films to meet the requirements of advanced processing.

Applied’s Producer Etch system utilizes the Twin-Chamber Producer platform to target cost-sensitive dielectric etch applications. To address advanced dielectric etch applications, the Applied Centura Enabler^® E5 Etch system enables customers to create the 40:1 HAR contact features that are critical to the yield and performance of 32nm and below DRAM and Flash memory chips. The Applied Centura Carina™ system uses innovative, high-temperature technology to deliver the etch capability essential for scaling logic and memory devices with high-k/metal gates at 45nm and below.

For etching silicon, the Applied Centris AdvantEdge™ Mesa™ system features eight process chambers for high wafer output and proprietary system intelligence software to assure every process on every chamber precisely matches. The system also saves on power, water and gas consumption, helping customers to lower operating costs and support their sustainable manufacturing initiatives. The Applied Centura Mariana™ Trench Etch system provides customers with the capability to scale DRAM capacitors by enabling the etching of 80:1 aspect ratio structures. The Applied Centura Silvia™ system is specifically designed for etching small, deep holes for TSV applications in 3D-ICs. For etching metals, the Applied Opus™ AdvantEdge Metal Etch system uses an optimized 5-chamber platform configuration that enables customers to extend aluminum interconnect technology and productivity for flash and DRAM memory applications.

Rapid Thermal Processing

RTP is a process in which a wafer is subjected to rapid bursts of intense heat that can take the wafer from room temperature to more than 1,000 degrees Celsius in less than 10 seconds. A rapid thermal process is used mainly for annealing, which modifies the properties of deposited films. The Applied Centura Radiance^®Plus and Applied Vantage RadOx™ RTP systems feature advanced RTP technology with differing platform designs. While the multi-chamber Centura platform offers exceptional process flexibility, the streamlined two-chamber Vantage platform is designed for dedicated high-volume manufacturing. These single-wafer RTP systems are also used for growing high quality oxide and oxynitride films, deposition steps that traditional large batch furnaces can no longer achieve with the necessary precision and control.

Applied’s latest RTP systems address the critical need for controlling wafer temperature to increase chip performance and yield. The laser-based Applied Vantage Astra™ millisecond anneal system abruptly raises the surface temperature of the wafer locally to modify material properties at the atomic level. The Applied Vantage Vulcan system, the first RTP system to heat the wafer entirely from the backside, brings a new level of precision and control to the anneal process, allowing chipmakers to produce more high performance devices per wafer.

Ion Implantation

Ion implantation is a key technology for forming transistors and is used many times during chip fabrication. During ion implantation, wafers are bombarded by a beam of electrically-charged ions, called dopants, which change the electrical properties of the exposed surface films. These dopants are accelerated to an energy that permits them to penetrate the substrate at a precise quantity and depth. Dopant concentration is determined by controlling the number of ions in the beam and the number of times the wafer passes through the beam; the depth of the dopants is determined by the energy of beam. Ion implantation systems may also be used in other areas of IC manufacturing to modify the material properties of the semiconductor devices, as well as in manufacturing crystalline-silicon solar cells.

As a result of Applied's acquisition of Varian, Applied now offers a comprehensive line of single-wafer ion implantation equipment that covers the entire energy and current range required to manufacture advanced devices. The VIISta 3000XP implanter delivers the angle precision required for advanced high-energy applications, while the VIISta 900XP implanter provides medium current doping and the industry's highest implant productivity. The VIISta PLAD implanter enables manufacturers to rapidly implant high dopant concentrations over the entire wafer using a low-energy process that preserves sensitive circuit features in next-generation devices. In 2012, Applied introduced the VIISta Trident high current ion implanter that provides the precise dose and angle control needed for advanced transistor structures.

With the acquisition of Varian, Applied also acquired ion implantation technology for c-Si cell manufacturing. The Applied Solion^TM ion implanter provides unique advantages over traditional thermal diffusion doping to create higher efficiency p-n junctions, which are the electronic pathways of the cell. The Solion system is based on the successful VIISta ribbon beam architecture and provides the precision and process control needed to support advanced solar cell structures.

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Chemical Mechanical Planarization

The CMP process removes material from a wafer to create a flat (planarized) surface. This process allows subsequent photolithography patterning steps to occur with greater accuracy and enables film layers to build with minimal height variations. Applied has led the industry with its 300mm Applied Reflexion^® LK system, with features such as integrated cleaning, film measurement and process control capabilities. Applied’s latest CMP product, the Applied Reflexion GT system, has an innovative dual-wafer design that increases performance while lowering system cost of ownership in fabricating copper interconnects and tungsten contacts.

Surface Preparation

Cleaning the surface of the wafer is critical to the adhesion and quality of films that are subsequently deposited in the chip fabrication process. Applied offers several surface preparation systems. The Applied Raider SP tool can incorporate several types of cleaning methods, including spray, vapor, immersion, megasonics, and anneal technologies, with automated single or dual-side wafer processing for high volume manufacturing.

Metrology and Wafer Inspection

Applied offers several products for measuring features and inspecting defects on the wafer during various stages of the fabrication process. These systems enable customers to characterize and control critical dimension (CD) and defect issues, especially at advanced generation technology nodes.

Critical Dimension and Defect Review Scanning Electron Microscopes (CD-SEMs and DR-SEMs)

Scanning electron microscopes (SEMs) use an electron beam to form images of microscopic features of a patterned wafer at extremely high magnification. Applied’s SEM products provide customers with full automation, along with the high accuracy and sensitivity needed for measuring very small CDs. The Applied VeritySEM^® 4i metrology system uses proprietary SEM imaging technology to enable precise control of the lithography and etching processes, measuring CDs at a precision of less than 0.3nm. Applied’s OPC Check™ software for the VeritySEM system performs automated qualification of OPC-based (optical proximity correction) chip designs, significantly reducing mask (see Mask Making section below) verification time over conventional manual methods.

DR-SEMs review defects on the wafer (such as particles, scratches or residues) that are first located by a defect detection system and then classify the defects to identify their source. The high-throughput, fully automatic Applied SEMVision™ Defect Analysis products enable customers to use this technology as an integral part of their production lines to analyze defects as small as 30nm with industry-leading throughput.

Wafer Inspection

Using deep ultraviolet (DUV) laser-based technology, defects can be detected on patterned wafers (wafers with printed circuit images) as they move between processing steps. Defects include particles, open circuit lines, and shorts between lines. The Applied UVision^® 5 wafer inspection system detects yield-limiting defects in the critical patterning layers of 22nm and below logic and memory devices. Applied also offers the Applied DFinder system, the first darkfield wafer inspection system to use DUV laser scanning to detect particles as small as 40nm in interconnect layers.

Mask Making

Masks are used by photolithography systems to transfer microscopic circuit designs onto wafers. Since an imperfection in a mask may be replicated on the wafer, the mask must be virtually defect-free. Applied provides systems for etching and inspecting masks.

Applied's Tetra™ line of systems has been used by mask makers worldwide to etch the majority of high-end masks over the last five years. The Applied Centura Tetra EUV (extreme ultraviolet) Advanced Reticle Etch system is an advanced etch tool for fabricating leading-edge masks at 22nm and below. The Applied Aera3™ Mask inspection system also addresses the challenges of detecting defects on 22nm masks, using sophisticated aerial imaging technology that allows users to immediately see how the pattern on the mask will appear on the wafer, revealing only the defects most likely to print and significantly reducing inspection time. These systems also address the challenge of fabricating emerging EUV lithography masks.

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Applied Global Services Segment

The Applied Global Services segment encompasses products and services designed to improve the performance and productivity, and reduce the environmental impact, of the fab operations of semiconductor, LCD, and solar PV manufacturers. The in-depth expertise and best known methods of Applied’s extensive global support infrastructure enable Applied to continuously support customers’ production requirements. Trained customer engineers and process support engineers are deployed in more than a dozen countries. These engineers are usually located at or near customers’ fab sites and service over 33,000 installed Applied systems, as well as non-Applied systems. Applied offers the following general types of services and products under the Applied Global Services segment:

Fab and Equipment Services — Applied offers a portfolio of fab-wide operations services to maintain and optimize customers’ fabrication facilities. Applied Performance Services offers customers comprehensive equipment support with performance-based pricing and predictable costs to enable improved cost of ownership. Included in this program is Applied’s ExpertConnect remote diagnostic capability, providing expert support around the clock. In addition to these value-added services, Applied offers its FabVantage™ team of technology, equipment and engineering experts who provide key insights to helping customers solve some of their most difficult manufacturing challenges.

Applied also offers its Total Parts Management program with spare parts manufactured to Applied’s strict technical specifications and quality standards.

In addition, Applied offers a wide range of products and services to extend the productive life of 200mm semiconductor fabs, including new and remanufactured 200mm equipment, system enhancements and fab transition services. Designed to maximize productivity and lower cost of ownership, these products also assist customers in implementing green manufacturing solutions. Applied’s 200mm systems are available in a broad range of production-proven technologies, including CVD, PVD, etch, implant, RTP, CMP, epitaxy, metrology, and inspection tools.

Automation Systems — Applied offers automated factory-level and tool-level control software systems for semiconductor, LCD, and solar PV manufacturing facilities. These enterprise solutions include manufacturing execution systems (MES) to automate the production of wafers and LCD and solar substrates, advanced process control systems, and scheduling and materials handling control systems. The Applied SmartFactory™ MES software is a factory automation solution designed to help accelerate the production ramp of emerging technologies for solar PV, chip-packaging, and light-emitting diode (LED) applications.

Applied also offers computerized maintenance management systems, performance tracking, and modeling and simulation tools for improving asset utilization. Applied’s E3™ equipment engineering system solution, for example, integrates all critical equipment automation and process control components. The Applied SmartSched™ system is the semiconductor industry’s first predictive scheduling solution for optimizing the movement of wafers during the lithography process to reduce cycle time and increase tool utilization.

Thin Film Solar - As a result of Applied's restructuring of its Energy and Environmental Solutions segment in fiscal 2010, the Company discontinued sales to new customers of its fully-integrated SunFab™ thin film solar production lines, but continues to support existing SunFab customers with services, upgrades and capacity increases through the Applied Global Services segment. Thin film solar technologies are suitable for large-scale applications, such as utility scale solar farms and commercial rooftops, where space is not a constraint.

Display Segment

Applied’s products for manufacturing thin film transistor liquid crystal displays (TFT- LCDs) for televisions, personal computers (PCs), tablet PCs, smartphones, and other consumer-oriented electronic applications are reported under its Display segment. While similarities exist between the technologies utilized in chipmaking and LCD fabrication, the most significant differences are in the size and composition of the substrate. Substrates used to manufacture LCD panels can be more than 120 times larger in area than 300mm wafers and are made of glass, while wafers used in semiconductor fabrication are made of silicon.

Applied supplies a wide range of systems that process and test different glass substrate sizes. To meet consumer demand for larger, more cost-effective LCD TVs, Applied’s latest generation (Gen) 10 systems can process substrates sized at approximately 2.85 x 3.05 meters, with each substrate enabling the production of up to six 65-inch LCD TV screens.

Applied is also extending its core LCD technology to enable ultra-high resolution displays for next-generation smartphones, tablet PCs, and organic LED (OLED) TVs. These higher-performance displays are fabricated using newer materials such as low-temperature polysilicon (LTPS) and metal oxide films in the transistor layer of the panel to gain significantly faster switching speeds. In 2012, Applied added to its line of plasma-enhanced CVD (PECVD) systems for depositing LTPS films with the AKT-15K PX, AKT-25K PX, and AKT-55K PX systems. These CVD systems are offered for a range of display substrate sizes to enable manufacturers to achieve economies of scale.

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In 2012, Applied also introduced technology for fabricating advanced metal oxide-based transistors in displays. The AKT-PiVot™ PVD system, which features rotary cathode array technology, deposits indium gallium zinc oxide (IZGO) film to form the transistor channel. The AKT-PECVD system is used to deposit the dielectric film needed to insulate the transistor gate. Together, these systems offer a cost-effective solution for producing smaller, faster switching pixels to create higher resolution screens.

For manufacturing the color filter of LCD panels, Applied offers the AKT-NEW ARISTO™ system for transparent conductive oxide film deposition. Providing customers with new levels of productivity and flexibility, the Applied AKT-AristoTwin system is used for manufacturing touch-enabled displays. The system features two independent processing tracks on a single system, enabling customers to achieve 50% more capacity using half the manufacturing space.

To complement these systems, Applied also offers a line of electron beam array test (EBT) systems for testing substrates during production for defective pixels and other imperfections, including the Gen-10 AKT-90K EBT product. Featuring one of the industry’s fastest and most accurate pixel test technologies with the lowest operating cost, the EBT systems’ non-contact test technology enables the safe testing of high-value LCD TV panels without damaging or scratching the display.

Energy and Environmental Solutions Segment

The Energy and Environmental Solutions segment includes manufacturing systems to produce products for the generation and conservation of energy. To increase the conversion efficiency and yields of solar PV devices and help reduce the cost per watt of solar-generated electricity, Applied offers manufacturing solutions for wafer-based crystalline silicon (c-Si) applications.

Applied’s portfolio of solar PV wafer and cell fabrication technologies has made it one of the leading suppliers of c-Si equipment worldwide in terms of revenue. In addition to innovative technology, these systems offer key manufacturing benefits to customers in high productivity, advanced ultra-thin wafer handling, and extensive automation.

Wafer manufacturing — Applied’s precision wafering systems crop and square silicon ingots into bricks and slice silicon bricks into thin wafers. These wafers are subsequently processed by cell manufacturing systems to create the PV cells used in making c-Si solar panels. The Applied HCT wire saw cropper and squarer systems cut silicon ingots into bricks with high productivity and minimal silicon loss. The Applied HCT B5 wire saw was designed for large load capacity in volume manufacturing and has a unique four-position architecture that provides load flexibility for optimizing yield and productivity.

Cell manufacturing — Applied offers a comprehensive line of automated metallization and test systems for c-Si cell manufacturing with its Applied Baccini products. These systems include high-precision printing capability for increasing the efficiency of c-Si solar cells. The latest metallization system is the Applied Baccini Pegaso™ platform for next-generation solar cell manufacturing. In addition to increased yield and output, a key feature of the Pegaso system is its proprietary “smart” capabilities that bring a new level of precision and control to the cell manufacturing process. The system’s modular architecture allows customers to rapidly add modules for additional processing capability, while reducing the time, cost, and risk of implementing new cell designs.

Other products offered under the Energy and Environmental Solutions segment include roll-to-roll, vacuum web coating systems for high-performance deposition of a range of films on flexible substrates for functional, aesthetic, or optical properties. The Applied TopMet™ 4450 system is the world’s largest and fastest roll-to-roll machine for depositing ultra-thin aluminum films for flexible packaging applications. The Applied SmartWeb™ system uses PVD technology to deposit critical multi-layer films required for fabricating advanced touch panels in mobile devices and other flexible electronic substrates. The system’s modular design allows up to 12 different thin film layers to be deposited simultaneously on flexible material, enabling complex structures to be created in a single pass.

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Backlog

Applied manufactures systems to meet demand represented by order backlog and customer commitments. 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.

Backlog by reportable segment as of October 28, 2012 and October 30, 2011 was as follows:

	2012				2011
	(In millions, except percentages)
Silicon Systems Group	$	705	44	%	$	913	38	%
Applied Global Services	580		36	%	662		28	%
Display	206		13	%	337		14	%
Energy and Environmental Solutions	115		7	%	480		20	%
Total	$	1,606	100	%	$	2,392	100	%

Applied’s backlog on any particular date 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. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Delays in delivery schedules and/or a reduction of backlog during any particular period could have a material adverse effect on Applied’s business and results of operations.

Manufacturing, Raw Materials and Supplies

Applied’s manufacturing activities consist primarily of assembly, test and integration of various proprietary and commercial parts, components and subassemblies (collectively, parts) that are used to manufacture systems. Applied has implemented a distributed manufacturing model under which 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. Applied uses numerous vendors, including contract manufacturers, to supply parts and assembly services for the manufacture and support of its products. Although Applied makes reasonable efforts to assure that parts are available from multiple qualified suppliers, this is not always possible. Accordingly, some key parts may be obtained from only a single supplier or a limited group of suppliers. Applied seeks to reduce costs and to lower the risks of manufacturing and service interruptions by: (1) selecting and qualifying alternate suppliers for key parts; (2) monitoring the financial condition of key suppliers; (3) maintaining appropriate inventories of key parts; (4) qualifying new parts on a timely basis; and (5) locating certain manufacturing operations in close proximity to suppliers and customers.

Research, Development and Engineering

Applied’s long-term growth strategy requires continued development of new products. The Company’s significant investment in research, development and engineering (RD&E) has generally enabled it to deliver new products and technologies before the emergence of strong demand, thus allowing customers to incorporate these products into their manufacturing plans at an early stage in the technology selection cycle. Applied works closely with its global customers to design systems and processes that meet their planned technical and production requirements. Product development and engineering organizations are located primarily in the United States, as well as in Europe, Israel, Taiwan, and China. In addition, Applied outsources certain RD&E activities, some of which are performed outside the United States, primarily in India. Process support and customer demonstration laboratories are located in the United States, China, Taiwan, Europe, and Israel.

Applied’s investments in RD&E for product development and engineering programs to create or improve products and technologies over the last three years were as follows: $1.2 billion (14 percent of net sales) in fiscal 2012, $1.1 billion (11 percent of net sales) in fiscal 2011, and $1.1 billion (12 percent of net sales) in fiscal 2010. Applied has spent an average of 13 percent of net sales in RD&E over the last five years. In addition to RD&E for specific product technologies, Applied maintains ongoing programs for automation control systems, materials research and environmental control that are applicable to its products.

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Marketing and Sales

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

	2012				2011				2010
	(In millions, except percentages)
Taiwan	2,411		28	%	2,093		20	%	2,750		29	%
China	783		9	%	2,574		24	%	1,557		16	%
Korea	1,897		22	%	1,263		12	%	1,768		19	%
Japan	704		8	%	912		9	%	768		8	%
Southeast Asia	312		3	%	592		5	%	578		6	%
Asia Pacific	6,107		70	%	7,434		70	%	7,421		78	%
United States	1,749		20	%	1,963		19	%	1,147		12	%
Europe	863		10	%	1,120		11	%	981		10	%
Total	$	8,719	100	%	$	10,517	100	%	$	9,549	100	%

Because of the highly technical nature of its products, Applied markets and sells products worldwide almost entirely through a direct sales force. Approximately 80 percent of Applied’s fiscal 2012 net sales were to regions outside of the United States.

General economic conditions impact Applied’s business and financial results. From time to time, the markets in which products are sold experience weak economic conditions that may negatively impact sales. Applied’s business is usually not seasonal in nature, but it is highly cyclical, based on capital equipment investment by major semiconductor, flat panel display, solar PV and other manufacturers. Customers’ expenditures depend on many factors, including: anticipated market demand and pricing for semiconductors, LCDs, solar cells and modules, and other substrates; the development of new technologies; customers’ factory utilization; capital resources and financing; government policies and incentives; and global and regional economic conditions.

Information on net sales to unaffiliated customers and long-lived assets attributable to Applied’s geographic regions is included in Note 16 of Notes to Consolidated Financial Statements. The following companies accounted for at least 10 percent of Applied’s net sales in 2012, 2011, and/or 2010, which were for products in multiple reportable segments.

	2012	2011	2010
Samsung Electronics Co., Ltd.	20%	12%	14%
Taiwan Semiconductor Manufacturing Company Limited	16%	10%	11%
Intel Corporation	*	10%	*

 ________________________

* Less than 10%.

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Competition

The industries in which Applied operates are highly competitive and characterized by rapid technological change. Applied’s ability to compete generally depends on its ability to timely commercialize its technology, continually improve its products and develop new products that meet constantly evolving customer requirements. Significant competitive factors include technical capability and differentiation, productivity and cost-effectiveness. The importance of these factors varies according to customers’ needs, including product mix and respective product requirements, applications, and the timing and circumstances of purchasing decisions. Substantial competition exists in all areas of Applied’s business. Competitors range from small companies that compete with a single product and/or in a single region, to global, diversified companies with a range of products. Applied’s ability to compete requires a high level of investment in RD&E, marketing and sales and global customer support activities. Management believes that many of Applied’s products have strong competitive positions.

The competitive environment for each segment is described below.

The semiconductor industry has been increasingly driven by consumer demand for lower-cost electronic products with increased capability. As a result, products within the Silicon Systems Group segment are subject to significant changes in customer requirements, including transitions to smaller dimensions, new materials and an increasing number of applications. While certain existing technologies may be adapted to new requirements, some applications create the need for an entirely different technological approach. The rapid pace of technological change can quickly diminish the value of current technologies and products and create opportunities for existing and new competitors. Applied offers a broad portfolio of technologically differentiated products that must continuously evolve to satisfy customers’ requirements in order to compete effectively. Applied allocates resources among its numerous product offerings and therefore may decide not to invest in an individual product to the same degree as competitors who specialize in fewer products. There are a number of competitors serving the semiconductor manufacturing equipment industry, with some offering a single product line and others offering multiple product lines. These competitors range from suppliers serving a single region to global, diversified companies. The competitive environment for the Silicon Systems Group in fiscal 2012 reflected continued investment in the semiconductor industry driven by capacity demand for mobile computing. Foundry customers led capacity additions for advanced technology nodes and were the primary drivers for net sales of the Silicon Systems Group.

Products and services within the Applied Global Services segment complement the Silicon Systems Group, Display, and Energy and Environmental Solutions segments’ products, in markets that are characterized by demanding worldwide service requirements and a diverse group of numerous competitors. To compete effectively, Applied offers products and services to improve tool performance, lower overall cost of ownership, and increase the productivity and energy efficiency of customers’ fab operations. Significant competitive factors include productivity, cost-effectiveness, and the level of technical service and support. The importance of these factors varies according to customers’ needs and the type of products or services offered. Industry conditions that affected Applied Global Services’ sales of spares and services in fiscal 2012 were principally semiconductor manufacturers' wafer starts and factory utilization rates.

Products in the Display segment are generally subject to strong competition from a number of major competitors. Applied holds established market positions with its technically-differentiated TFT-LCD manufacturing solutions for PECVD, color filter PVD, PVD array, PVD touch panel, and TFT array testing, although its market position could change quickly due to customers' evolving requirements. The competitive environment for the Display segment in fiscal 2012 was characterized by the weakest level of industry investment in TV manufacturing equipment in recent history, while investment continued in equipment to make touch screen and high-end mobile devices. Important factors affecting the competitive position of Applied's Display products include: industry trends, Applied's ability to innovate and develop new products, and the extent to which Applied's products are technically-differentiated, as well as which customers within a highly concentrated customer base are making capital equipment investments and Applied's existing position at these customers.

Applied's products within the Energy and Environmental Solutions segment compete in several diverse market areas, including primarily the c-Si solar equipment market. All of these markets are characterized by extreme pressure to reduce customers' overall production costs and improve performance. In relation to solar, for fiscal 2012, end-market demand continued to be robust as the industry further reduced manufacturing costs and made conversion efficiency improvements, enabling PV-generated electricity to reach parity with retail electricity rates in an increasing number of areas around the world. However, excess manufacturing capacity relative to end-demand created an exceptionally challenging environment, causing solar cell and wafering customers to defer purchases of new capacity to preserve capital and resulting in some industry consolidation. The rationalization of capacity will be an important factor in determining when supply and demand come back into balance. Adding to market uncertainty are international trade actions against Chinese solar manufacturers commenced in the U.S. and other regions that have resulted in the imposition of sanctions. With respect to its c-Si equipment products, Applied competes with a number of other companies, some of which have significant experience with solar applications and some of which are new entrants to the solar equipment market. The solar industry downturn has affected many of Applied's competitors and customers adversely, with some companies going through extensive financial and organizational restructuring.

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Patents and Licenses

Management believes that Applied’s competitive position significantly depends upon the Company’s research, development, engineering, manufacturing and marketing capabilities, and not just on its patent position. However, protection of Applied’s technological assets through enforcement of its intellectual property rights, including patents, is important. Therefore, Applied’s practice is to file patent applications in the United States and other countries for inventions that Applied considers significant. Applied has a substantial number of patents in the United States and other countries, and additional applications are pending for new inventions. Although Applied does not consider its business materially dependent upon any one patent, the rights of Applied and the products made and sold under its patents, taken as a whole, are a significant element of Applied’s business. In addition to patents, Applied also possesses other intellectual property, including trademarks, know-how, trade secrets, and copyrights.

Applied enters into patent and technology licensing agreements with other companies when management determines that it is in Applied’s best interest to do so. Applied pays royalties under existing patent license agreements for the use, in several of its products, of certain patented technologies that are licensed to Applied. Applied also receives royalties from licenses granted to third parties. Royalties received from or paid to third parties have not been, and are not expected to be, material to Applied’s consolidated results of operations.

In the normal course of business, Applied periodically receives and makes inquiries regarding possible patent infringement. In responding to such inquiries, it may become necessary or useful for Applied to obtain or grant licenses or other rights. However, there can be no assurance that such licenses or rights will be available to Applied on commercially reasonable terms, or at all. If Applied is not able to resolve or settle claims, obtain necessary licenses on commercially reasonable terms, and/or successfully prosecute or defend its position, Applied’s business, financial condition and results of operations could be materially and adversely affected.

Environmental Matters

Applied maintains a number of environmental, health, and safety programs that are primarily preventive in nature. As part of these programs, Applied regularly monitors ongoing compliance with applicable laws and regulations. In addition, Applied has trained personnel to conduct investigations of any environmental, health, or safety incidents, including, but not limited to, spills, releases, or possible contamination.

Compliance with federal, state and local environmental, health, and safety provisions, including, but not limited to, those regulating the discharge of materials into the environment, remedial agreements, and other actions relating to the environment have not had, and are not expected to have, a material effect on Applied’s capital expenditures, competitive position, financial condition, or results of operations.

The most recent report on Applied’s environmental, health, and safety activities can be found in the Company’s latest Citizenship Report on its website at http://www.appliedmaterials.com/about/cr/sustainability. The Citizenship Report is updated periodically. This website address is intended to be an inactive textual reference only. None of the information on, or accessible through, Applied’s website is part of this Form 10-K or is incorporated by reference herein.

Employees

At October 28, 2012, Applied employed approximately 14,500 regular employees and 500 temporary employees. In the high-technology industry, competition for highly-skilled employees is intense. Applied believes that its future success is highly dependent upon its continued ability to attract, retain, and motivate qualified employees. There can be no assurance that Applied will be able to attract, hire, assimilate, motivate, and retain a sufficient number of qualified employees.

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Executive Officers of the Registrant

The following table and notes set forth information about Applied’s executive officers as of November 30, 2012:

Name of Individual	Position
Michael R. Splinter(1)	Chairman of Board of Directors, Chief Executive Officer
Gary E. Dickerson(2)	President
George S. Davis(3)	Executive Vice President, Chief Financial Officer
Randhir Thakur(4)	Executive Vice President, General Manager Silicon Systems
Joseph Flanagan(5)	Senior Vice President, Worldwide Operations and Supply Chain
Mary Humiston(6)	Senior Vice President, Global Human Resources
Manfred Kerschbaum(7)	Senior Vice President, Chief of Staff
Thomas F. Larkins(8)	Senior Vice President, General Counsel and Corporate Secretary
Omkaram Nalamasu(9)	Group Vice President, Chief Technology Officer
Charlie Pappis(10)	Group Vice President, General Manager Applied Global Services
Ali Salehpour(11)	Group Vice President, General Manager Energy and Environmental Solutions and Display Business Groups
Thomas S. Timko(12)	Corporate Vice President, Corporate Controller and Chief Accounting Officer

(1) Mr. Splinter, age 62, has been Chief Executive Officer of Applied since April 2003 and Chairman of the Board of Directors since March 2009. Prior to joining Applied, Mr. Splinter was an executive at Intel Corporation (Intel), a manufacturer of chips and computer, networking and communications products, where Mr. Splinter held a number of positions, including Executive Vice President and Director of Sales and Marketing and Executive Vice President and General Manager of the Technology and Manufacturing Group.

(2) Mr. Dickerson, age 55, was named President of Applied in June 2012, after working on merger integration matters since joining Applied following its acquisition of Varian in November 2011. Mr. Dickerson was Chief Executive Officer and a director of Varian from 2004. Prior to joining Varian in 2004, Mr. Dickerson served 18 years with KLA-Tencor Corporation (KLA-Tencor), a supplier of process control and yield management solutions for the semiconductor and related industries, where he held a variety of operations and product development roles before being appointed Chief Operating Officer in 1999 and then President and Chief Operating Officer in 2002. Mr. Dickerson started his semiconductor career in manufacturing and engineering management at General Motors' Delco Electronics Division and then AT&T, Inc.

(3) Mr. Davis, age 55, has been Executive Vice President, Chief Financial Officer of Applied since December 2009, after serving as Senior Vice President, Chief Financial Officer, since December 2006, and Group Vice President, Chief Financial Officer from November 2006. Previously, he had been Group Vice President, General Manager, Corporate Business Development since March 2005. From November 1999 to February 2005, Mr. Davis served as Vice President and Corporate Treasurer, where he managed Applied’s worldwide treasury operations and was responsible for investments, tax, financial risk management, and trade and export matters. Mr. Davis joined Applied in 1999. Prior to joining Applied, Mr. Davis served 19 years with Atlantic Richfield Company, a global oil, gas and chemical company, in a number of finance and other corporate positions.

(4) Dr. Thakur, age 50, has been Executive Vice President, General Manager Silicon Systems Group since December 2009, after serving as Senior Vice President, General Manager Silicon Systems Group since October 2009. Previously, he was Senior Vice President, General Manager, Thin Film Solar and Display. He was appointed Senior Vice President, General Manager, Strategic Operations when he rejoined Applied in May 2008. He previously was with Applied from 2000 to 2005 in a variety of executive roles including Group Vice President, General Manager for Front End Products. From September 2005 to May 2008, Dr. Thakur served as Executive Vice President of Technology and Fab Operations at SanDisk Corporation, a data storage solutions manufacturer, and as head of SanDisk’s worldwide operations. Prior to joining Applied in 2000, Dr. Thakur served in leadership roles at Steag Electronic Systems, an electronics company, and Micron Technology, Inc., a semiconductor manufacturer.

(5) Mr. Flanagan, age 41, joined Applied as Senior Vice President, Worldwide Operations and Supply Chain in February 2010. Prior to joining Applied, Mr. Flanagan held executive positions in global operations for Nortel Networks Corporation, a telecommunications equipment manufacturer, since 2006, including President of Nortel Business Services from August 2009 to February 2010, and Senior Vice President of Global Operations from August 2007 until August 2009. Previously, Mr. Flanagan held a number of positions from 1993 to 2006 at General Electric Company (GE), a global infrastructure, finance and media company.

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(6) Ms. Humiston, age 47, was named Senior Vice President, Global Human Resources in July 2011. She was Corporate Vice President, Global Human Resources from June 2009 to June 2010 and then promoted to Group Vice President in July 2010. Prior to June 2009, she served as the Corporate Vice President of Human Resources for both the Energy and Environmental Solutions and Display groups. Prior to joining Applied, Ms. Humiston was Vice President of Human Resources at Honeywell International Inc., which provides technologies to address safety, security and energy, from October 2002 to June 2008, with responsibility for various corporate and international organizations. She previously held executive positions with PeoplePC, an internet service provider; Gap, Inc., an apparel retailer; and GE.

(7) Mr. Kerschbaum, age 58, was named Senior Vice President, Chief of Staff in September 2009. Prior to that, he served as Senior Vice President, General Manager, Applied Global Services from January 2005 to September 2009. Mr. Kerschbaum was Senior Vice President, Global Operations from July 2004 to January 2005 and from October 2002 to May 2003. From May 2003 to July 2004, he was Group Vice President, Foundation Engineering and Operations. From January 1996 to October 2002, he held various positions in Applied Materials North America, most recently as Group Vice President, General Manager, Applied Materials North America. Mr. Kerschbaum has served in various other operations, customer service and engineering positions since joining Applied in 1983. Mr. Kerschbaum has announced his intent to retire from the Company in January 2013.

(8) Mr. Larkins, age 51, was named Senior Vice President, General Counsel and Corporate Secretary of Applied in November 2012, with responsibility for global legal affairs, intellectual property and security. Previously, Mr. Larkins was employed by Honeywell International (Honeywell), a diversified global technology and manufacturing company, where he was Vice President, Corporate Secretary and Deputy General Counsel from 2002 until joining Applied.  Mr. Larkins served in various other positions at Honeywell (formerly AlliedSignal) after joining the company in 1997, including Vice President and General Counsel of its Automation and Control Solutions business segment, and General Counsel of its Aerospace Services business unit.

(9) Dr. Nalamasu, age 54, was promoted to Group Vice President, Chief Technology Officer for Applied in January 2012, after serving as Corporate Vice President, Chief Technology Officer since January 2011. Upon joining Applied in June 2006 and until January 2011, Dr. Nalamasu was an Appointed Vice President of Research and served as Deputy Chief Technology Officer and General Manager for Advanced Technologies Group. From 2002 to 2006, Dr. Nalamasu was a NYSTAR distinguished professor of Materials Science and Engineering at Rensselaer Polytechnic Institute, where he also served as Vice President of Research from 2005 to 2006. Prior to that, he held various R&D leadership positions at Bell Labs and later Lucent Technologies, Inc., a telecommunications company, for 17 years.

(10) Mr. Pappis, age 51, has been Group Vice President and General Manager of Applied Global Services since September 2009. He previously held positions in Applied Global Services as Corporate Vice President and General Manager for the Semiconductor Service Solutions group and as general manager for Equipment Productivity Services. He has held various other management positions since joining Applied in 1986.

(11) Mr. Salehpour, age 51, joined Applied in November 2012 as Group Vice President, General Manager Energy and Environmental Solutions and Display Business Groups. Prior to Applied, Mr. Salehpour worked at KLA-Tencor for 16 years, where he served most recently as Senior Vice President and General Manager SFS-ADE Divisions from 2008. Previous positions at KLA-Tencor included President North America Field Operations from 2005 to 2008, and Senior Vice President and General Manager Intel Business Unit from 2001 to 2005. Prior to KLA-Tencor, Mr. Salehpour worked in the Schlumberger Test Systems unit of Schlumberger Ltd. in marketing, account management and engineering roles.

(12) Mr. Timko, age 44, joined Applied in March 2010 as Corporate Vice President, Corporate Controller and Chief Accounting Officer. From June 2006 until March 2010, Mr. Timko was with Delphi Automotive LLP, a supplier to the automotive, computing, communications, energy and consumer accessories markets, where he was most recently Chief Accounting Officer and Controller. He served as Assistant Controller for The Interpublic Group of Companies, Inc., a global provider of advertising and marketing services, from December 2004 to June 2006, and previously at Dover Corporation, a manufacturer of industrial products. Mr. Timko began his career in 1991 with PricewaterhouseCoopers LLC, a provider of audit and assurance, tax and advisory services, and is a certified public accountant.

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Available Information

Applied’s website is http://www.appliedmaterials.com. Applied makes available free of charge, on or through its website, its annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the SEC. This website address is intended to be an inactive textual reference only. None of the information on, or accessible through, Applied’s website is part of this Form 10-K or is incorporated by reference herein.

Item 1A: Risk Factors

The following factors could materially affect Applied’s business, financial condition or results of operations and should be carefully considered in evaluating the Company and its business.

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, 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. More recently, consumer buying patterns for electronic products, combined with growing customer concentration, have led to a seasonality effect in demand for semiconductor equipment, particularly from foundry customers.

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 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. 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. If Applied does not accurately forecast and timely and appropriately adapt to changes in its business environment, Applied’s business, financial condition and results of operations may be materially and adversely affected.

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

Uncertain global economic conditions and slowing or negative growth in China, Europe, and the United States, along with continuing difficulties in the financial markets, national debt and fiscal concerns in various regions (including a potential “fiscal cliff” in the U.S. if remedial legislation is not enacted by December 31, 2012), 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 a market recovery. 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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If Applied does not timely and appropriately adapt to changes resulting from the uncertain macroeconomic environment and industry conditions, or to difficulties in the financial markets, Applied’s business, financial condition and results of operations may be materially and adversely affected.

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, including:

• the nature and timing 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 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, particularly when financial market conditions are difficult;

• 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, LCDs 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.

If Applied does not successfully manage the risks resulting from the ongoing changes in the semiconductor, flat panel display, solar and related industries, its business, financial condition and results of operations could be materially and adversely affected.

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 that industry in addition to the general industry changes described in the preceding risk factor, including:

• the increasing cost of research and development due to many factors, including: decreasing linewidths on a chip, the use of new materials such as cobalt and yttrium, 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’ decreasing capital expenditures as a percentage of revenue, and their increasing capital investment in market segments that Applied does not serve, such as lithography, or segments where Applied's products have lower relative market share;

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

• 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;

• potential shifts in sourcing strategies by a major computer and electronics company that may impact the equipment requirements of Applied's foundry customers;

• the concentration of new wafer starts in Korea, 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 proposed 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. Recently, 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. If Applied does not successfully manage the risks resulting from these and other ongoing changes occurring in the semiconductor industry, its business, financial condition and results of operations could be materially and adversely affected.

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. Current global solar PV production capacity exceeds anticipated near-term end-use demand, causing customers to significantly reduce or delay investments in manufacturing capacity and new technology, or to cease operations. In addition to the general industry changes described above in the third risk factor, 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;

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• the increasing number of government-affiliated entities in China that are becoming customers;

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

• increasing solar industry challenges of solar panel manufacturing overcapacity and weaker operating performance and outlook, leading to the increasing deterioration of the solar equipment market and of the financial condition of Applied's customers.

If Applied does not successfully manage the risks resulting from the ongoing changes occurring in the solar industry, its business, financial condition and results of operations could be materially and adversely affected.

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 LCD manufacturers, the concentrated nature of LCD end-use applications, and excess production capacity relative to end-use demand. Industry growth has depended primarily on consumer demand for increasingly larger and more advanced LCD TVs, which demand has slowed significantly, and more recently on demand for smartphones and other mobile devices, which demand is highly sensitive to cost and improvements in technologies and features. In addition to the general industry changes described above in the third risk factor, the display industry is characterized by ongoing changes particular to that industry, including:

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

• the increasing 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 LCD technology end-use applications and growth drivers.

If Applied does not successfully manage the risks resulting from the ongoing changes occurring in the display industry, its business, financial condition and results of operations could be materially and adversely affected.

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 increasingly 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 sales and marketing strategies that 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.

If Applied does not successfully manage these challenges, its business, financial condition and results of operations could be materially and adversely affected.

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 fiscal 2012, three semiconductor manufacturers accounted for 60 percent of Silicon Systems Group net sales and two customers accounted for 36 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 fiscal 2012, customers in Taiwan accounted for 32 percent of net sales for the Silicon Systems Group segment, while customers in Korea and the U.S. together constituted 49 percent; customers in Taiwan and China accounted for a total of 66 percent of net sales for the Display segment; and customers in China accounted for 49 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 may result in changes in 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, which may result in added complexities in managing customer relationships and transactions and make it more challenging for Applied’s business units to generate organic growth. In addition, 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. These factors could have a material adverse effect on Applied’s business, financial condition and results of operations.

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

In fiscal 2012, approximately 80 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, Italy and Switzerland. 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 in a particular country, such as Korea and China;

• variations among, and changes in, local, regional, national or international laws and regulations (including intellectual

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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;

• 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;

• reliance on various information systems, data centers and software applications to conduct many aspects of Applied's business, which may be vulnerable to cyberattacks by third parties or breached due to employee error, misuse or other causes that could result in business disruptions, misappropriation of confidential information, or other adverse consequences in the event that Applied’s firewalls and security processes and practices are ineffective;

• 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, LCDs 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. These challenges may materially and adversely affect Applied’s business, financial condition and results of operations.

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;

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• 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;

• 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.

If Applied does not successfully manage the risks resulting from its diversification and entry into new markets and industries, its business, financial condition and results of operations could be materially and adversely affected.

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 adverse conditions in the credit and financial markets 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 (such as Israel, which has recently experienced increased geopolitical conflict).

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. Any or all of these factors could materially and adversely affect Applied’s business, financial condition and results of operations.

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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, competitors’ hiring practices, 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. If Applied does not successfully attract, retain and motivate key employees with appropriate skills, Applied may be unable to capitalize on its opportunities and its business, financial condition and operating results may be materially and adversely affected.

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. In November 2011, Applied completed its acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian), which was the Company’s largest acquisition to date. 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 appropriateness of valuation and other transaction terms;

• 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;

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• 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. Mergers and acquisitions and strategic investments are inherently subject to significant risks. If Applied does not successfully manage the risks associated with acquisitions and strategic investments, its business, financial condition and results of operations could be materially and adversely affected.

Applied is exposed to various risks related to legal proceedings or claims and protection of intellectual property rights.

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.

In February 2010, the Seoul Prosecutor’s Office for the Eastern District in Korea indicted certain employees of Applied Materials Korea (AMK), including the former head of AMK who at the time of indictment was a vice president of Applied Materials, Inc., along with employees of several other companies, alleging the improper receipt and use of confidential information of Samsung Electronics Co., Ltd. (Samsung), a major customer. Hearings on these matters have been ongoing. On November 22, 2012, the Court held the last hearing and scheduled the announcement of its decision for January 24, 2013.

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. If Applied is not able to favorably resolve or settle legal proceedings or claims, or in the event of any adverse findings against Applied or any of its employees, Applied’s business, financial condition and results of operations could be materially and adversely affected and Applied may suffer harm to its reputation.

In addition, 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. 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. 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. Applied previously entered into an arrangement with one of its competitors to decrease the risk of patent infringement lawsuits in the future. There can be no assurance that the intended results of this arrangement will be achieved or that Applied will be able to adequately protect its intellectual property rights with the restrictions associated with the arrangement. If Applied is not able to favorably resolve or settle claims, obtain or enforce intellectual property rights, obtain necessary licenses on commercially reasonable terms, and/or successfully prosecute or defend its intellectual property position, Applied’s business, financial condition and results of operations could be materially and adversely affected and Applied may suffer harm to its reputation.

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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.

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, any or all of which could materially and adversely affect Applied’s business, financial condition and results of operations.

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 fourth quarter of fiscal 2012, Applied concluded that the carrying value of the Energy and Environmental Solutions reporting unit exceeded its fair value and accordingly recorded a $421 million goodwill impairment charge. Applied may be required to record future charges to earnings during the period in which an impairment of goodwill or amortizable intangible assets is determined to exist, which could materially and adversely affect Applied’s results of operations.

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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 increasingly international nature of its business, Applied is transitioning certain manufacturing, supply chain, and other operations into Asia, bringing these activities closer to customers. These changes are expected to result in a reduction of future 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, which could materially and adversely affect Applied’s financial condition and results of operations.

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, each of which could have a material adverse effect on Applied’s business, financial condition and results of operations.

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. If Applied is found by a court or regulatory agency not to be in compliance with applicable laws, rules or regulations, Applied could be subject to legal or regulatory sanctions, the public’s and customers’ perception of Applied could decline, and Applied’s business, financial condition and results of operations could be materially and adversely affected.

Item 1B: Unresolved Staff Comments

None.

28

Item 2: Properties

Information concerning Applied’s principal properties at October 28, 2012 is set forth below:

Location	Type	Principal Use	Square Footage	Ownership
Santa Clara, CA	Office, Plant & Warehouse	Headquarters; Marketing; Manufacturing; Distribution; Research, Development, Engineering; Customer Support	1,512,000 150,000	Owned Leased
Austin, TX	Office, Plant & Warehouse	Manufacturing	1,719,000 145,000	Owned Leased
Rehovot, Israel	Office, Plant & Warehouse	Manufacturing; Research, Development, Engineering; Customer Support	417,000 5,000	Owned Leased
Alzenau, Germany	Office, Plant & Warehouse	Manufacturing; Research, Development and Engineering	281,000	Leased
Kalispell, MT	Office, Plant & Warehouse	Manufacturing; Research, Development, Engineering; Customer Support	252,000	Owned
Cheseaux, Switzerland	Office, Plant & Warehouse	Manufacturing; Research, Development, Engineering; Customer Support	165,000	Leased
Treviso, Italy	Office, Plant & Warehouse	Manufacturing; Research, Development, Engineering; Customer Support	150,000	Leased
Singapore	Office, Plant & Warehouse	Manufacturing and Customer Support	392,000 5,000	Owned Leased
Gloucester, MA	Office, Plant & Warehouse	Manufacturing; Research, Development, Engineering; Customer Support	319,000 135,000	Owned Leased
Tainan, Taiwan	Office, Plant & Warehouse	Manufacturing and Customer Support	320,000	Owned
Xi’an, China	Office, Plant & Warehouse	Research, Development and Engineering	567,000	Owned
Hsinchu, Taiwan	Office & Warehouse	Customer Support	93,000 6,000	Owned Leased
Shanghai, China	Office & Warehouse	Customer Support	105,000	Leased

Because of the interrelation of Applied’s operations, properties within a country may be shared by the segments operating within that country. Products in the Silicon Systems Group are manufactured in Austin, Texas; Gloucester, Massachusetts; Rehovot, Israel; and Singapore. Remanufactured products in the Applied Global Services segment are produced primarily in Austin, Texas. Products in the Display segment are manufactured in Santa Clara, California; Alzenau, Germany; and Tainan, Taiwan. Products in the Energy and Environmental Solutions segment are primarily manufactured in Alzenau, Germany; Cheseaux, Switzerland; and Treviso, Italy.

In addition to the above properties, Applied leases office space for marketing, sales, engineering and customer support offices in 79 locations throughout the world: 17 in Europe, 23 in Japan, 16 in North America (principally the United States), 7 in China, 7 in Korea, 6 in Southeast Asia, and 3 in Taiwan.

Applied also owns 112 acres of buildable land in Texas that could accommodate approximately 1,708,000 square feet of additional building space, 12.5 acres in California that could accommodate approximately 400,000 square feet of additional building space, 10.8 acres in Massachusetts that could accommodate approximately 65,000 square feet of additional building space and 10 acres in Israel that could accommodate approximately 111,000 square feet of additional building space. Applied also leases 4 acres in Italy that could accommodate approximately 180,000 square feet of additional building space.

Applied considers the properties that it owns or leases as adequate to meet its current and future requirements. Applied regularly assesses the size, capability and location of its global infrastructure and periodically makes adjustments based on these assessments.

29

Item 3: Legal Proceedings

The information set forth under “Legal Matters” in Note 15 of Notes to Consolidated Financial Statements is incorporated herein by reference.

Item 4: Mine Safety Disclosures

None.

PART II

Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

The following table sets forth the high and low closing sale prices for the periods presented as reported on the NASDAQ Global Select Market.

	Price Range
	High		Low
Fiscal 2011
First quarter	$	16.10	$	12.37
Second quarter	$	16.85	$	14.46
Third quarter	$	15.24	$	12.27
Fourth quarter	$	12.62	$	9.85
Fiscal 2012
First quarter	$	12.73	$	10.13
Second quarter	$	13.21	$	11.49
Third quarter	$	11.99	$	10.01
Fourth quarter	$	12.05	$	10.65

Applied’s common stock is traded on the NASDAQ Global Select Market under the symbol AMAT. As of November 21, 2012, there were 3,895 registered holders of Applied common stock.

30

Performance Graph

The performance graph below shows the five-year cumulative total stockholder return on Applied common stock during the period from October 28, 2007 through October 28, 2012. This is compared with the cumulative total return of the Standard & Poor’s 500 Stock Index and the RDG Semiconductor Composite Index over the same period. The comparison assumes $100 was invested on October 28, 2007 in Applied common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Dollar amounts in the graph are rounded to the nearest whole dollar. The performance shown in the graph represents past performance and should not be considered an indication of future performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Applied Materials, Inc., the S&P 500 Index

and the RDG Semiconductor Composite Index

* $100 invested on 10/28/07 in stock or 10/31/07 in index, including reinvestment of dividends.

Indexes calculated on month-end basis.

Copyright^© 2012 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

	10/28/2007	10/26/2008	10/25/2009	10/31/2010	10/30/2011	10/28/2012
Applied Materials	100.00	61.22	71.06	69.23	72.37	62.92
S&P 500 Index	100.00	63.90	70.17	81.76	88.37	101.81
RDG Semiconductor Composite Index	100.00	54.74	68.59	84.46	91.33	82.37

Dividends

During fiscal 2012, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.09 per share each and one quarterly cash dividend in the amount of $0.08 per share. During fiscal 2011, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.08 per share each and one quarterly cash dividend in the amount of $0.07 per share. During fiscal 2010, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.07 per share each and one quarterly cash dividend in the amount of $0.06. Dividends declared during fiscal 2012, 2011 and 2010 amounted to $438 million, $408 million and $361 million, respectively. Applied currently anticipates that it will continue to pay cash dividends on a quarterly basis in the future, although the declaration and amount of any future cash dividends are 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 that cash dividends are in the best interests of Applied’s stockholders.

31

Repurchases of Applied Common Stock

The following table provides information as of October 28, 2012 with respect to the shares of common stock repurchased by Applied during the fourth quarter of fiscal 2012.

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
(July 30, 2012 to August 26, 2012)	5.7	$	11.82	$	67	5.7	$	2,279
Month #2
(August 27, 2012 to September 23, 2012)	19.2	$	11.69	224		19.2	$	2,055
Month #3
(September 24, 2012 to October 28, 2012)	20.2	$	11.13	225		20.2	$	1,830
Total	45.1	$	11.46	$	516	45.1

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

32

Item 6: Selected Financial Data

The following selected financial information has been derived from Applied’s historical audited consolidated financial statements and should be read in conjunction with the consolidated financial statements and the accompanying notes for the corresponding fiscal years:

Fiscal Year(1)	2012		2011		2010		2009			2008
	(In millions, except percentages, per share amounts and number of employees)
Net sales	$	8,719	$	10,517	$	9,549	$	5,014		$	8,129
Gross margin	$	3,313	$	4,360	$	3,715	$	1,431		$	3,443
(% of net sales)	38.0		41.5		38.9		28.5			42.4
Research, development and engineering	$	1,237	$	1,118	$	1,143	$	934		$	1,104
(% of net sales)	14.2		10.6		12.0		18.6			13.6
Selling, general and administrative	$	1,076	$	901	$	942	$	735		$	965
(% of net sales)	12.3		8.6		9.9		14.7			11.9
Operating income (loss)	$	411	$	2,398	$	1,384	$	(394	)	$	1,355
(% of net sales)	4.7		22.8		14.5		(7.9		)	16.7
Income (loss) before income taxes	$	316	$	2,378	$	1,387	$	(486	)	$	1,409
Effective tax rate (%)	65.5		19.0		32.4		(37.2		)	31.8
Net income (loss)	$	109	$	1,926	$	938	$	(305	)	$	961
(% of net sales)	1.3		18.3		9.8		(6.1		)	11.8
Earnings (loss) per diluted share	$	0.09	$	1.45	$	0.70	$	(0.23	)	$	0.70
Weighted average common shares, diluted	1,277		1,330		1,349		1,333			1,375
New orders	$	8,037	$	10,142	$	10,249	$	4,097		$	9,155
Order backlog	$	1,606	$	2,392	$	3,244	$	2,735		$	4,848
Working capital	$	2,837	$	7,561	$	3,877	$	3,749		$	3,719
Long-term debt	$	1,946	$	1,947	$	204	$	201		$	202
Cash dividends declared per common share	$	0.35	$	0.31	$	0.27	$	0.24		$	0.24
Stockholders’ equity	$	7,235	$	8,800	$	7,536	$	7,095		$	7,549
Total assets	$	12,102	$	13,861	$	10,943	$	9,574		$	11,006
Capital expenditures	$	162	$	209	$	169	$	249		$	288
Regular employees	14,526		12,973		13,045		12,619			14,824

(1) Each fiscal year ended on the last Sunday in October.

33

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to facilitate an understanding of Applied’s business and results of operations. This MD&A should be read in conjunction with Applied’s Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-K. The following discussion contains forward-looking statements and should also be read in conjunction with the cautionary statement set forth at the beginning of this Form 10-K. MD&A consists of the following sections:

• Overview: a summary of Applied’s business and measurements

• Results of Operations: a discussion of operating results

• Segment Information: a discussion of segment operating results

• Business Combinations: a summary or overview of acquired businesses

• Recent Accounting Pronouncements: a discussion of new accounting pronouncements and its impact to Applied's consolidated financial statements

• Financial Condition, Liquidity and Capital Resources: an analysis of cash flows, sources and uses of cash, contractual obligations and financial position

• Off-Balance Sheet Arrangements and Contractual Obligations

• Critical Accounting Policies: a discussion of critical accounting policies that require the exercise of judgments and estimates

• Non-GAAP Results: a presentation of results reconciling GAAP to non-GAAP measures

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 displays (LCDs), 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 16 of Notes to Consolidated Financial Statements. A discussion of factors that could affect Applied’s operations is set forth under “Risk Factors” in Item 1A, which is incorporated herein by reference. Product development and manufacturing activities occur primarily in North America, Europe 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 historically have been 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, 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.

34

The following table presents certain significant measurements for the past three fiscal years:

										Change
Fiscal Year	2012			2011			2010			2012 over 2011			2011 over 2010
	(In millions, except per share amounts and percentages)
New orders	$	8,037		$	10,142		$	10,249		$	(2,105	)	$	(107	)
Net sales	$	8,719		$	10,517		$	9,549		$	(1,798	)	$	968
Gross margin	$	3,313		$	4,360		$	3,715		$	(1,047	)	$	645
Gross margin percent	38.0		%	41.5		%	38.9		%	(3.5) points			2.6 points
Operating income	$	411		$	2,398		$	1,384		$	(1,987	)	$	1,014
Operating margin percent	4.7		%	22.8		%	14.5		%	(18.1) points			8.3 points
Net income	$	109		$	1,926		$	938		$	(1,817	)	$	988
Earnings per diluted share	$	0.09		$	1.45		$	0.70		$	(1.36	)	$	0.75
Non-GAAP Results
Gross margin	$	3,566		$	4,397		$	3,788		$	(831	)	$	609
Gross margin percent	40.9		%	41.8		%	39.7		%	(0.9) points			2.1 points
Operating income	$	1,379		$	2,411		$	1,731		$	(1,032	)	$	680
Operating margin percent	15.8		%	22.9		%	18.1		%	(7.1) points			4.8 points
Net income	$	960		$	1,723		$	1,181		$	(763	)	$	542
Earnings per diluted share	$	0.75		$	1.30		$	0.88		$	(0.55	)	$	0.42

Reconciliations of non-GAAP measures are presented under "Non-GAAP Results" below. Fiscal 2012 and 2011 each contained 52 weeks each, while fiscal 2010 contained 53 weeks.

Fiscal 2012 was a year characterized by significant fluctuations in demand for semiconductor equipment, which is Applied's largest business, coupled with an extremely weak market environment for display and solar equipment. Mobility, connectivity and cloud computing trends drove the semiconductor industry spending, with mobility as the biggest influence. Applied also completed its acquisition of Varian in the first quarter of fiscal 2012. Consumer buying patterns for electronic products, combined with growing semiconductor customer concentration, contributed to a seasonality effect, with relatively strong demand for semiconductor equipment led by foundry customers during the first half of fiscal 2012, followed by softening of demand from foundry and logic customers in the third quarter of fiscal 2012 and further declines across all categories of wafer fab equipment customers in the fourth quarter of fiscal 2012.  Low investment levels for display equipment continued in fiscal 2012, characterized by decreased capacity requirements for larger flat panel televisions as conditions in this industry remained challenging. As with the semiconductor industry, demand for mobility products, such as smartphones and tablets, significantly influenced equipment spending in the display industry. In the solar industry, fiscal 2012 was characterized by continued excess manufacturing capacity, which led to significantly reduced demand for c-Si equipment, as well as weaker operating performance and outlook by the fourth quarter of fiscal 2012.

The first nine months of fiscal 2011 reflected increased demand across all segments except Display due to more favorable global economic and industry conditions than in fiscal 2010, although demand softened for semiconductor, LCD and solar equipment in the last quarter of fiscal 2011. Towards the end of fiscal 2011, the semiconductor, LCD and solar industries were negatively impacted by uncertainty in the macroeconomic environment and the LCD and solar equipment industries were also negatively impacted by overcapacity.

Applied's strategic priorities for 2013 include expanding market share in wafer fab equipment and growing its technical capabilities, extending its technology leadership in solar and display equipment and enhancing its organization in key product areas. In semiconductor equipment, Applied intends to increase investment in 300mm and 450mm research and development and enhance the technical field team. In addition, Applied plans to make selective investments in developing enabling technologies for display and solar products.

35

Results of Operations

The following table presents certain quarterly and full fiscal year financial information:

	Fiscal Quarter									Fiscal Year
	First		Second		Third		Fourth
	(In millions, except per share amounts)
2012:
New orders	$	2,008	$	2,765	$	1,799	$	1,465		$	8,037
Net sales	$	2,189	$	2,541	$	2,343	$	1,646		$	8,719
Gross margin	$	786	$	1,011	$	930	$	586		$	3,313
Operating income (loss)	$	179	$	409	$	322	$	(499	)	$	411
Net income (loss)	$	117	$	289	$	218	$	(515	)	$	109
Earnings (loss) per diluted share	$	0.09	$	0.22	$	0.17	$	(0.42	)	$	0.09
2011:
New orders	$	2,971	$	3,185	$	2,390	$	1,596		$	10,142
Net sales	$	2,686	$	2,862	$	2,787	$	2,182		$	10,517
Gross margin	$	1,136	$	1,189	$	1,184	$	852		$	4,360
Operating income	$	674	$	677	$	687	$	361		$	2,398
Net income	$	506	$	489	$	476	$	456		$	1,926
Earnings per diluted share	$	0.38	$	0.37	$	0.36	$	0.34		$	1.45
2010:
New orders	$	1,965	$	2,533	$	2,725	$	3,026		$	10,249
Net sales	$	1,849	$	2,296	$	2,518	$	2,886		$	9,549
Gross margin	$	711	$	927	$	860	$	1,217		$	3,715
Operating income	$	116	$	386	$	183	$	699		$	1,384
Net income	$	83	$	264	$	123	$	468		$	938
Earnings per diluted share	$	0.06	$	0.20	$	0.09	$	0.35		$	0.70

Orders and sales for manufacturing equipment historically has been volatile across all segments as a result of sudden changes in demand and other factors, including global economic and market conditions and rapid technological advances in fabrication processes. Applied’s business was subject to cyclical industry conditions in fiscal 2012, 2011 and 2010. As a result of these conditions and the changing global economic environment, there were significant fluctuations in Applied’s quarterly new orders and net sales, both within and across the three fiscal years. As of the end of fiscal 2012 and 2011, the semiconductor, display and solar equipment industries were each in a capacity-driven downturn. The nature and timing of a recovery in capital equipment investment are expected to depend largely on the macroeconomic environment.

36

New Orders

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

	2012				Change 2012 over 2011	2011				Change 2011 over 2010	2010
	(In millions, except percentages)
Taiwan	$	2,155	27	%	(4)%	$	2,235	22	%	(19)%	$	2,760	27	%
China	403		5	%	(80)%	2,066		20	%	(4)%	2,155		21	%
Korea	1,784		22	%	39%	1,286		13	%	(24)%	1,703		17	%
Japan	600		7	%	(40)%	1,001		10	%	35%	741		7	%
Southeast Asia	283		4	%	(39)%	463		5	%	(31)%	675		7	%
Asia Pacific	5,225		65	%	(26)%	7,051		70	%	(12)%	8,034		79	%
United States	1,995		25	%	(4)%	2,069		20	%	53%	1,348		13	%
Europe	817		10	%	(20)%	1,022		10	%	18%	867		8	%
Total	$	8,037	100	%	(21)%	$	10,142	100	%	(1)%	$	10,249	100	%

New orders for fiscal 2012 decreased from fiscal 2011, reflecting a steep decline in demand for c-Si solar equipment, combined with reduced demand for LCD TV and semiconductor equipment, partially offset by new orders of $1.0 billion attributable to Varian. The reduction in new orders from customers in China primarily reflected the decreased investments in the solar industry due to overcapacity. Customers in Taiwan, United States and Korea together represented 74 percent of total new orders for fiscal 2012. In the fourth quarter of fiscal 2012, new orders were $1.5 billion, down 19 percent from the prior quarter, reflecting lower semiconductor equipment demand, partially offset by modest order increases in other segments.

New orders for fiscal 2011 were slightly down from fiscal 2010, primarily attributable to decreased demand for semiconductor equipment from memory customers and decreased demand for LCD TV equipment, partially offset by increased demand for touch panel tools from display customers and increased demand for c-Si equipment from solar manufacturers. Customers in Taiwan, United States and China together represented 62 percent of total new orders for fiscal 2011. In the fourth quarter of fiscal 2011, new orders were $1.6 billion, down 33 percent from the third quarter of fiscal 2011.

New orders by reportable segment for the past three fiscal years were as follows:

	2012				Change 2012 over 2011	2011				Change 2011 over 2010	2010
	(In millions, except percentages)
Silicon Systems Group	$	5,294	66	%	(4)%	$	5,489	54	%	(5)%	$	5,759	56	%
Applied Global Services	2,274		28	%	(3)%	2,333		23	%	7%	2,183		21	%
Display	274		4	%	(57)%	636		6	%	(20)%	799		8	%
Energy and Environmental Solutions	195		2	%	(88)%	1,684		17	%	12%	1,508		15	%
Total	$	8,037	100	%	(21)%	$	10,142	100	%	(1)%	$	10,249	100	%

New orders for fiscal 2012 decreased for all segments compared to the same periods in the prior year, mostly due to the excess manufacturing capacity in the solar industry and the continued down cycle in the display industry, partially offset by the addition of orders attributable to Varian of $1.0 billion. The Silicon Systems Group's and Applied Global Services' relative share of total new orders increased compared to the prior year as a result of the addition of Varian and the sharp decrease in orders in Display and Energy and Environmental Solutions.

For fiscal 2011 as compared to fiscal 2010, new orders by segment as well as the relative share of total new orders for the Silicon Systems Group and Display decreased, while new orders by segment as well as the relative share of new orders in Applied Global Services and Energy and Environmental Solutions increased.

37

Changes in backlog during fiscal 2012 and 2011 were as follows:

	2012			2011
	(In millions)
Beginning balance	$	2,392		$	3,244
New orders	8,037			10,142
Net sales	(8,719		)	(10,517		)
Net adjustments	(104		)	(477		)
Ending balance	$	1,606		$	2,392

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. Approximately 75 percent of the backlog as of the end of fiscal 2012 is anticipated to be shipped within the first two quarters of fiscal 2013.

Applied’s backlog was $1.6 billion at October 28, 2012 as compared to $2.4 billion at October 30, 2011. Backlog adjustments were negative for fiscal 2012 and totaled $104 million, primarily consisting of customer cancellations.

Backlog by reportable segment as of October 28, 2012 and October 30, 2011 was as follows:

	2012				Change 2012 over 2011	2011
	(In millions, except percentages)
Silicon Systems Group	$	705	44	%	(23)%	$	913	38	%
Applied Global Services	580		36	%	(12)%	662		28	%
Display	206		13	%	(39)%	337		14	%
Energy and Environmental Solutions	115		7	%	(76)%	480		20	%
Total	$	1,606	100	%	(33)%	$	2,392	100	%

Backlog decreased in fiscal 2012 from fiscal 2011 across all segments reflecting decreased demand for semiconductor, LCD and solar equipment. In the fourth quarter of fiscal 2012, approximately 53 percent of net sales in the Silicon Systems Group, Applied’s largest business segment, were for orders received and shipped within the quarter, up from 45 percent in the fourth quarter of fiscal 2011.

Net Sales

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

	2012				Change 2012 over 2011	2011				Change 2011 over 2010	2010
	(In millions, except percentages)
Taiwan	2,411		28	%	15%	2,093		20	%	(24)%	2,750		29	%
China	783		9	%	(70)%	2,574		24	%	65%	1,557		16	%
Korea	1,897		22	%	50%	1,263		12	%	(29)%	1,768		19	%
Japan	704		8	%	(23)%	912		9	%	19%	768		8	%
Southeast Asia	312		3	%	(47)%	592		5	%	2%	578		6	%
Asia Pacific	6,107		70	%	(18)%	7,434		70	%	—%	7,421		78	%
United States	1,749		20	%	(11)%	1,963		19	%	71%	1,147		12	%
Europe	863		10	%	(23)%	1,120		11	%	14%	981		10	%
Total	$	8,719	100	%	(17)%	$	10,517	100	%	10%	$	9,549	100	%

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Net sales for fiscal 2012 decreased from the prior year, primarily due to decreased industry investment in c-Si solar products and LCD TV equipment, partially offset by sales attributable to Varian. Net sales attributable to Varian were $1.0 billion for fiscal 2012. The reduction in net sales from customers in China primarily reflected the decreased investments in the solar and display industries due to overcapacity. Customers in Taiwan, Korea and United States combined represented 70 percent of total net sales in fiscal 2012. In the fourth quarter of fiscal 2012, net sales were $1.6 billion, down 30 percent from the prior quarter, led by a reduction in semiconductor equipment sales.

Net sales for fiscal 2011 increased from fiscal 2010, primarily due to increased industry investment in c-Si solar equipment and higher sales of spares and refurbished semiconductor equipment. Customers in China, Taiwan and United States combined represented 63 percent of total net sales in fiscal 2011.

Net sales by reportable segment for the past three fiscal years were as follows:

	2012				Change 2012 over 2011	2011				Change 2011 over 2010	2010
	(In millions, except percentages)
Silicon Systems Group	$	5,536	64	%	2%	$	5,415	51	%	2%	$	5,304	56	%
Applied Global Services	2,285		26	%	(5)%	2,413		23	%	29%	1,865		20	%
Display	473		5	%	(32)%	699		7	%	(22)%	899		9	%
Energy and Environmental Solutions	425		5	%	(79)%	1,990		19	%	34%	1,481		15	%
Total	$	8,719	100	%	(17)%	$	10,517	100	%	10%	$	9,549	100	%

For fiscal 2012 as compared to fiscal 2011, net sales in the Silicon Systems Group increased slightly while net sales across all other segments decreased. The decrease reflected lower investments in c-Si solar and LCD TV equipment, partially offset by sales attributable to Varian. The Silicon Systems Group's relative share of total net sales increased compared to the prior year and remains the largest contributor of net sales.

For fiscal 2011 as compared to fiscal 2010, net sales in the Silicon Systems Group remained essentially flat while net sales in Energy and Environment Solutions and Applied Global Services increased due to increased demand for c-Si equipment, and spare parts and refurbished equipment, respectively. Net sales in Display decreased during fiscal 2011 as compared to fiscal 2010 due to a weaker LCD TV market. For fiscal 2011 as compared to fiscal 2010, the relative share of total net sales in the Silicon Systems Group decreased, while the relative share of total net sales in Energy and Environmental Solutions increased. The increase in Energy and Environmental Solutions’ relative share of total net sales was due to increased demand for c-Si equipment.

Gross Margin

Gross margins for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011			2011 over 2010
	(In millions, except percentages)
Gross margin	$	3,313		$	4,360		$	3,715		$	(1,047	)	$	645
Gross margin (% of net sales)	38.0		%	41.5		%	38.9		%	(3.5) points			2.6 points
Non-GAAP Results
Gross margin	$	3,566		$	4,397		$	3,788		$	(831	)	$	609
Gross margin (% of net sales)	40.9		%	41.8		%	39.7		%	(0.9) points			2.1 points

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

Gross margin decreased in fiscal 2012 from fiscal 2011 due primarily to changes in segment and customer mix, inventory fair value adjustments and intangible asset amortization associated with purchase accounting, additional inventory reserves and lower net sales, partially offset by sales for a single thin film solar production line, for which inventory was fully reserved prior to fiscal 2012. Inventory fair value adjustments and intangible asset amortization, mostly associated with the acquisition of Varian, were $253 million in fiscal 2012. Inventory charges of approximately $290 million were recorded in fiscal 2012 as a result of the softening of demand for semiconductor-related businesses and continued weakness in the solar industry. Of the total inventory charges during fiscal 2012, $13 million were recorded in connection with the restructuring of the Energy and Environmental Solutions segment. The increase in gross margin and non-GAAP gross margin in fiscal 2011 from fiscal 2010 was principally

39

attributable to the inventory-related charges of $330 million incurred in fiscal 2010 associated with SunFab thin film solar equipment, which lowered gross margin for fiscal 2010 by approximately 3 percentage points. Gross margin during fiscal 2012, 2011 and 2010 included $54 million, $48 million and $32 million, respectively, of share-based compensation expense.

Research, Development and Engineering

Research, Development and Engineering (RD&E) expenses for the past three fiscal years were as follows:

							Change
	2012		2011		2010		2012 over 2011		2011 over 2010
	(In millions)
Research, development and engineering	$	1,237	$	1,118	$	1,143	$	119	$	(25	)

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. The increase in RD&E for fiscal 2012 compared to the prior year was primarily due to the RD&E expenses related to Varian of approximately $180 million and continued investment in the development of smaller linewidths and 450mm wafer equipment, partially offset by lower investments in solar R&D projects and the cessation of LED equipment development. 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. RD&E expense during fiscal 2012, 2011 and 2010 included $54 million, $46 million and $43 million, respectively, of share-based compensation expense.

In fiscal 2012, Applied developed transistor and interconnect technologies for scaling chip features to the 14nm node and beyond. Applied focused on processes to enable the formation of three dimensional transistor and memory storage architectures that improve the performance and energy efficiency of devices. For advanced interconnects, Applied focused on process technology for the void-free filling of smaller, narrower wiring structures with copper material. Complementary to this technology was the optimization of low k films to increase device performance and lengthen battery life. Efforts continued on bringing down the cost of through-silicon via (TSV) technology for packaging chips with the development of new low temperature conformal films that are also applicable for new backside-illuminated image sensors. TSV technologies permit interconnecting 3D chip stacks to enable better device performance, lower power consumption and the integration of heterogeneous devices. The Company also continued to invest in the development of 450mm wafer equipment. For LCD manufacturing, Applied developed new processes to fabricate metal oxide-based transistors, which provide smaller, faster-switching pixels for higher resolution displays. In solar, Applied focused on technology to increase the efficiency and cost-effectiveness of solar cells by optimizing the structure of its conducting lines.

In fiscal 2011, Applied developed logic and memory chip technologies to meet the requirements of manufacturing below the 22nm node. These systems were designed to help semiconductor customers continue their drive to pack more transistors in the same space using high-k/metal gate technologies and double patterning processes. These technologies include low k dielectrics and curing for interconnect structures and high-k dielectric materials and ALD processes for fabricating transistor gates. Applied also focused on processes to help customers build new three-dimensional (3D) gate structures. In addition, Applied continued to focus on optimizing the cost-effectiveness of TSV technologies to enable their widespread implementation. Applied also invested in other new product development areas such as 450mm wafer systems. For LCD manufacturing, Applied developed deposition systems to enable larger organic light-emitting diode (OLED), LCD and touch-enabled displays. In solar, Applied focused on screen printing technology to keep pace with cell manufacturers’ new higher-efficiency cell designs. Another key development area was “smart” capability, which brings a new level of precision and control to the PV production process.

In fiscal 2010, Applied developed new technology to enable next-generation 22nm and below chip designs. Applied also developed technology for TSVs. In the solar PV area, Applied continued the development of its precision wafering and cell manufacturing products for lowering the cost of producing solar-generated electricity through advanced c-Si technology. RD&E also included activities to develop products that enable lower-cost production of solar energy, production of LED devices for display backlighting and general lighting, and other products to enable energy conservation.

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Selling, General and Administrative

Selling, general and administrative (SG&A) expenses for the past three fiscal years were as follows:

							Change
	2012		2011		2010		2012 over 2011		2011 over 2010
	(In millions)
Selling, general and administrative	$	1,076	$	901	$	942	$	175	$	(41	)

The increase in SG&A expenses for fiscal 2012 compared to fiscal 2011 is primarily attributable to acquisition-related costs and other SG&A expenses incurred in connection with Varian which totaled $190 million, partially offset by lower variable compensation and savings associated with temporary shutdowns. The decrease in SG&A expenses for fiscal 2011 compared to fiscal 2010 reflected lower expenses as a result of the restructuring of the Energy and Environmental Solutions segment that occurred in fiscal 2010. SG&A expenses for fiscal 2011 included $19 million in transaction costs associated with the acquisition of Varian, while fiscal 2010 included $10 million in transaction costs associated with the acquisition of Semitool, Inc. SG&A expenses during fiscal 2012, 2011 and 2010 included $74 million, $52 million and $51 million, respectively, of share-based compensation expense.

Impairment of Goodwill

Applied tested goodwill of the Energy and Environmental Solutions reporting unit for potential impairment during the second quarter of fiscal 2012 in light of second quarter developments that included current industry trends, financial performance, weaker short-term outlooks, and other adverse operating conditions within the solar industry. The results of the first step of the impairment test indicated that goodwill of the Energy and Environmental Solutions reporting unit was not impaired at that time. During the third quarter of fiscal 2012, Applied noted no events that would significantly impact the results of the impairment test performed in the second quarter of fiscal 2012. However, during the fourth quarter of fiscal 2012, the solar industry faced increasing challenges of solar panel manufacturing overcapacity and weaker operating performance and outlook, leading to the deterioration of the solar equipment market and Applied's customers' financial condition, coupled with lower market valuations. Taking these factors into account, Applied reassessed its financial outlook of the Energy and Environmental Solutions reporting unit, and consequently reevaluated the recoverability of Energy and Environmental Solutions' goodwill. Accordingly, Applied performed the two-step impairment test and concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value and recorded a $421 million goodwill impairment charge in the fourth quarter of fiscal 2012.

In the fourth quarter of fiscal 2012, Applied also performed a qualitative assessment to test goodwill for the remaining reporting units for impairment and determined that it was more likely than not that each of the Silicon Systems Group, Applied Global Services, and Display reporting units' fair values exceeded its respective carrying values and that it was not necessary to perform the two-step goodwill impairment test for these reporting units.

The evaluation of goodwill 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 analyses are lower than current estimates, a material impairment charge may result at that time.

For further details, see Note 9 of Notes to Consolidated Financial Statements.

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Restructuring and Asset Impairments

Restructuring and asset impairment expenses for the past three fiscal years were as follows:

								Change
	2012		2011			2010		2012 over 2011		2011 over 2010
	(In millions)
Restructuring and asset impairments, net	$	168	$	(30	)	$	246	$	198	$	(276	)

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 are 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 meet minimum age and length of service requirements, as well as other business-specific criteria. Under the 2012 Global Restructuring Plan, Applied also implemented other workforce reduction actions globally across multiple business segments and functions, the extent of which depended on the number of employees who participate in the voluntary retirement program and other considerations.

During fiscal 2012, Applied incurred severance and other employee-related costs of $106 million related to the 2012 Global Restructuring Plan, which was based on an estimated number of employees impacted by the workforce reduction. Incremental charges will coincide with the acceptances of the voluntary retirement program in the first quarter of fiscal 2013. Due to the nature of this plan, these costs are subject to subsequent adjustments due to multiple assumptions and estimates used, including with respect to: the number and job levels of employees who participate in the voluntary retirement program, the nature and extent of additional workforce actions required to complete this plan, and other factors.

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 of October 28, 2012, as part of the 2012 EES Restructuring Plan, Applied was still in the process of relocating certain manufacturing, business operations and customer support functions of its precision wafering systems business and has ceased LED development activities. During fiscal 2012, Applied incurred restructuring and asset impairment charges of $48 million related to this plan.

Also in fiscal 2012, Applied incurred severance costs of $14 million associated with the integration of Varian.

Results for fiscal 2011 included favorable adjustments of $60 million related to restructuring program charges recorded in prior years, offset in part by asset impairment charges of $30 million primarily related to certain intangible assets.

Results for fiscal 2010 included restructuring charges of $129 million related to two restructuring programs announced in fiscal 2010, and asset impairment charges of $117 million primarily related to a plan to restructure the Energy and Environmental Solutions segment.

For further details, see Note 11 of Notes to Consolidated Financial Statements.

Gain on Sale of Facilities, net

In the first quarter of fiscal 2011, Applied received $39 million in proceeds from the sale of a property located in North America and incurred a loss of $1 million on the transaction. In the third quarter of fiscal 2011, Applied received $60 million in proceeds from the sale of another property located in North America and incurred a gain of $28 million on the transaction.

Impairments of Strategic 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. During fiscal 2012, 2011 and 2010, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $17 million, $3 million and $13 million, respectively.

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Interest and Other Expenses

Interest and other expenses for the past three fiscal years were as follows:

							Change
	2012		2011		2010		2012 over 2011		2011 over 2010
	(In millions)
Interest and other expense	$	95	$	59	$	21	$	36	$	38

The increase in interest and other expense for fiscal 2012 from fiscal 2011 is mainly due to the full year of interest expense incurred on the senior unsecured notes issued in June 2011 to fund a portion of the consideration and certain costs associated with the acquisition of Varian. The increase in interest and other expense for fiscal 2011 from fiscal 2010 was primarily due to interest of $31 million payable on senior unsecured notes issued in fiscal 2011 and to fees of $8 million associated with a bridge loan facility that was entered into and terminated during fiscal 2011.

Interest and Other Income, net

Interest and other income, net for the past three fiscal years was as follows:

							Change
	2012		2011		2010		2012 over 2011			2011 over 2010
	(In millions)
Interest and other income, net	$	17	$	42	$	37	$	(25	)	$	5

The decrease in interest and other income in fiscal 2012 from fiscal 2011 is due to lower cash and investment balances after completion of the acquisition of Varian, decreased realized gains on investment securities, and lower interest rates. The increase in interest and other income in fiscal 2011 from fiscal 2010 was primarily due to an increase in gains realized on sale of investment securities.

Income Taxes

Income tax expenses for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011			2011 over 2010
	(In millions, except percentages)
Provision (benefit) for income taxes	$	207		$	452		$	449		$	(245	)	$	3
Effective income tax rate	65.5		%	19.0		%	32.4		%	46.5 points			(13.4) points

The effective income tax rate for fiscal 2012 is significantly higher than the rate for fiscal 2011 due primarily to the recording of goodwill impairment charges in fiscal 2012, which are not deductible for tax purposes. In addition, the tax rate for fiscal 2011 benefited from a favorable U.S. Internal Revenue Service audit settlement. The tax rates for fiscal 2012 and 2011 both benefited from tax incentives offered in several jurisdictions and fiscal 2011 benefited from the December 2010 reinstatement of the U.S. R&D tax credit retroactive to its prior expiration in December 2009. The effective income tax rate for fiscal 2010 did not include the impact of the U.S. R&D tax credit from the time it expired in December 2009. Applied’s effective income tax rate depends on various factors, such as tax legislation and the geographic composition of Applied’s pre-tax income.

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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 and services, as well as financial data, for each reportable segment can be found in Note 16 of Notes to Consolidated 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 charges or adjustments 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 biggest 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.

Certain significant measures for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011				2011 over 2010
	(In millions, except percentages and ratios)
New orders	$	5,294		$	5,489		$	5,759		$	(195	)	(4)%	$	(270	)	(5)%
Net sales	5,536			5,415			5,304			121			2%	111			2%
Book to bill ratio	1.0			1.0			1.1
Operating income	1,243			1,764			1,892			(521		)	(30)%	(128		)	(7)%
Operating margin	22.5		%	32.6		%	35.7		%				(10.1) points				(3.1) points
Non-GAAP Results
Operating income	$	1,537		$	1,779		$	1,919		(242		)	(14)%	(140		)	(7)%
Operating margin	27.8		%	32.9		%	36.2		%				(5.1) points				(3.3) points

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

New orders for the Silicon Systems Group by end use application for the past three fiscal years were as follows:

	2012		2011		2010
Foundry	62	%	47	%	41	%
Memory	22	%	28	%	43	%
Logic and other	16	%	25	%	16	%
	100	%	100	%	100	%

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The following region accounted for at least 30 percent of total net sales for the Silicon Systems Group segment for one or more of the past three fiscal years:

							Change
	2012		2011		2010		2012 over 2011				2011 over 2010
	(In millions, except percentages)
Taiwan	$	1,744	$	1,309	$	1,976	$	435	33	%	$	(667	)	(34	)%

Customers in Taiwan accounted for 32 percent, 24 percent and 37 percent of the total net sales of the Silicon Systems Group in fiscal 2012, 2011 and 2010, respectively. Customers in Korea and United States together contributed 49 percent, 43 percent and 36 percent of the total net sales for this segment in fiscal 2012, 2011 and 2010, respectively.

Fiscal 2012 financial results reflected continued uncertain global economic conditions that led to decreased demand for semiconductor manufacturing equipment compared to fiscal 2011, particularly in the second half of fiscal 2012. In the fourth quarter of fiscal 2012, new orders were $741 million, a decrease of 36 percent compared to the prior quarter. The decrease in new orders in fiscal 2012 from the prior year was primarily due to reduced demand from memory and logic customers, partially offset by the addition of Varian. Net sales increased slightly in fiscal 2012 from the prior year due to the addition of net sales attributable to Varian, partially offset by decreased investment from memory and logic customers. Three customers accounted for 60 percent of net sales in this segment in fiscal 2012. Approximately 53 percent of net sales in the fourth quarter of fiscal 2012 were for orders received and shipped within the quarter, which remained flat from the third quarter of fiscal 2012. Operating income and non-GAAP operating income for fiscal 2012 decreased compared to fiscal 2011, due to changes in customer and product mix with the inclusion of Varian, costs associated with Varian operations, and additional inventory charges. In fiscal 2012, inventory charges of approximately $134 million were recorded for the segment. Operating income for fiscal 2012 also included Varian acquisition-related costs of $290 million and severance charges of $4 million associated with the integration of Varian.

Fiscal 2011 financial results reflected decreased demand for semiconductor manufacturing equipment compared to fiscal 2010, particularly in the second half of fiscal 2011, due primarily to uncertain global economic conditions. In the fourth quarter of fiscal 2011, new orders were $925 million, a decrease of 25 percent compared to the prior quarter. For fiscal 2011, new orders decreased compared to fiscal 2010, primarily due to reduced demand from memory customers. Net sales increased for fiscal 2011 compared to fiscal 2010, primarily due to increased investment by logic customers. Three customers accounted for 52 percent of net sales in this segment in fiscal 2011. Approximately 45 percent of net sales in the fourth quarter of fiscal 2011 were for orders received and shipped within the quarter, down from 49 percent in the third quarter of fiscal 2011. Operating income and non-GAAP operating income in fiscal 2011 decreased from the prior year. The decrease was due in part to a settlement agreement between Applied and Samsung Electronics Co., Ltd (Samsung) that provided for volume-based rebates and other incentives to Samsung. The decrease was also due to operating expenses incurred as a result of headcount increases during fiscal 2011.

Applied Global Services Segment

The Applied Global Services segment encompasses spares, upgrades, services, remanufactured earlier generation equipment 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.

Since the first quarter of fiscal 2011, Applied also accounts for thin film solar products, including the fully-integrated-SunFab thin film solar production line, under the Applied Global Services segment. As part of a restructuring of the Energy and Environmental Solutions segment in fiscal 2010, Applied discontinued sales of SunFab lines to new customers but continues to support existing SunFab customers with services, upgrades and capacity increases through its Applied Global Services segment as these products are considered to have reached a particular stage in the product lifecycle.

45

Certain significant measures for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011				2011 over 2010
	(In millions, except percentages and ratios)
New orders	$	2,274		$	2,333		$	2,183		$	(59	)	(3)%	$	150	7	%
Net sales	2,285			2,413			1,865			(128		)	(5)%	548		29	%
Book to bill ratio	1.0			1.0			1.2
Operating income	502			482			337			20			4%	145		43	%
Operating margin	22.0		%	20.0		%	18.1		%				2.0 points			1.9 points
Non-GAAP Results
Operating income	530			513			348			17			3%	165		47	%
Operating margin	23.2		%	21.3		%	18.7		%				1.9 points			2.6 points

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

There were no individual regions that accounted for at least 30 percent of total net sales for the Applied Global Services segment for any of the past three fiscal years.

For fiscal 2012, new orders and net sales decreased compared to fiscal 2011 due primarily to lower sales of 200mm systems, offset in part by the addition of Varian. In the fourth quarter of fiscal 2012, new orders were $576 million, an increase of 8 percent compared to the third quarter of fiscal 2012, reflecting seasonal effect of annual contract renewals. Net sales in the fourth quarter of fiscal 2012 were $621 million and included $85 million in sales for a single thin film solar production line. Operating income and non-GAAP operating income increased in fiscal 2012 compared to fiscal 2011 primarily due to the sale of the thin film solar line, for which inventory had been fully reserved prior to fiscal 2012 partially offset by inventory charges of approximately $57 million. Operating income also included restructuring and asset impairment charges of $15 million associated with the 2012 EES Restructuring Plan and the integration of Varian.

Fiscal 2011 financial results reflected increased demand for services over fiscal 2010. In the fourth quarter of fiscal 2011, new orders were $564 million, a decrease of 8 percent compared to the prior quarter. For fiscal 2011, new orders increased compared to fiscal 2010 due primarily to higher demand for spare parts and refurbished equipment. Net sales increased for fiscal 2011, a record for the segment, compared to fiscal 2010. The increase in net sales was primarily due to higher sales in spare parts and refurbished equipment and included $71 million in sales for two thin film solar production lines. Operating income and non-GAAP operating income increased for fiscal 2011 compared to fiscal 2010, primarily reflecting increased sales of spare parts and refurbished equipment.

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Display Segment

The Display segment encompasses products for manufacturing LCDs, 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 by differentiation with larger-scale manufacturing equipment for TVs, entry into new markets such as the 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, for which demand has slowed significantly. More recently, mobility-related markets have represented the majority of this segment's orders and net sales.

Certain significant measures for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011				2011 over 2010
	(In millions, except percentages and ratios)
New orders	$	274		$	636		$	799		$	(362	)	(57)%	$	(163	)	(20)%
Net sales	473			699			899			(226		)	(32)%	(200		)	(22)%
Book to bill ratio	0.6			0.9			0.9
Operating income	25			147			267			(122		)	(83)%	(120		)	(45)%
Operating margin	5.3		%	21.0		%	29.7		%				(15.7) points				(8.7) points
Non-GAAP Results
Operating income	$	32		$	154		$	274		(122		)	(79)%	(120		)	(44)%
Operating margin	6.8		%	22.0		%	30.5		%				(15.2) points				(8.5) points

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

The following regions accounted for at least 30 percent of total net sales for the Display segment for one or more of the past three fiscal years:

							Change
	2012		2011		2010		2012 over 2011					2011 over 2010
	(In millions, except percentages)
China	$	133	$	330	$	162	$	(197	)	(60	)%	$	168		104	%
Taiwan	$	179	$	216	$	311	$	(37	)	(17	)%	$	(95	)	(31	)%
Korea	$	88	$	111	$	334	$	(23	)	(21	)%	$	(223	)	(67	)%

In fiscal 2012, customers in China accounted for 28 percent of total net sales for the Display segment compared to 47 percent in fiscal 2011, and 18 percent in fiscal 2010. Customers in Taiwan accounted for 38 percent of total net sales for the segment in fiscal 2012 compared to 31 percent in fiscal 2011, and 35 percent in fiscal 2010. Customers in Korea accounted for 19 percent of total net sales for the Display segment in fiscal 2012 compared to 16 percent in fiscal 2011, and 37 percent in fiscal 2010.

Fiscal 2012 operating results reflected a continued overcapacity in the large substrate LCD TV equipment industry that resulted in decreased new orders and net sales in fiscal 2012. The downturn in the LCD TV equipment industry was partially offset by increased demand for advanced mobile display equipment. In the fourth quarter of fiscal 2012, new orders remained at low levels of $83 million, but increased compared to $67 million in the prior quarter. Four customers accounted for 60 percent of net sales for the Display segment in fiscal 2012.

Fiscal 2011 operating results reflected a downturn in demand for equipment to manufacture LCD TV products that resulted in an extremely low level of orders in the fourth quarter of fiscal 2011. In the fourth quarter of fiscal 2011, new orders were $20 million, a decrease of 91 percent compared to the prior quarter. For fiscal 2011, new orders decreased compared to fiscal 2010. The decrease in new orders reflected customers’ decisions to delay investment in new LCD TV capacity, which was partially offset by increased demand for LTPS and touch panel systems, although this demand also softened in the fourth quarter of fiscal 2011 as an initial build-out of manufacturing capacity was absorbed. Net sales decreased for fiscal 2011 compared to fiscal 2010. The decrease in net sales reflected a decline in spending for LCD TV equipment, as customers delayed their investments, including plans for manufacturing in China, partially offset by increased demand for equipment to manufacture new mobile devices like smart phones and tablets. Operating income decreased for fiscal 2011 compared to fiscal 2010 reflecting an unfavorable product mix. Three customers accounted for 54 percent of net sales for the Display segment in fiscal 2011. The decrease in operating margin and non-GAAP operating margin in fiscal 2011 compared to fiscal 2010 was due to changes in product mix.

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Energy and Environmental Solutions Segment

The Energy and Environmental Solutions segment includes products for fabricating c-Si solar PVs, high throughput roll-to-roll coating systems for flexible electronics, and web products. This business is focused on delivering solutions to generate and conserve energy, with an emphasis on lowering the cost to produce solar power by providing equipment to enhance manufacturing scale and efficiency. While end-demand for solar PVs has been robust over the last several years, investment levels in capital equipment have experienced considerable volatility. Current global solar PV production capacity exceeds anticipated near-term demand, which has caused solar PV manufacturers to significantly reduce or delay investments in manufacturing capacity and new technology, or to cease operations.

Until the first quarter of fiscal 2011, the Energy and Environmental Solutions segment included the fully-integrated SunFab production line for manufacturing thin film solar panels. During the third quarter of fiscal 2010, Applied announced a plan to restructure its Energy and Environmental Solutions segment in response to adverse market conditions for thin film solar. As a result, Applied discontinued sales of SunFab lines to new customers, but continues to support existing SunFab line customers with services, upgrades and capacity increases through its Applied Global Services segment.

Certain significant measures for the past three fiscal years were as follows:

										Change
	2012			2011			2010			2012 over 2011				2011 over 2010
	(In millions, except percentages and ratios)
New orders	$	195		$	1,684		$	1,508		$	(1,489	)	(88)%	$	176	12%
Net sales	425			1,990			1,481			(1,565		)	(79)%	509		34%
Book to bill ratio	0.5			0.8			1.0
Operating income (loss)	(668		)	453			(466		)	(1,121		)	(247)%	919		(197)%
Operating margin	(157.2		)%	22.8		%	(31.5		)%				(180.0) points			54.3 points
Non-GAAP Results
Operating income (loss)	(184		)	444			(267		)	(628		)	(141)%	711		(266)%
Operating margin	(43.3		)%	22.3		%	(18.0		)%				(65.6) points			40.3 points

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

The following region accounted for at least 30 percent of total net sales for the Energy and Environmental Solutions segment for one or more of the past three fiscal years:

							Change
	2012		2011		2010		2012 over 2011					2011 over 2010
	(In millions, except percentages)
China	$	210	$	1,584	$	935	$	(1,374	)	(87	)%	$	649	69	%

In fiscal 2012, customers in China accounted for 49 percent of total net sales for the Energy and Environmental Solutions segment compared to 80 percent in fiscal 2011, and 63 percent in fiscal 2010.

Fiscal 2012 financial results reflected continued excess manufacturing capacity in the solar industry, the impairment of a portion of the segment's goodwill and a restructuring program. In the fourth quarter of fiscal 2012, new orders were $65 million, an increase of 86 percent compared to the prior quarter's low level of $35 million in new orders. During fiscal 2012, 65 percent of the segment's net sales were from products shipped in earlier periods. For fiscal 2012, new orders and net sales decreased compared to fiscal 2011 reflecting significantly decreased demand for c-Si equipment. The Energy and Environmental Solutions segment reported operating loss of $668 million for fiscal 2012 compared to an operating income of $453 million for fiscal 2011 due primarily to lower sales, additional inventory charges, impairment and restructuring charges during the year. Inventory charges of $96 million were recorded in fiscal 2012.

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On May 10, 2012, Applied announced a plan to restructure the Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and LED equipment markets. During fiscal 2012, Applied incurred severance and asset impairment charges totaling $48 million associated with this plan, of which $38 million was included in the Energy and Environmental Solutions segment. Of the total inventory charges recorded in fiscal 2012, $13 million was associated with the restructuring. Details on restructuring and asset impairment charges are included in Note 11 of the Notes to the Consolidated Financial Statements.

During the fourth quarter of fiscal 2012, Applied performed the two-step impairment test and concluded that the Energy and Environmental Solutions reporting unit's carrying value exceeded its fair value and recorded $421 million of goodwill impairment charge in the fourth quarter of fiscal 2012. See discussion in the Impairment of Goodwill section above and Note 9 of Notes to Consolidated Financial Statements for further details.

Fiscal 2011 financial results reflected increased demand for c-Si products in the first half of the year, followed by a steep decline in the second half of fiscal 2011 due to excess manufacturing capacity and customers’ decreased access to capital. In the fourth quarter of fiscal 2011, new orders were $86 million, a decrease of 73 percent compared to the prior quarter. For fiscal 2011, new orders increased compared to fiscal 2010. The increase in new orders for fiscal 2011 reflected significantly increased demand for c-Si equipment, particularly wafering and metallization products. The increased demand was partially driven by government incentives for solar. Net sales increased for fiscal 2011 compared to fiscal 2010. The increase in net sales for fiscal 2011 primarily reflected higher sales to c-Si customers. Net sales in fiscal 2010 included $539 million from sales of SunFab thin film lines. There were no sales of SunFab thin film lines recognized in the Energy and Environmental Solutions segment in fiscal 2011. In fiscal 2011, customers in China accounted for an increased proportion of the Energy and Environmental Solutions segment’s results compared to prior years, including 78 percent of new orders. The Energy and Environmental Solutions segment reported operating income of $453 million for fiscal 2011 compared to an operating loss of $466 million for fiscal 2010. Operating loss for fiscal 2010 included charges totaling $486 million associated with the Energy and Environmental Solutions restructuring plan announced in July 2010, consisting of inventory-related charges of $330 million related to SunFab thin film solar equipment, asset impairment charges of $108 million, employee severance charges of $45 million, and other costs of $3 million.The increase in operating income for fiscal 2011 was also attributable to significantly higher net sales of c-Si equipment and included favorable adjustments of $36 million related to the restructuring program announced in the third quarter of fiscal 2010. The increase in operating margin for fiscal 2011 was due to higher manufacturing volume for c-Si equipment.

Business Combinations

On November 10, 2011, Applied completed the acquisition of Varian, a public company manufacturer of semiconductor processing equipment and the leading supplier of ion implantation equipment used by chip makers globally, for an aggregate purchase price of $4.2 billion in cash, net of cash acquired and assumed earned equity awards of $27 million, pursuant to an Agreement and Plan of Merger (the Merger Agreement) dated as of May 3, 2011. Applied's primary reasons for this acquisition were to complement existing product offerings and to provide opportunities for future growth. Beginning in the first quarter of fiscal 2012, the acquired business is included in results for the Silicon Systems Group and Applied Global Services segments.

Varian designs, markets, manufactures and services ion implantation systems. These systems are primarily used in the manufacture of transistors, which are a basic building block of ICs or microchips. Ion implantation systems create a beam of electrically charged particles called ions, which are implanted into transistor structures at precise locations and depths, changing the electrical properties of the semiconductor device. These implantation systems may also be used in other areas of IC manufacture for modifying the material properties of the semiconductor devices, as well as in manufacturing crystalline-silicon solar cells and LEDs.

Applied funded the transaction with a combination of existing cash balances and debt. On June 8, 2011, Applied issued senior unsecured notes (the Notes) in the aggregate principal amount of $1.75 billion and used the net proceeds of the Notes to fund a portion of the consideration and certain costs associated with the acquisition. The indenture governing the Notes includes certain covenants with which Applied was in compliance at October 28, 2012. See Note 10 of Notes to Consolidated Financial Statements for additional discussion of long-term debt.

On December 21, 2009, Applied acquired Semitool, Inc., a public company based in the state of Montana, for a purchase price of $323 million in cash, net of cash acquired, pursuant to a tender offer and subsequent short-form merger. The acquired business is a leading supplier of electrochemical plating and wafer surface preparation equipment used by semiconductor packaging and manufacturing companies globally. Applied’s primary reasons for this acquisition were to complement its existing product offerings and to provide opportunities for future growth. The acquired business is included in results for the Silicon Systems Group segment.

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Semitool is a leading provider of wet chemical processing equipment, targeting wafer surface preparation and ECD plating applications for all areas of wafer fabrication, including device packaging. Semitool’s solutions address critical applications within the semiconductor manufacturing process, and enable its customers to manufacture more advanced semiconductor devices that feature higher levels of performance.

In November 2009, Applied acquired substantially all the assets, including the intellectual property, of Advent Solar, a developer of advanced technology for c-Si solar photovoltaic cells and modules (PVs), for a purchase price of $14 million. This acquisition complemented Applied’s portfolio of solar PV technologies and enhanced Applied’s opportunities in the c-Si equipment market. The acquisition is included in results for the Energy and Environmental Solutions segment.

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

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance on the presentation of comprehensive income to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The authoritative guidance also required presentation of adjustments for items that are reclassified from other comprehensive income in the statement where the components of net income and the components of other compressive income are presented, which was indefinitely deferred by the FASB in December 2011. Applied early adopted this authoritative guidance in fiscal 2012. The implementation of this authoritative guidance did not have an impact on Applied’s financial position or results of operations.

In July 2012, the FASB amended its existing guidance for goodwill and other intangible assets. This authoritative guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. To perform a qualitative assessment, a company must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. This authoritative guidance becomes effective for Applied in the first quarter of fiscal 2013, with early adoption permitted. The implementation of this authoritative guidance is not expected to have a material impact on Applied's financial position or results of operations.

Financial Condition, Liquidity and Capital Resources

Applied’s cash, cash equivalents and investments decreased to $3.0 billion at October 28, 2012 from $7.2 billion at October 30, 2011. The decrease in cash was the result of the completion of the acquisition of Varian during the first quarter of fiscal 2012, and cash paid for stock repurchases and dividends, which were partially offset by cash generated from operations. Cash, cash equivalents and investments at October 30, 2011 included net proceeds from the issuance of $1.75 billion of senior secured notes that were issued to assist in funding the Varian acquisition.

Cash, cash equivalents and investments consist of the following:

	October 28, 2012		October 30, 2011
	(In millions)
Cash and cash equivalents	$	1,392	$	5,960
Short-term investments	545		283
Long-term investments	1,055		931
Total cash, cash-equivalents and investments	$	2,992	$	7,174

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

	2012			2011		2010
	(In millions)
Cash provided by operating activities	$	1,851		$	2,429	$	1,723
Cash provided by (used in) investing activities	$	(4,660	)	$	707	$	(862	)
Cash provided by (used in) financing activities	$	(1,754	)	$	960	$	(576	)

The primary sources of cash from operating activities for fiscal 2012 were net income, as adjusted to exclude the effect of non-cash charges including depreciation, amortization, share-based compensation, impairment of goodwill, restructuring and asset impairments, deferred income taxes and changes in components of working capital. Applied did not utilize programs to discount letters of credit issued by customers in fiscal 2012. Applied utilized programs to discount letters of credit issued by customers of $211 million in fiscal 2011, and $230 million in fiscal 2010. 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. Applied factored accounts receivable and discounted promissory notes of $93 million in fiscal 2012, $80 million in fiscal 2011, and $157 million in fiscal 2010. Applied’s working capital was $2.8 billion at October 28, 2012 and $7.6 billion at October 30, 2011. During fiscal 2011, Applied received a U.S. federal income tax refund of $276 million including interest. During fiscal 2010, Applied received a U.S. federal income tax refund of approximately $130 million for the carryback of Applied’s net operating loss from fiscal 2009 to fiscal 2005.

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

	2012	2011	2010
Days sales outstanding	67	62	58
Days inventory outstanding	109	116	84
Days payable outstanding	34	33	36

Days sales outstanding varies due to the timing of shipments and the payment terms. The improving trend for days inventory outstanding from fiscal 2011 to fiscal 2012 represents increased cash flows from changes in inventory during the year. The change in inventory resulted from lower net sales and consequently, lower purchases, for fiscal 2012 compared to the prior year. The cash flow increase from the improved days inventory outstanding reflecting lower business volume was partially offset by decreases in accounts payable, accrued expenses, customer deposits and deferred revenues. Accounts receivable, inventories, accounts payable and accrued expenses provided an aggregate of $737 million in cash flows in fiscal 2012 and used an aggregate amount of $92 million in fiscal 2011 and $153 million in fiscal 2010.

Applied used $4.7 billion of cash for investing activities in fiscal 2012 and $862 million in fiscal 2010. Applied generated $707 million of cash from investing activities in fiscal 2011. Capital expenditures were $162 million in fiscal 2012, $209 million in fiscal 2011, and $169 million in fiscal 2010. Capital expenditures in fiscal 2012 were primarily for various information technology expenditures in North America, including the addition of Varian, and expansion of semiconductor assembly centers in Singapore. Capital expenditures in fiscal 2011 were offset by $99 million in proceeds received from the sale of two properties located in North America and $31 million in proceeds received from the completed divestiture of certain assets held for sale. Capital expenditures for fiscal 2010 were primarily for the implementation of an enterprise resource planning software system and the construction of a solar R&D/demonstration center in Xi’an, China. Capital expenditures for fiscal 2010 also included investment to construct a facility in Singapore. Purchases of investments, net of proceeds from sales and maturities of investments, totaled $308 million for fiscal 2012 and $370 million in fiscal 2010, while proceeds from sales and maturities of investments, net of purchases of investments, totaled $786 million for fiscal 2011.

Investing activities also included investments in technology and acquisitions of companies to allow Applied to access new market opportunities or emerging technologies. In fiscal 2012, Applied acquired Varian for $4.2 billion, net of cash acquired. In fiscal 2010, Applied acquired Semitool, a public company based in the state of Montana, for $323 million, net of cash acquired. See Note 8 of Notes to Consolidated Financial Statements for additional details on business acquisitions.

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Applied used cash for financing activities in the amount of $1.8 billion for fiscal 2012. Applied generated $960 million of cash from financing activities in fiscal 2011, consisting primarily of net proceeds received from the issuance of senior unsecured notes of $1.75 billion. Applied used cash for financing activities in the amount of $576 million for fiscal 2010. Financing activities for these periods included payment of cash dividends to stockholders and issuances and repurchases of common stock. Cash used to repurchase shares totaled $1.4 billion in fiscal 2012, $468 million in fiscal 2011, and $350 million in fiscal 2010. In March 2012, Applied’s Board of Directors approved a new stock repurchase program authorizing up to $3.0 billion in repurchases over the next three years ending in March 2015. Proceeds from stock issuances related to equity compensation awards were $97 million in fiscal 2012, $95 million in fiscal 2011, and $129 million in fiscal 2010.

During fiscal 2012, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.09 per share each and one quarterly cash dividend in the amount of $0.08 per share. During fiscal 2011, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.08 per share each and one quarterly cash dividend in the amount of $0.07 per share. During fiscal 2010, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.07 per share each and one quarterly cash dividend in the amount of $0.06. Cash paid in dividends during fiscal 2012, 2011 and 2010 amounted to $434 million, $397 million and $349 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.

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 2012 and is scheduled to expire in May 2016. 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 October 28, 2012. Remaining credit facilities in the amount of approximately $100 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 October 28, 2012 and October 30, 2011 and Applied has not utilized these credit facilities.

In fiscal 2011, Applied established a short-term commercial paper program of up to $1.5 billion. At October 28, 2012 and October 30, 2011, Applied did not have any commercial paper outstanding.

In June 2011, Applied issued senior unsecured notes (the Notes) in the aggregate principal amount of $1.75 billion. The following table summarizes the Notes issued in June 2011:

Due Date	Principal   Amount		Effective   Interest Rate	Interest Payment Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400	2.666%	June 15, December 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
	$	1,750

The indenture governing the Notes includes certain covenants with which Applied was in compliance at October 28, 2012. See Note 10 of Notes to Consolidated Financial Statements for additional discussion of long-term debt.

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 fiscal 2012, Applied recorded a bad debt provision of $14 million as a result of certain customers' financial condition. While Applied believes that its allowance for doubtful accounts at October 28, 2012 is adequate, it will continue to closely monitor customer liquidity and economic conditions.

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As of October 28, 2012, approximately $800 million 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 $450 million 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 Statements of Cash Flows in this report.

For details on standby letters of credit and other agreements with banks, see Off-Balance Sheet Arrangements below.

Off-Balance Sheet Arrangements

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 October 28, 2012, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $42 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 October 28, 2012, Applied Materials Inc. has provided parent guarantees to banks for approximately $102 million to cover these arrangements.

Applied also has operating leases for various facilities. Total rent expense was $38 million for fiscal 2012, $44 million for fiscal 2011, and $44 million for fiscal 2010.

Contractual Obligations

The following table summarizes Applied’s contractual obligations as of October 28, 2012:

	Payments Due by Period
Contractual Obligations	Total		Less Than 1  Year		1-3 Years		3-5 Years		More Than 5  Years
	(In millions)
Long-term debt obligations	$	1,950	$	—	$	—	$	600	$	1,350
Interest expense associated with long-term debt obligations	1,421		92		184		174		971
Operating lease obligations	89		31		32		18		8
Purchase obligations*	1,096		1,054		42		—		—
Other long-term liabilities	315		—		88		38		189
	$	4,871	$	1,177	$	346	$	830	$	2,518

______________________ 

* Represents Applied’s agreements to purchase goods and services consisting of Applied’s (a) outstanding purchase orders for goods and services; and (b) contractual requirements to make specified minimum payments even if Applied does not take delivery of the contracted goods.

In addition to the contractual obligations disclosed above, Applied has certain tax obligations. Gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year have been reported as non-current liabilities on the Consolidated Balance Sheet. As of October 28, 2012, the gross liability for unrecognized tax benefits was $174 million, exclusive of interest and penalties. Increases or decreases to interest and penalties on uncertain tax positions are included in provision for income taxes in the Consolidated Statement of Operations. Interest and penalties accrued related to uncertain tax positions were $7 million as of October 28, 2012 and $1 million as of October 30, 2011, which were classified as a long-term liability in the Consolidated Balance Sheets. At this time, Applied is unable to make a reasonably reliable estimate of the timing of payments in individual years due to uncertainties in the timing of tax audit outcomes and, accordingly, such amounts are not included in the above contractual obligation table.

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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 describes 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 I, 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.

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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 Results

Management uses non-GAAP 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 results presented below exclude the impact of the following, where applicable: certain discrete tax items; restructuring charges and any associated adjustments; certain acquisition-related costs; impairments of assets, goodwill, or investments; and/or gain or loss on sale of facilities. These non-GAAP 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 consolidated results for the past three fiscal years:

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

	Twelve Months Ended
	October 28, 2012			October 30, 2011			October 31, 2010
	(In millions, except percentages)
Non-GAAP Gross Margin
Reported gross margin (GAAP basis)	$	3,313		$	4,360		$	3,715
Certain items associated with acquisitions1	253			37			73
Non-GAAP gross margin	$	3,566		$	4,397		$	3,788
Non-GAAP gross margin percent (% of net sales)	40.9		%	41.8		%	39.7		%
Non-GAAP Operating Income
Reported operating income (GAAP basis)	$	411		$	2,398		$	1,384
Certain items associated with acquisitions1	298			51			91
Acquisition integration and deal costs	81			19			10
Impairment of goodwill	421			—			—
Restructuring charges and asset impairments2, 3, 4	168			(30		)	246
Gain on sale of facilities, net	—			(27		)	—
Non-GAAP operating income	$	1,379		$	2,411		$	1,731
Non-GAAP operating margin percent (% of net sales)	15.8		%	22.9		%	18.1		%
Non-GAAP Net Income
Reported net income (GAAP basis)	$	109		$	1,926		$	938
Certain items associated with acquisitions1	298			51			91
Acquisition integration and deal costs	81			19			10
Impairment of goodwill	421			—			—
Restructuring charges and asset impairments2, 3, 4	168			(30		)	246
Impairment of strategic investments	17			3			13
Gain on sale of facilities, net	—			(27		)	—
Reinstatement of federal R&D tax credit	—			(13		)	—
Resolution of audits of prior years’ income tax filings	(22		)	(203		)	—
Income tax effect of non-GAAP adjustments	(112		)	(3		)	(117		)
Non-GAAP net income	$	960		$	1,723		$	1,181

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 twelve months ended October 28, 2012 included severance and other charges of $106 million related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of $48 million related to the restructuring program announced on May 10, 2012, and severance charges of $14 million related to the integration of Varian.
3	Results for the twelve months ended October 30, 2011 included favorable adjustments of $36 million related to a restructuring program announced on July 21, 2010, $19 million related to a restructuring program announced on November 11, 2009, and $5 million related to a restructuring program announced on November 12, 2008, partially offset by asset impairment charges of $30 million primarily related to certain fixed and intangible assets.
4	Results for the twelve months ended October 31, 2010 included asset impairment charges of $108 million and restructuring charges of $45 million related to a restructuring program announced on July 21, 2010, restructuring charges of $84 million associated with a restructuring program announced on November 11, 2009, and asset impairment charges of $9 million related to a facility held for sale.

56

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

	Twelve Months Ended
	October 28, 2012			October 30, 2011			October 31, 2010
	(In millions, except per share amounts)
Non-GAAP Earnings Per Diluted Share
Reported earnings per diluted share (GAAP basis)	$	0.09		$	1.45		$	0.70
Certain items associated with acquisitions	0.19			0.03			0.05
Acquisition integration and deal costs	0.05			0.01			0.01
Impairment of goodwill	0.33			—			—
Restructuring charges and asset impairments	0.10			(0.01		)	0.12
Impairment of strategic investments	0.01			—			—
Gain on sale of facilities, net	—			(0.02		)	—
Reinstatement of federal R&D tax credit and resolution of audits of prior years’ income tax filings	(0.02		)	(0.16		)	—
Non-GAAP earnings per diluted share	$	0.75		$	1.30		$	0.88
Weighted average number of diluted shares	1,277			1,330			1,349

57

The following table presents a reconciliation of the GAAP and non-GAAP segment results for the past three fiscal years:

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

	Twelve Months Ended
	October 28, 2012			October 30, 2011			October 31, 2010
	(In millions, except percentages)
Non-GAAP SSG Operating Income
Reported operating income (GAAP basis)	$	1,243		$	1,764		$	1,892
Certain items associated with acquisitions1	253			12			27
Acquisition integration and deal costs	37			3			—
Restructuring charges and asset impairments2	4			—			—
Non-GAAP operating income	$	1,537		$	1,779		$	1,919
Non-GAAP operating margin percent (% of net sales)	27.8		%	32.9		%	36.2		%
Non-GAAP AGS Operating Income
Reported operating income (GAAP basis)	$	502		$	482		$	337
Certain items associated with acquisitions1	13			7			11
Restructuring charges and asset impairments2, 3	15			24			—
Non-GAAP operating income	$	530		$	513		$	348
Non-GAAP operating margin percent (% of net sales)	23.2		%	21.3		%	18.7		%
Non-GAAP Display Operating Income
Reported operating income (GAAP basis)	$	25		$	147		$	267
Certain items associated with acquisitions1	7			7			7
Non-GAAP operating income	$	32		$	154		$	274
Non-GAAP operating margin percent (% of net sales)	6.8		%	22.0		%	30.5		%
Non-GAAP EES Operating Income
Reported operating income (loss) (GAAP basis)	$	(668	)	$	453		$	(466	)
Certain items associated with acquisitions1	25			25			46
Impairment of goodwill	421			—			—
Restructuring charges and asset impairments2, 3, 4	38			(34		)	153
Non-GAAP operating income (loss)	$	(184	)	$	444		$	(267	)
Non-GAAP operating margin percent (% of net sales)	(43.3		)%	22.3		%	(18.0		)%

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 twelve months ended October 28, 2012 included restructuring and asset impairment charges of $43 million related to the restructuring program announced on May 10, 2012 and severance charges of $14 million related to the integration of Varian.
3	Results for the twelve months ended October 30, 2011 included favorable adjustments of $36 million related to a restructuring program announced on July 21, 2010, partially offset by asset impairment charges of $26 million primarily related to certain fixed and intangible assets.
4	Results for the twelve months ended October 31, 2010 included asset impairment charges of $108 million and restructuring charges of $45 million related to a restructuring program announced on July 21, 2010.

Note: The reconciliation of GAAP and non-GAAP 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.

58

Item 7A: 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 $1.5 billion at October 28, 2012. These securities are subject to interest rate risk and will decline in value if interest rates increase. Based on Applied’s investment portfolio at October 28, 2012, an immediate 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of approximately $23 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 October 28, 2012, the carrying amount of debt issued by Applied was $1.9 billion with an estimated fair value of $2.3 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 $221 million at October 28, 2012.

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 expected to occur within 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. Net foreign currency gains and losses were not material for fiscal 2012.

Item 8: Financial Statements and Supplementary Data

The consolidated financial statements required by this Item are set forth on the pages indicated at Item 15(a).

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

59

Item 9A: 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 the design and operation 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.

Management’s Report on Internal Control over Financial Reporting

Applied’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of Applied’s Chief Executive Officer and Chief Financial Officer, management of Applied conducted an evaluation of the effectiveness of Applied’s internal control over financial reporting based upon the framework in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, Applied’s management concluded that Applied’s internal control over financial reporting was effective as of October 28, 2012.

KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Form 10-K and, as part of the audit, has issued a report, included herein, on the effectiveness of Applied’s internal control over financial reporting as of October 28, 2012.

Changes in Internal Control over Financial Reporting

During the fourth quarter of fiscal 2012, there were no changes in the internal control over financial reporting that materially affected, or are reasonably likely to materially affect, Applied’s internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Procedures and 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.

Item 9B: Other Information

None

60

PART III

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, portions of the information required by Part III of Form 10-K are incorporated by reference from Applied’s Proxy Statement to be filed with the SEC in connection with the 2013 Annual Meeting of Stockholders (the Proxy Statement).

Item 10: Directors, Executive Officers and Corporate Governance

(1) Information regarding directors, including director nominations, and Applied’s audit committee and audit committee financial expert, appears in the Proxy Statement under “Election of Directors,” and is incorporated herein by reference.

(2) For information with respect to Executive Officers, see Part I, Item 1 of this Annual Report on Form 10-K, under “Executive Officers of the Registrant.”

(3) Information regarding Section 16(a) beneficial ownership reporting compliance appears in the Proxy Statement under “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Applied has implemented the Standards of Business Conduct, a code of ethics with which every person who works for Applied and every member of the Board of Directors is expected to comply. If any substantive amendments are made to the Standards of Business Conduct or any waiver is granted, including any implicit waiver, from a provision of the code to Applied’s Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer, Applied will disclose the nature of such amendment or waiver on its website or in a report on Form 8-K. The above information, including the Standards of Business Conduct, is available on Applied’s website under the Corporate Governance section at http://www.appliedmaterials.com/investor-relations. This website address is intended to be an inactive, textual reference only. None of the materials on, or accessible through, this website is part of this report or is incorporated by reference herein.

Item 11: Executive Compensation

Information regarding executive compensation appears in the Proxy Statement under “Executive Compensation and Related Information” and is incorporated herein by reference.

Information regarding compensation committee interlocks and insider participation appears in the Proxy Statement under “Compensation Committee Interlocks and Insider Participation” and is incorporated herein by reference.

Information regarding the compensation committee report appears in the Proxy Statement under “Human Resources and Compensation Committee Report” and is incorporated herein by reference.

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information regarding the security ownership of certain beneficial owners and management appears in the Proxy Statement, under “Principal Stockholders,” and is incorporated herein by reference.

The following table summarizes information with respect to options and other equity awards under Applied’s equity compensation plans as of October 28, 2012:

Equity Compensation Plan Information

Plan Category	(a) Number of Securities to be Issued Upon Exercise of  Outstanding Options, Warrants and Rights(1)		(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2)		(c) Number of  Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a))
	(In millions, except prices)
Equity compensation plans approved by security holders	50		$	10.67	220	(3)
Equity compensation plans not approved by security holders	6	(4)	$	10.19	16	(5)
Total	56		$	10.53	236

61

(1) Includes only options and restricted stock units (also referred to as “performance shares” under the Applied Materials, Inc. Employee Stock Incentive Plan) outstanding under Applied’s equity compensation plans, as no stock warrants or other rights were outstanding as of October 28, 2012. On March 6, 2012, Applied's stockholders approved the amended and restated Employee Stock Incentive Plan, which included an increase of 125 million shares of Applied common stock available for issuance under the plan and other amendments to the plan.

(2) The weighted average exercise price calculation does not take into account any restricted stock units as they have a de minimis purchase price.

(3) Includes 30 million shares of Applied common stock available for future issuance under the Applied Materials, Inc. Employees’ Stock Purchase Plan. Of these 30 million shares, 2 million are subject to purchase during the purchase period in effect as of October 28, 2012.

(4) Includes options to purchase 4 million shares of Applied common stock assumed through various mergers and acquisitions, after giving effect to the applicable exchange ratios. The assumed options had a weighted average exercise price of $6.66 per share. No further shares are available for issuance under the plans under which these assumed awards were granted.

(5) Includes 16 million shares of Applied common stock available for future issuance under the Applied Materials, Inc. Stock Purchase Plan for Offshore Employees. Of these 16 million shares, 2 million are subject to purchase during the purchase period in effect as of October 28, 2012.

Applied has the following equity compensation plans that have not been approved by stockholders:

2000 Global Equity Incentive Plan. The 2000 Global Equity Incentive Plan (the 2000 Plan) was adopted effective as of June 21, 2000. The 2000 Plan provides for the grant of non-qualified stock options to employees other than officers and directors. The administrator of the 2000 Plan (either the Board of Directors of Applied or a committee appointed by the Board) determines the terms and conditions of all stock options granted; provided, however, that (1) the exercise price generally may not be less than 100 percent of the fair market value (on the date of grant) of the stock covered by the option, and (2) the term of options can be no longer than 10 years (or 13 years in the event of death). Upon stockholder approval of the amended and restated Employee Stock Incentive Plan on March 6, 2012, the 2000 Global Equity Incentive Plan, which had approximately 76 million shares available for issuance, became unavailable for any future grants.

Stock Purchase Plan for Offshore Employees. The Stock Purchase Plan for Offshore Employees (the Offshore ESPP) was adopted effective as of October 16, 1995 for the benefit of employees of Applied’s participating affiliates (other than United States citizens or residents). The Offshore ESPP provides for the grant of options to purchase shares of Applied common stock through payroll deductions pursuant to one or more offerings. The administrator of the Offshore ESPP (the Board of Directors of Applied or a committee appointed by the Board) determines the terms and conditions of all options prior to the start of an offering, including the purchase price of shares, the number of shares covered by the option and when the option may be exercised. All options granted as part of an offering must be granted on the same date. Effective October 28, 2012, Applied amended the Offshore ESPP to increase the number of shares available for issuance under such plan by 15 million shares and correspondingly amended the stockholder-approved Applied Materials, Inc. Employees’ Stock Purchase Plan (the U.S. ESPP) to reduce the number of shares available for issuance under such plan by 15 million shares. Accordingly, as of October 28, 2012 a total of 36 million shares have been authorized for issuance under the Offshore ESPP, and 16 million shares remain available for issuance. These plan amendments did not result in any increase in the total aggregate number of shares authorized for issuance under the Offshore ESPP and the U.S. ESPP.

Nonemployee Director Share Purchase Plan. The Applied Materials, Inc. Nonemployee Director Share Purchase Plan was adopted effective March 22, 2005. The Nonemployee Director Share Purchase Plan provides a method by which non-employee directors may purchase Applied common stock at 100% of fair market value on the purchase date by foregoing cash they have earned as retainer fees or meeting fees. The shares generally are purchased at the same time the directors otherwise would have been paid the fees in cash. Since the directors pay full fair market value for the shares, there is no reserved amount of shares under this plan and, accordingly, the table above does not include any set number of shares available for future issuance under the plan.

Applied Materials Profit Sharing Scheme. The Applied Materials Profit Sharing Scheme was adopted effective July 3, 1996 to enable employees of Applied Materials Ireland Limited and its participating subsidiaries to purchase Applied common stock at 100% of fair market value on the purchase date. Under this plan, eligible employees may elect to forego a certain portion of their base salary and certain bonuses they have earned and that otherwise would be payable in cash to purchase shares of Applied common stock at full fair market value. Since the eligible employees pay full fair market value for the shares, there is no reserved amount of shares under this plan and, accordingly, the table above does not include any set number of shares available for future issuance under the plan.

62

Item 13: Certain Relationships and Related Transactions, and Director Independence

The information appearing in the Proxy Statement under the heading “Certain Relationships and Related Transactions” is incorporated herein by reference.

The information appearing in the Proxy Statement under the heading “Director Independence” is incorporated herein by reference.

Item 14: Principal Accounting Fees and Services

Information regarding principal accounting fees and services and the audit committee’s preapproval policies and procedures appears in the Proxy Statement under the headings “Fees Paid to KPMG LLP” and “Policy on Audit Committee’s Pre-Approval of Audit and Permissible Non-audit Services of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.

63

PART IV

Item 15: Exhibits and Financial Statements

(a) The following documents are filed as part of this Annual Report on Form 10-K:

		Page Number
(1)	Financial Statements:
	Reports of KPMG LLP, Independent Registered Public Accounting Firm	65
	Consolidated Statements of Operations for each of the years in the three-year period ended October 28, 2012	67
	Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended October 28, 2012	68
	Consolidated Balance Sheets at October 28, 2012 and October 30, 2011	69
	Consolidated Statements of Stockholders’ Equity for each of the years in the three-year period ended October 28, 2012	70
	Consolidated Statements of Cash Flows for each of the years in the three-year period ended October 28, 2012	71
	Notes to Consolidated Financial Statements	72
(2)	Exhibits:
	The exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K	115

All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Applied Materials, Inc.:

We have audited the accompanying consolidated balance sheets of Applied Materials, Inc. and subsidiaries (the Company) as of October 28, 2012 and October 30, 2011, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the years in the three‑year period ended October 28, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Applied Materials, Inc. and subsidiaries as of October 28, 2012 and October 30, 2011, and the results of their operations and their cash flows for each of the years in the three‑year period ended October 28, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Applied Materials, Inc.'s internal control over financial reporting as of October 28, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated December 5, 2012 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/S/    KPMG LLP

KPMG LLP

Santa Clara, California

December 5, 2012

65

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Applied Materials, Inc.:

We have audited Applied Materials, Inc.'s (the Company) internal control over financial reporting as of October 28, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Applied Materials, Inc. maintained, in all material respects, effective internal control over financial reporting as of October 28, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Applied Materials, Inc. and subsidiaries as of October 28, 2012 and October 30, 2011, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the years in the three‑year period ended October 28, 2012. Our report dated December 5, 2012 expressed an unqualified opinion on those consolidated financial statements.

/s/    KPMG LLP

KPMG LLP

Santa Clara, California

December 5, 2012

66

APPLIED MATERIALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Year	2012		2011			2010
	(In millions, except per share amounts)
Net sales	$	8,719	$	10,517		$	9,549
Cost of products sold	5,406		6,157			5,834
Gross margin	3,313		4,360			3,715
Operating expenses:
Research, development and engineering	1,237		1,118			1,143
Selling, general and administrative	1,076		901			942
Impairment of goodwill (Note 9)	421		—			—
Restructuring charges and asset impairments (Note 11)	168		(30		)	246
Gain on sale of facilities, net (Note 7)	—		(27		)	—
Total operating expenses	2,902		1,962			2,331
Income from operations	411		2,398			1,384
Impairments of strategic investments (Notes 3 and 4)	17		3			13
Interest and other expenses (Note 10)	95		59			21
Interest and other income, net	17		42			37
Income before income taxes	316		2,378			1,387
Provision for income taxes	207		452			449
Net income	$	109	$	1,926		$	938
Earnings per share:
Basic	$	0.09	$	1.46		$	0.70
Diluted	$	0.09	$	1.45		$	0.70
Weighted average number of shares:
Basic	1,266		1,319			1,340
Diluted	1,277		1,330			1,349

See accompanying Notes to Consolidated Financial Statements.

67

APPLIED MATERIALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Year	2012			2011			2010
	(In millions)
Net income	$	109		$	1,926		$	938
Other comprehensive income, net of tax:
Change in unrealized net gain (loss) on investments	(1		)	(8		)	4
Change in unrealized net gain (loss) on derivative investments	1			(4		)	4
Change in defined benefit plan liability (Notes 12 and 13)	(65		)	14			(6		)
Change in cumulative translation adjustments	(2		)	2			2
Other comprehensive income (loss), net of tax	(67		)	4			4
Comprehensive income	$	42		$	1,930		$	942

See accompanying Notes to Consolidated Financial Statements.

68

APPLIED MATERIALS, INC.

CONSOLIDATED BALANCE SHEETS

	October 28, 2012			October 30, 2011
	(In millions, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents (Notes 3 and 4)	$	1,392		$	5,960
Short-term investments (Notes 3 and 4)	545			283
Accounts receivable, net (Note 6)	1,220			1,532
Inventories (Note 7)	1,272			1,701
Deferred income taxes, net (Note 14)	369			580
Other current assets	304			299
Total current assets	5,102			10,355
Long-term investments (Notes 3 and 4)	1,055			931
Property, plant and equipment, net (Note 7)	910			866
Goodwill (Notes 8 and 9)	3,518			1,335
Purchased technology and other intangible assets, net (Notes 8 and 9)	1,355			211
Deferred income taxes and other assets (Note 14)	162			163
Total assets	$	12,102		$	13,861
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses (Note 7)	$	1,436		$	1,520
Customer deposits and deferred revenue (Note 7)	755			1,116
Income taxes payable (Note 14)	74			158
Total current liabilities	2,265			2,794
Long-term debt (Note 10)	1,946			1,947
Deferred income taxes and income taxes payable (Note 14)	341			104
Employee benefits and other liabilities (Note 13)	315			216
Total liabilities	4,867			5,061
Commitments and contingencies (Note 15)
Stockholders’ equity (Note 12):
Preferred stock: $.01 par value per share; 1 shares authorized; no shares issued	—			—
Common stock: $.01 par value per share; 2,500 shares authorized; 1,197 and 1,306 shares outstanding at 2012 and 2011, respectively	12			13
Additional paid-in capital	5,863			5,616
Retained earnings	12,700			13,029
Treasury stock: 699 and 573 shares at 2012 and 2011, respectively, net	(11,279		)	(9,864		)
Accumulated other comprehensive income (loss)	(61		)	6
Total stockholders’ equity	7,235			8,800
Total liabilities and stockholders’ equity	$	12,102		$	13,861

See accompanying Notes to Consolidated Financial Statements.

69

APPLIED MATERIALS, INC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock					Additional Paid-In Capital		Retained Earnings			Treasury Stock				Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount								Shares	Amount
	(In millions)
Balance at October 25, 2009	1,341		$	13		$	5,195	$	10,934		508	$	(9,046	)	$	(2	)	$	7,094
Net income	—		—			—		938			—	—			—			938
Other comprehensive income, net of tax	—		—			—		—			—	—			4			4
Dividends	—		—			—		(361		)	—	—			—			(361		)
Share-based compensation	—		—			126		—			—	—			—			126
Issuance under stock plans, net of a tax detriment of $28 and other	16		—			85		—			—	—			—			85
Common stock repurchases	(29	)	—			—		—			29	(350		)	—			(350		)
Balance at October 31, 2010	1,328		$	13		$	5,406	$	11,511		537	$	(9,396	)	$	2		$	7,536
Net income	—		—			—		1,926			—	—			—			1,926
Other comprehensive income, net of tax	—		—			—		—			—	—			4			4
Dividends	—		—			—		(408		)	—	—			—			(408		)
Share-based compensation	—		—			146		—			—	—			—			146
Issuance under stock plans, net of a tax detriment of $5 and other	14		—			64		—			—	—			—			64
Common stock repurchases	(36	)	—			—		—			36	(468		)	—			(468		)
Balance at October 30, 2011	1,306		$	13		$	5,616	$	13,029		573	$	(9,864	)	$	6		$	8,800
Net income	—		—			—		109			—	—			—			109
Other comprehensive loss, net of tax	—		—			—		—			—	—			(67		)	(67		)
Dividends	—		—			—		(438		)	—	—			—			(438		)
Share-based compensation	—		—			182		—			—	—			—			182
Stock options assumed in connection with acquisition	—		—			11		—			—	—			—			11
Issuance under stock plans, net of a tax detriment of $12 and other	17		—			54		—			—	—			—			54
Common stock repurchases	(126	)	(1		)	—		—			126	(1,415		)	—			(1,416		)
Balance at October 28, 2012	1,197		$	12		$	5,863	$	12,700		699	$	(11,279	)	$	(61	)	$	7,235

See accompanying Notes to Consolidated Financial Statements.

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APPLIED MATERIALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Year	2012			2011			2010
	(In millions)
Cash flows from operating activities:
Net income	$	109		$	1,926		$	938
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization	422			246			305
Net loss (gain) on dispositions and fixed asset retirements	7			(13		)	20
Provision for bad debts	14			5			17
Impairment of goodwill	421			—			—
Restructuring charges and asset impairments	168			(30		)	246
Deferred income taxes	161			122			(186		)
Net recognized loss on investments	23			19			20
Impairments of strategic investments	17			3			13
Share-based compensation	182			146			126
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	493			292			(767		)
Inventories	679			(163		)	145
Other current assets	37			(23		)	179
Other assets	9			(38		)	(7		)
Accounts payable and accrued expenses	(435		)	(221		)	469
Customer deposits and deferred revenue	(412		)	267			(23		)
Income taxes payable	(34		)	(89		)	262
Employee benefits and other liabilities	(10		)	(20		)	(34		)
Cash provided by operating activities	1,851			2,429			1,723
Cash flows from investing activities:
Capital expenditures	(162		)	(209		)	(169		)
Cash paid for acquisitions, net of cash acquired	(4,190		)	—			(323		)
Proceeds from sale of facilities and dispositions	—			130			—
Proceeds from sales and maturities of investments	1,019			1,923			1,408
Purchases of investments	(1,327		)	(1,137		)	(1,778		)
Cash provided by (used in) investing activities	(4,660		)	707			(862		)
Cash flows from financing activities:
Debt borrowings (repayments), net	(1		)	1,744			(6		)
Payments of debt issuance costs	—			(14		)	—
Proceeds from common stock issuances	97			95			129
Common stock repurchases	(1,416		)	(468		)	(350		)
Payments of dividends to stockholders	(434		)	(397		)	(349		)
Cash provided by (used in) financing activities	(1,754		)	960			(576		)
Effect of exchange rate changes on cash and cash equivalents	(5		)	6			(3		)
Increase (decrease) in cash and cash equivalents	(4,568		)	4,102			282
Cash and cash equivalents — beginning of year	5,960			1,858			1,576
Cash and cash equivalents — end of year	$	1,392		$	5,960		$	1,858
Supplemental cash flow information:
Cash payments for income taxes	$	243		$	761		$	388
Cash refunds from income taxes	$	79		$	289		$	201
Cash payments for interest	$	94		$	14		$	14

See accompanying Notes to Consolidated Financial Statements.

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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2012 and 2011 contained 52 weeks each, while fiscal 2010 contained 53 weeks. Each fiscal quarter of 2012 and 2011 contained 13 weeks. The first quarter of fiscal 2010 contained 14 weeks, while the second, third, and fourth quarters of fiscal 2010 each contained 13 weeks.

In November 2011, Applied completed its acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian). Beginning in the first quarter of fiscal 2012, the acquired business is included in Applied's consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.

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.

Cash Equivalents

All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Investments

All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the gains and losses on 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.

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.

Inventories

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully reserves for inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required.

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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.

Intangible Assets

Goodwill and indefinite-lived assets are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method.

Long-Lived Assets

Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets.

Research, Development and Engineering Costs

Research, development and engineering costs are expensed as incurred.

Sales and Value Added Taxes

Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Statements of Operations.

Warranty

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. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required.

Income Taxes

Income tax expense is based on pretax earnings. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards.

Restructuring

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. Costs associated with restructuring activities are included in restructuring charges and asset impairments in the Consolidated Statements of Operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Derivative Financial Instruments

Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. 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. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges of anticipated foreign currency denominated transactions, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Foreign Currencies

As of October 28, 2012, primarily all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in the Consolidated Statements of Operations as incurred.

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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentrations of Credit Risk

Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance on the presentation of comprehensive income to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The authoritative guidance also required presentation of adjustments for items that are reclassified from other comprehensive income in the statement where the components of net income and the components of other compressive income are presented, which was indefinitely deferred by the FASB in December 2011. Applied early adopted this authoritative guidance in fiscal 2012. The implementation of this authoritative guidance did not have an impact on Applied’s financial position or results of operations.

In July 2012, the FASB amended its existing guidance for goodwill and other intangible assets. This authoritative guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. To perform a qualitative assessment, a company must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. This authoritative guidance becomes effective for Applied in the first quarter of fiscal 2013, with early adoption permitted. The implementation of this authoritative guidance is not expected to have a material impact on Applied's financial position or results of operations.

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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure.

	2012		2011		2010
	(In millions, except per share amounts)
Numerator:
Net income	$	109	$	1,926	$	938
Denominator:
Weighted average common shares outstanding	1,266		1,319		1,340
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	11		11		9
Denominator for diluted earnings per share	1,277		1,330		1,349
Basic earnings per share	$	0.09	$	1.46	$	0.70
Diluted earnings per share	$	0.09	$	1.45	$	0.70
Potentially dilutive securities	9		16		34

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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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED 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:

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

 _________________________

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

October 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	297	$	—	$	—	$	297
Cash equivalents:
Money market funds	5,663		—		—		5,663
Total Cash equivalents	5,663		—		—		5,663
Total Cash and Cash equivalents	$	5,960	$	—	$	—	$	5,960
Short-term and long-term investments:
U.S. Treasury and agency securities	$	184	$	1	$	—	$	185
Non-U.S. government securities	40		—		—		40
Municipal securities	371		2		—		373
Commercial paper, corporate bonds and medium-term notes	216		3		1		218
Asset-backed and mortgage-backed securities	307		3		1		309
Total fixed income securities	1,118		9		2		1,125
Publicly traded equity securities	8		19		—		27
Equity investments in privately-held companies	62		—		—		62
Total short-term and long-term investments	$	1,188	$	28	$	2	$	1,214
Total Cash, Cash equivalents and Investments	$	7,148	$	28	$	2	$	7,174

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APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at October 28, 2012:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	515	$	516
Due after one through five years	663		668
Due after five years	1		2
No single maturity date**	396		414
	$	1,575	$	1,600

 _________________________

** 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

Gross realized gains and losses on sales of investments during fiscal 2012, 2011, and 2010 were as follows:

	2012		2011		2010
	(In millions)
Gross realized gains	$	3	$	20	$	6
Gross realized losses	$	3	$	4	$	2

At 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 October 28, 2012, October 30, 2011 and October 31, 2010 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for fiscal 2012, fiscal 2011 or fiscal 2010. During fiscal 2012, 2011 and 2010, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $17 million, $3 million and $13 million, respectively.

The following table provides the fair market value of Applied’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired as of October 30, 2011.

	In Loss Position  for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Commercial paper, corporate bonds and medium-term notes	$	32	$	1	$	32	$	1
Asset-backed and mortgaged-backed securities	77		1		77		1
Total	$	109	$	2	$	109	$	2

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 Fair Value Measurements

Applied’s financial assets are measured and recorded at fair value, except for equity investments held 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 October 28, 2012, 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 October 28, 2012 and October 30, 2011:

	October 28, 2012						October 30, 2011
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	483	$	—	$	483	$	5,663	$	—	$	5,663
U.S. Treasury and agency securities	128		246		374		109		76		185
Non-U.S. government securities	—		29		29		—		40		40
Municipal securities	—		431		431		—		373		373
Commercial paper, corporate bonds and medium-term notes	—		384		384		—		218		218
Asset-backed and mortgage-backed securities	—		298		298		—		309		309
Publicly traded equity securities	47		—		47		27		—		27
Total	$	658	$	1,388	$	2,046	$	5,799	$	1,016	$	6,815
Liabilities:
Deferred compensation	$	7	$	—	$	7	$	—	$	—	$	—
Total	$	7	$	—	$	7	$	—	$	—	$	—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The deferred compensation liability represents our obligation to pay certain benefits under a non-qualified deferred compensation plan. The related investments, held in a rabbi trust, consist of equity securities, primarily mutual funds, and are classified as Level 1 in the valuation hierarchy.

There were no transfers between Level 1 and Level 2 fair value measurements during fiscal 2012 and 2011 and Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of October 28, 2012 or October 30, 2011.

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. Equity investments in privately-held companies totaled $70 million at October 28, 2012, 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. Equity investments in privately-held companies totaled $62 million at October 30, 2011, of which $40 million of investments were accounted for under the cost method of accounting and $22 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.

During fiscal 2012, 2011 and 2010, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $17 million, $3 million and $13 million, respectively.

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 the short maturities of these financial instruments. At October 28, 2012, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.3 billion. At October 30, 2011, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.2 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 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 within 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.

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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 October 28, 2012 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 fiscal 2012, 2011 or 2010.

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 effects of derivative instruments in Applied's consolidated financial statements were not material for the periods presented.

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 October 28, 2012.

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 also discounts letters of credit through various financial institutions. Applied sells its accounts receivable without recourse. Details of discounted letters of credit, factored accounts receivable and discounted promissory notes for fiscal years ended October 28, 2012, October 30, 2011 and October 31, 2010 were as follows:

	2012		2011		2010
	(In millions)
Discounted letters of credit	$	—	$	211	$	230
Factored accounts receivable and discounted promissory notes	93		80		157
Total	$	93	$	291	$	387

Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented.

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Accounts receivable are presented net of allowance for doubtful accounts of $87 million at October 28, 2012 and $73 million at October 30, 2011. Changes in allowance for doubtful accounts were as follows:

	2012		2011			2010
	(In millions)
Beginning balance	$	73	$	74		$	67
Provision	14		5			17
Recoveries	—		(6		)	(10		)
Ending balance	$	87	$	73		$	74

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 October 28, 2012, 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

	October 28, 2012		October 30, 2011
	(In millions)
Inventories
Customer service spares	$	312	$	328
Raw materials	331		407
Work-in-process	234		336
Finished goods	395		630
	$	1,272	$	1,701

Included in finished goods inventory is $60 million at October 28, 2012, and $224 million at October 30, 2011, 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 $176 million and $140 million of evaluation inventory at October 28, 2012 and October 30, 2011, respectively.

	Useful Life	October 28, 2012			October 30, 2011
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	169		$	163
Buildings and improvements	3-30	1,196			1,155
Demonstration and manufacturing equipment	3-5	760			686
Furniture, fixtures and other equipment	3-15	734			722
Construction in progress		58			12
Gross property, plant and equipment		2,917			2,738
Accumulated depreciation		(2,007		)	(1,872		)
		$	910		$	866

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During fiscal 2012, fixed asset impairment charges of $20 million were recorded in relation to the Energy and Environmental Solutions segment restructuring plan, as discussed in Note 11, Restructuring Charges and Asset Impairments.

In fiscal 2011, Applied received $99 million in proceeds from the sale of two properties located in North America and recognized a net gain of $27 million on the transactions. Applied also completed the divestiture of certain assets held for sale for proceeds of $31 million.

	October 28, 2012		October 30, 2011
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	396	$	484
Compensation and employee benefits	426		455
Warranty	119		168
Dividends payable	108		104
Other accrued taxes	18		81
Interest payable	30		31
Restructuring reserve	133		11
Other	206		186
	$	1,436	$	1,520

Other accrued expenses included acquisition obligation for untendered Varian shares of $12 million as of October 28, 2012.

	October 28, 2012		October 30, 2011
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	143	$	249
Deferred revenue	612		867
	$	755	$	1,116

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

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Note 8 Business Combinations

Varian Semiconductor Equipment Associates, Inc.

On November 10, 2011, Applied completed the acquisition of Varian, a public company manufacturer of semiconductor processing equipment and the leading supplier of ion implantation equipment used by chip makers globally, for an aggregate purchase price of $4.2 billion in cash, net of cash acquired and assumed earned equity awards of $27 million, pursuant to an Agreement and Plan of Merger (the Merger Agreement) dated as of May 3, 2011. Applied's primary reasons for this acquisition were to complement existing product offerings and to provide opportunities for future growth. Varian designs, markets, manufactures and services ion implantation systems. These systems are primarily used in the manufacture of transistors, which are a basic building block of integrated circuits (ICs) or microchips. Ion implantation systems create a beam of electrically charged particles called ions, which are implanted into transistor structures at precise locations and depths, changing the electrical properties of the semiconductor device. These implantation systems may also be used in other areas of IC manufacture for modifying the material properties of the semiconductor devices, as well as in manufacturing crystalline-silicon solar cells.

Applied allocated the purchase price of this acquisition to tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values. These estimates were determined through established and generally accepted valuation techniques. Applied recorded $2.6 billion in goodwill, which represented the excess of the purchase price over the aggregate estimated fair values of the assets acquired and liabilities assumed in the acquisition. Of this amount, $1.8 billion of goodwill was allocated to the Silicon Systems Group segment, and the remainder was allocated to the Applied Global Services segment. Goodwill associated with the acquisition was primarily attributable to the opportunities from the addition of Varian's product portfolio which complement Applied's Silicon Systems Group's suite of products, including providing integrated process solutions to customers. Goodwill is not deductible for tax purposes. During the third quarter of fiscal 2012, Applied completed the purchase price allocation for the Varian acquisition.

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition date:

	Acquisition 2012
Estimated Fair Values	(In millions)
Cash and cash equivalents	$	632
Short-term investments	56
Accounts receivable, net	194
Inventories	250
Deferred income taxes and other current assets	66
Long-term investments	62
Property and equipment, net	104
Goodwill	2,604
Purchased intangible assets	1,365
Other assets	10
Total assets acquired	5,343
Accounts payable and accrued expenses	(134		)
Customer deposits and deferred revenue	(52		)
Income taxes payable	(60		)
Deferred income taxes	(211		)
Other liabilities	(25		)
Total liabilities assumed	(482		)
Purchase price allocated	$	4,861

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The following table presents details of the purchase price allocated to purchased intangible assets of Varian at the acquisition date:

	Useful Life	Purchased Intangible  Assets 2012
	(In years)	(In millions)
Developed technology	1 - 7	$	987
Customer relationships	15	150
In-process technology		142
Patents and trademarks	10	69
Backlog	1	7
Covenant not to compete	2	10
Total purchased intangible assets		$	1,365

The results of operations of Varian are included in Applied's consolidated results of operations, primarily in the results for the Silicon Systems Group and Applied Global Services segments, beginning in the first quarter of fiscal 2012. For the fiscal year ended October 28, 2012, net sales of approximately $1.0 billion and operating loss of approximately $148 million attributable to Varian were included in the consolidated results of operations. For the year ended October 28, 2012, results of operations included charges of $332 million, attributable to inventory fair value adjustments on products sold, amortization of purchased intangible assets, share-based compensation associated with accelerated vesting, deal costs and other integration costs associated with the acquisition. Of these amounts, deal costs and other acquisition-related costs of $45 million were not allocated to the segments for the year ended October 28, 2012. Deal costs are included in selling, general and administrative expenses in Applied's consolidated results of operations.

The following unaudited pro forma consolidated results of operations assume the acquisition was completed as of the beginning of fiscal 2011. The pro forma consolidated results of operations for the year ended October 30, 2011 combine the results of Applied for the year ended October 30, 2011, with the results of Varian for the year ended September 30, 2011.

The pro forma results below include adjustments related to the purchase price allocation and financing of the acquisition, primarily to increase depreciation and amortization with the higher values of property, plant and equipment and identifiable intangible assets, to increase interest expense for the additional debt incurred to complete the acquisition, and to reflect the related income tax effect. The pro forma results for the fiscal year ended October 30, 2011 include costs of $128 million, which reduced net income due to inventory fair value adjustments on products sold, share-based compensation associated with accelerated vesting and acquisition-related costs, which are not expected to occur in future quarters. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it necessarily indicative of future operating results. The pro forma information does not include any potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition.

	2012		2011
	(In millions, except per share amounts)
Net sales	$	8,719	$	11,734
Net income	$	167	$	1,862
Basic earnings per share	$	0.13	$	1.41
Diluted earnings per share	$	0.13	$	1.40

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Semitool, Inc. and Advent Solar

On December 21, 2009, Applied acquired Semitool, Inc. (Semitool), a public company based in the state of Montana, for a purchase price of $323 million in cash, net of cash acquired, pursuant to a tender offer and subsequent short-form merger. The acquired business is a leading supplier of electrochemical plating and wafer surface preparation equipment used by semiconductor packaging and manufacturing companies globally. Applied’s primary reasons for this acquisition were to complement its existing product offerings and to provide opportunities for future growth. The acquired business is included in results for the Silicon Systems Group segment.

In November 2009, Applied acquired substantially all the assets, including the intellectual property, of Advent Solar, a developer of advanced technology for c-Si solar photovoltaic cells and modules (PVs), for a purchase price of $14 million.

Applied allocated the purchase price of each of these acquisitions to tangible assets, liabilities and identifiable intangible assets acquired, based on their estimated fair values. The excess of purchase price over the aggregate fair values was recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. These estimates were determined through established and generally accepted valuation techniques. Applied calculated the fair value of the tangible and intangible assets acquired to allocate the purchase prices at the respective acquisition dates. Based upon these calculations, the purchase prices for the above acquisitions were allocated as follows:

Estimated Fair Values	Acquisitions 2010
	(In millions)
Fair value of net tangible assets acquired	$	117
Goodwill	165
Purchased intangible assets	93
Purchase price allocated	$	375

The results of operations of Semitool and Advent Solar were not material in relation to those of Applied.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 9 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 cost of the acquisition 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.

In fiscal 2011, Applied adopted authoritative guidance which allows entities to use a qualitative approach to test goodwill for impairment. This authoritative guidance permits an entity to first perform 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, it is necessary to perform 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’s reporting units are consistent with the reportable segments identified in Note 16, Industry Segment Operations, which are based on the manner in which Applied operates its business and the nature of those operations. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. Under the income approach, Applied calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Estimated future cash flows will be impacted by a number of factors including anticipated future operating results, estimated cost of capital and/or discount rates. Under the market approach, Applied estimates the fair value based on market multiples of revenue or earnings for comparable companies, as appropriate. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then Applied would perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. In the second step, Applied would then allocate the reporting unit's fair value to all of the assets and liabilities of that unit including the fair value of unrecorded intangible assets, in a hypothetical analysis, as if Applied had acquired the reporting unit in a business combination, with the fair value of the reporting unit being the “purchase price.” The excess of the “purchase price” over the carrying amounts assigned to assets and liabilities represents the implied fair value of goodwill. If Applied determined that the carrying value of a reporting unit’s goodwill exceeded its implied fair value, Applied would record an impairment charge equal to the difference.

In the fourth quarter of fiscal 2012, Applied performed a qualitative assessment to test goodwill for all reporting units for impairment and determined that it was more likely than not that each of the Silicon Systems Group, Applied Global Services, and Display reporting units' fair values exceeded its respective carrying values and that it was not necessary to perform the two-step goodwill impairment test for these reporting units.

Applied tested goodwill of the Energy and Environmental Solutions reporting unit for potential impairment during the second quarter of fiscal 2012 in light of second quarter developments that included current industry trends, financial performance, weaker short-term outlooks, and other adverse operating conditions within the solar industry. The results of the first step of the impairment test indicated that goodwill of the Energy and Environmental Solutions reporting unit was not impaired at that time. During the third quarter of fiscal 2012, Applied noted no events that would significantly impact the results of the impairment test performed in the second quarter of fiscal 2012. However, during the fourth quarter, the solar industry faced increasing challenges of solar panel manufacturing overcapacity and weaker operating performance and outlook, leading to the deterioration of the solar equipment market and Applied's customers' financial condition, coupled with lower market valuations. Taking these factors into account, Applied reassessed its financial outlook of the Energy and Environmental Solutions reporting unit, and consequently reevaluated the recoverability of Energy and Environmental Solutions' goodwill and performed the two-step impairment test.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Applied utilized an equal weighting of both the discounted cash flow method of the income approach and the guideline company method of the market approach to estimate the fair value of the Energy and Environmental Solutions reporting unit. The estimates used in the impairment testing were consistent with the discrete forecasts that Applied uses to manage its business, and considered the significant developments that occurred during the quarter. Under the discounted cash flow method, cash flows beyond the discrete forecasts were estimated using a terminal growth rate, which considered the long-term earnings growth rate specific to the Energy and Environmental Solutions reporting unit. The estimated future cash flows were discounted to present value using a discount rate that was the value-weighted average of the reporting unit's estimated cost of equity and debt derived using both known and estimated market metrics, and was adjusted to reflect risk factors that considered both the timing and risks associated with the estimated cash flows. The tax rate used in the discounted cash flow method reflected the international structure currently in place, which is consistent with the market participant perspective. Under the guideline company method, market multiples were applied to forecasted revenues and earnings before interest, taxes, depreciation and amortization. The market multiples used were consistent with comparable publicly-traded companies.

Applied then allocated the fair value of the reporting unit to all of the assets and liabilities of the Energy and Environmental Solutions reporting unit. Based on Applied's analyses, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the Energy and Environmental Solutions reporting unit. As a result, Applied recorded a $421 million goodwill impairment charge in the fourth quarter of fiscal 2012.

The evaluation of goodwill 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 analyses are lower than current estimates, a material impairment charge may result at that time.

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

	October 28, 2012		October 30, 2011
	(In millions)
Purchased technology, net	$	945	$	127
Intangible assets - finite-lived, net	268		84
Intangible assets - indefinite-lived	142		—
Total	$	1,355	$	211

Details of goodwill and other indefinite-lived intangible assets were as follows:

	October 28, 2012						October 30, 2011
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	381	$	—	$	381
Applied Global Services	1,027		—		1,027		193		—		193
Display	116		—		116		116		—		116
Energy and Environmental Solutions	224		—		224		645		—		645
Carrying amount	$	3,518	$	142	$	3,660	$	1,335	$	—	$	1,335

During fiscal 2012, goodwill and other indefinite-lived intangible assets increased by $2.3 billion due to the acquisition of Varian as discussed in Note 8, Business Combinations, partially offset by the impairment of goodwill recorded in the fourth quarter of fiscal 2012.

In fiscal 2011, Applied negotiated the divestiture of certain assets and determined the trade name, which was included in assets held for sale, to be impaired, and, accordingly, recorded $18 million of impairment charges.

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 based on 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.

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NOTES TO CONSOLIDATED 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 environment, technological advances, and changes in cost structure. In the fourth quarter of fiscal 2012, Applied performed an impairment analysis on the carrying value of its intangible assets and determined that there was no impairment.

Details of finite-lived intangible assets were as follows:

	October 28, 2012									October 30, 2011
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,300		$	252		$	1,552		$	310		$	20		$	330
Applied Global Services	28			44			72			28			40			68
Display	110			33			143			110			33			143
Energy and Environmental Solutions	105			232			337			105			232			337
Gross carrying amount	$	1,543		$	561		$	2,104		$	553		$	325		$	878
Accumulated amortization:
Silicon Systems Group	$	(411	)	$	(36	)	$	(447	)	$	(256	)	$	(8	)	$	(264	)
Applied Global Services	(22		)	(39		)	(61		)	(20		)	(31		)	(51		)
Display	(106		)	(27		)	(133		)	(102		)	(25		)	(127		)
Energy and Environmental Solutions	(59		)	(191		)	(250		)	(48		)	(177		)	(225		)
Accumulated amortization	$	(598	)	$	(293	)	$	(891	)	$	(426	)	$	(241	)	$	(667	)
Carrying amount	$	945		$	268		$	1,213		$	127		$	84		$	211

During fiscal 2012, the change in gross carrying amount of the finite-lived intangible assets was $1.2 billion due to the acquisition of Varian as discussed in Note 8, Business Combinations.

In fiscal 2011, Applied entered into an agreement to divest certain assets held in the Applied Global Services segment and determined certain identified purchased technology and finite-lived intangible assets, which were included in the assets held for sale, to be impaired, and, accordingly, recorded $6 million of impairment charges. The gross carrying amount of the divested amortized intangible assets was approximately $25 million. In fiscal 2010, Applied incurred intangible impairment charges of $31 million related to a plan to restructure its Energy and Environmental Solutions segment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Details of amortization expense by segment for fiscal 2012, 2011 and 2010 were as follows:

	2012		2011		2010
	(In millions)
Silicon Systems Group	$	183	$	13	$	21
Applied Global Services	9		7		9
Display	7		8		8
Energy and Environmental Solutions	25		24		44
Total	$	224	$	52	$	82

For fiscal 2012, 2011 and 2010, amortization expense was charged to the following categories:

	2012		2011		2010
	(In millions)
Cost of products sold	$	185	$	36	$	63
Research, development and engineering	1		—		1
Selling, general and administrative	38		16		18
Total	$	224	$	52	$	82

As of October 28, 2012, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	214
2014	198
2015	184
2016	175
2017	171
Thereafter	271
Total	$	1,213

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 10 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 2012 and is scheduled to expire in May 2016. 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 October 28, 2012. Remaining credit facilities in the amount of approximately $100 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 October 28, 2012 and October 30, 2011 and Applied has not utilized these credit facilities.

In June 2011, Applied issued senior unsecured notes due 2016, 2021, and 2041 in the aggregate principal amount of $1.75 billion (collectively, the Notes) pursuant to the terms of an indenture and first supplemental indenture (collectively, the Indenture). The Indenture contains certain covenants with which Applied was in compliance at October 28, 2012. Applied used the net proceeds of the Notes to fund a portion of the consideration payable in, and certain costs associated with, Applied’s acquisition of Varian.

Long-term debt outstanding was as follows:

	Principal Amount
	October 28, 2012			October 30, 2011			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			600			5.879%	June 15, December 15
Other debt	—			1
	1,950			1,951
Total unamortized discount	(4		)	(4		)
Total long-term debt	$	1,946		$	1,947

Applied has debt agreements that contain financial and other covenants. These covenants require Applied to maintain certain minimum financial ratios. At October 28, 2012, Applied was in compliance with all such covenants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 11 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.

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 are 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. In addition, 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. Applied expects to substantially complete this plan by the end of the third quarter of fiscal 2013, depending on local legal requirements.

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 $180 million to $230 million, substantially all of which will be paid in cash. Applied began recording these restructuring charges in the fourth quarter of fiscal 2012 and expects that the remainder will be recorded during fiscal 2013.

During the fourth quarter of fiscal 2012, Applied recognized $106 million of severance and other employee-related costs in connection with the 2012 Global Restructuring Plan, all of which remain outstanding as of October 28, 2012. These costs were not allocated to the segments and were based on an estimated number of employees who are impacted by the workforce reduction. Incremental charges will coincide with the acceptances of the voluntary retirement plan in the first quarter of fiscal 2013.

Due to the nature of this plan, the costs and charges incurred are subject to subsequent adjustments due to multiple assumptions and estimates used, including with respect to: the number and job levels of employees who participate in the voluntary retirement program, the nature and extent of additional workforce actions required to complete this plan, and other factors.

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 of October 28, 2012, as part of the 2012 EES Restructuring Plan, Applied was still in the process of relocating certain manufacturing, business operations and customer support functions of its precision wafering systems business and has ceased LED development activities. The 2012 EES Restructuring 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 12 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 impacted up to approximately 250 positions globally. During fiscal 2012, Applied recognized $48 million of restructuring and asset impairment charges in connection with the 2012 EES Restructuring Plan. These costs were primarily reported in the Energy and Environmental Solutions and Applied Global Services segments. As of October 28, 2012, remaining severance accrual associated with restructuring reserves under this program was $16 million.

Integration of Varian and Prior Year Restructuring Plans

During fiscal 2012, Applied also recognized $14 million of severance and other employee-related costs in connection with the integration of Varian. These costs were reported in the Silicon Systems Group and Applied Global Services segments. As of October 28, 2012, remaining severance accrual associated with restructuring reserves under this program was $5 million.

On July 21, 2010, Applied announced a plan (the 2010 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment, which was expected to impact between 400 to 500 positions globally. During fiscal 2011, as a result of changes in Applied’s operating environment and business requirements, Applied revised its workforce reduction under this program to approximately 200 positions and recorded a favorable adjustment of $36 million. During fiscal 2010, Applied incurred employee severance charges of $45 million associated with this program. As of October 28, 2012, the 2010 EES Restructuring Plan was complete.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On November 11, 2009, Applied announced a restructuring program (the 2010 Global Restructuring Plan) to reduce its global workforce as of October 25, 2009. During fiscal 2010, Applied recorded restructuring charges of $84 million under this program. The improved economic environment continued in the first half of fiscal 2011, and as a result Applied recorded an additional favorable adjustment of $19 million. As of October 28, 2012, the 2010 Global Restructuring Plan was complete.

On November 12, 2008, Applied initiated a restructuring program to reduce its global workforce by approximately 2,000 positions. During fiscal 2011, Applied favorably adjusted the severance accrual associated with this program by $5 million. As of October 28, 2012, this program was complete.

The following table summarizes major components of the restructuring and asset impairment charges during fiscal 2012, 2011 and 2010:

	2012		2011			2010
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs	$	106	$	—		$	—
2012 EES Restructuring Plan
Severance and other employee-related costs	27		—			—
Contract cancellation and other costs	1		—			—
Asset impairments	20		—			—
2010 EES Restructuring Plan
Severance and other employee-related costs	—		(36		)	45
Asset impairments	—		—			108
2010 Global Restructuring Plan
Severance and other employee-related costs	—		(19		)	84
Others
Severance and other employee-related costs	14		(5		)	—
Non-Restructuring Related
Asset impairments	—		30			9
	$	168	$	(30	)	$	246

In fiscal 2012, Applied incurred inventory-related charges of $13 million associated with 2012 EES Restructuring Plan that were recorded in cost of products sold and reported in the Energy and Environmental Solutions segment.

In fiscal 2011, Applied incurred impairment charges of $24 million associated with certain intangible assets and purchased technology. See Note 9, Goodwill, Purchased Technology and Other Intangible Assets. Applied also incurred asset impairment charges of $3 million related to certain fixed assets.

In fiscal 2010, Applied recorded asset impairment charges of $108 million related to the 2010 EES Restructuring Plan and $9 million to write down a facility to its estimated fair value based on prices for comparable local properties. In fiscal 2011, Applied recorded additional impairment charges of $3 million related to this facility. In addition, during fiscal 2010, inventory-related charges of $330 million were recorded in costs of products sold associated with SunFab^TM thin film solar equipment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restructuring and asset impairment charges were recorded as follows:

	2012		2011			2010
	(In millions)
Silicon Systems Group	$	4	$	—		$	—
Applied Global Services	15		24			—
Energy and Environmental Solutions	38		(33		)	153
Corporate Unallocated	111		(21		)	93
Total	$	168	$	(30	)	$	246

Changes in restructuring reserves for fiscal 2012, 2011, and 2010 related to other restructuring plans and facilities realignment programs initiated in prior periods were as follows:

	2012 Global Restructuring Plan		2012 EES Restructuring Plan					2010 EES Restructuring Plan			2010 Global 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			Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 25, 2009	$	—	$	—		$	—	$	—		$	—		$	26		$	5	$	31
Provision for restructuring reserves	—		—			—		45			104			—			—		149
Consumption of reserves	—		—			—		(3		)	(33		)	(20		)	—		(56		)
Adjustment of restructuring reserves	—		—			—		—			(20		)	—			—		(20		)
Balance, October 31, 2010	$	—	$	—		$	—	$	42		$	51		$	6		$	5	$	104
Consumption of reserves	—		—			—		(5		)	(27		)	(1		)	—		(33		)
Adjustment of restructuring reserves	—		—			—		(36		)	(19		)	(5		)	—		(60		)
Balance, October 30, 2011	$	—	$	—		$	—	$	1		$	5		$	—		$	5	$	11
Provision for restructuring reserves	106		27			1		—			—			14			—		148
Consumption of reserves	—		(11		)	—		(1		)	(5		)	(9		)	—		(26		)
Balance, October 28, 2012	$	106	16			1		—			—			$	5		$	5	$	133

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12 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, were as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Unrealized gain (loss) on investments, net	$	16		$	17
Unrealized gain (loss) on derivative instruments qualifying as cash flow hedges	1			—
Pension liability	(90		)	(25		)
Cumulative translation adjustments	12			14
	$	(61	)	$	6

The increase in accumulated other comprehensive income (loss) associated with pension liability amounted to $65 million, net of income tax effect of $23 million, and was primarily a result of lower discount rates used to determine the benefit obligation, taking into account prevailing interest rates.

Stock Repurchase Program

On March 5, 2012, Applied's Board of Directors approved a new 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. Applied's stock repurchase program authorized on March 8, 2010 was terminated concurrent with the start of the new repurchase program. At October 28, 2012, $1.8 billion remains available for future stock repurchases under the new repurchase program.

The following table summarizes Applied’s stock repurchases:

	2012		2011		2010
	(In millions, except per share amounts)
Shares of common stock repurchased	126		36		29
Cost of stock repurchased	$	1,416	$	468	$	350
Average price paid per share	$	11.22	$	12.88	$	12.15

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Dividends

During fiscal 2012, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.09 per share each and one quarterly cash dividend in the amount of $0.08 per share. During fiscal 2011, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.08 per share each and one quarterly cash dividend in the amount of $0.07 per share. During fiscal 2010, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.07 per share each and one quarterly cash dividend in the amount of $0.06. Dividends declared during fiscal 2012, 2011 and 2010 amounted to $438 million, $408 million and $361 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 adopted stock plans that permit grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the Employee Stock Incentive 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. 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 fiscal 2012, 2011, and 2010, 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:

	2012		2011		2010
	(In millions)
Share-based compensation	$	182	$	146	$	126
Tax benefit recognized	$	52	$	42	$	38

The effect of share-based compensation on the results of operations for fiscal 2012, 2011, and 2010 was as follows:

	2012		2011		2010
	(In millions)
Cost of products sold	$	54	$	48	$	32
Research, development, and engineering	54		46		43
Selling, general and administrative	74		52		51
Total	$	182	$	146	$	126

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 October 28, 2012, Applied had $259 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of stock options, restricted stock units, restricted stock, performance units, performance shares and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.5 years. On March 6, 2012, Applied's stockholders approved the amended and restated Employee Stock Incentive Plan, which included an increase of 125 million shares of Applied common stock available for issuance under the plan and other amendments to the plan. Also, upon approval of the amended and restated plan, the 2000 Global Equity Incentive Plan, which had approximately 76 million shares available for issuance, became unavailable for any future grants. At October 28, 2012, there were 195 million shares available for grants of stock options, restricted stock units, restricted stock, performance units, performance shares and other share-based awards under the Employee Stock Incentive Plan, and an additional 47 million shares available for issuance under the ESPP.

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NOTES TO CONSOLIDATED 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’s employee stock options have characteristics significantly different from those of publicly traded options. There were no stock options granted during fiscal 2012, 2011 and 2010. As part of the Varian acquisition, stock options to purchase 5 million shares of Applied common stock were assumed during fiscal 2012. The weighted average assumptions used in the model for the stock options assumed are outlined below:

	2012
Stock Options:
Dividend yield	2.6	%
Expected volatility	38.7	%
Risk-free interest rate	0.52	%
Expected life (in years)	3.3

Information with respect to stock options is as follows:

	2012		2011		2010
	(In millions)
Aggregate intrinsic value of outstanding stock options	$	43	$	58	$	73
Total intrinsic value of stock options exercised	$	21	$	23	$	15
Total fair value of stock options vested	$	41	$	17	$	21
Cash received from stock option exercises	$	33	$	41	$	78
Actual tax benefit realized from options exercised	$	7	$	11	$	4

Stock option activity for fiscal 2012, 2011 and 2010 was as follows:

	2012				2011				2010
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding, beginning of year	30		$	13.05	51		$	15.04	73		$	14.72
Assumed in Varian acquisition	5		$	4.85	—		$	—	—		$	—
Exercised	(4	)	$	7.30	(5	)	$	9.21	(7	)	$	10.88
Canceled and forfeited	(10	)	$	16.76	(16	)	$	20.28	(15	)	$	15.64
Outstanding, end of year	21		$	10.53	30		$	13.05	51		$	15.04
Exercisable, end of year	20		$	10.71	24		$	14.23	37		$	17.39

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information with respect to options outstanding and exercisable at October 28, 2012:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In millions)			(In years)	(In millions)		(In millions)			(In millions)
$3.09 — $9.99	15	$	7.68	1.80	$	43	14	$	7.80	$	40
$10.00 — $19.99	6	$	17.11	0.57	—		6	$	17.11	—
	21	$	10.53	1.43	$	43	20	$	10.71	$	40
Options exercisable and expected to become exercisable	21	$	10.53	1.43	$	43

Option prices at the lower end of the range were principally attributable to stock options assumed in connection with the Varian acquisition in fiscal year 2012.

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 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 units, restricted stock, performance shares and performance units granted to certain executive officers and other key employees 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 the 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 remain 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 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. An award that has become eligible for time-based vesting based on achievement of the performance goals will vest over approximately four years from the date of grant, provided that the grantee remains employed by Applied through each scheduled vesting date. Performance-based awards that do not become eligible for time-based vesting in a particular year may become eligible for time-based vesting 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 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 2012 awards, additional shares become eligible for time-based vesting depending on certain levels of achievement of Applied's 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Committee approved the grant of 3 million performance-based restricted stock units and 1 million performance-based shares of restricted stock under this program in fiscal 2012. In each of fiscal 2011 and 2010, the Committee approved the grant of 2 million performance-based restricted stock units and 0.1 million performance-based shares of restricted stock. With respect to the performance-based awards granted in fiscal 2012, as of October 28, 2012, no awards had beenearned. With respect to the performance-based awards granted in fiscal 2011, as of October 28, 2012, 100 percent of the awards had beenearned, subject to additional time-based vesting requirements. With respect to the performance-based awards granted in fiscal 2010, as of October 28, 2012, 82 percent of the awards had been earned, subject to additional time-based vesting requirements. The remaining 18 percent of the awards may still be earned, depending on performance in fiscal 2013.

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during fiscal 2012 are presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2009	12		$	16.16	2.4 Years	$	157
Granted	13		$	12.36
Vested	(5	)	$	17.13
Canceled	(2	)	$	15.41
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 31, 2010	18		$	13.33	2.8 Years	$	227
Granted	17		$	12.62
Vested	(5	)	$	14.64
Canceled	(2	)	$	13.11
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2011	28		$	12.64	2.8 Years	$	345
Granted	19		$	10.61
Vested	(9	)	$	12.87
Canceled	(2	)	$	12.26
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 Years	$	376
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	34		$	11.81	2.3 Years	$	357

At October 28, 2012, 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.

The actual tax benefit realized for the tax deductions from vested restricted stock units totaled $27 million in fiscal 2012 and $22 million in each of fiscal 2011 and 2010.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $2.73 per share for the year ended October 28, 2012, $3.03 per share for the year ended October 30, 2011 and $2.76 per share for the year ended October 31, 2010. The number of shares issued under the ESPP during fiscal 2012, 2011 and 2010 was 7 million, 6 million and 5 million, respectively. At October 28, 2012, there were 47 million available for future issuance under the ESPP. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model for fiscal 2012, 2011 and 2010 are outlined in the following table:

	2012		2011		2010
ESPP:
Dividend yield	3.01	%	2.53	%	2.44	%
Expected volatility	29.6	%	31.1	%	33.3	%
Risk-free interest rate	0.13	%	0.09	%	0.19	%
Expected life (in years)	0.5		0.5		0.5

Note 13 Employee Benefit Plans

Employee Bonus Plans

Applied has various employee bonus plans. A discretionary bonus plan provides for the distribution of a percentage of pre-tax income to Applied employees who are not participants in other performance-based incentive plans, up to a maximum percentage of eligible compensation. Other plans provide for bonuses to Applied’s executives and other key contributors based on the achievement of profitability and/or other specified performance criteria. Charges under these plans were $271 million for fiscal 2012, $319 million for fiscal 2011, and $320 million charges for fiscal 2010.

Employee Savings and Retirement Plan

Applied’s Employee Savings and Retirement Plan (401(k) Plan) is qualified under Sections 401(a) and (k) of the Internal Revenue Code. Eligible employees may make salary deferral and catch-up contributions under the 401(k) Plan on a pre-tax basis. Applied matches a percentage of each participant’s salary deferral contributions with cash contributions. Plan participants who were employed by Applied or any of its affiliates on or after January 1, 2010 became 100% vested in their Applied matching contribution account balances. Participants may direct that funds held in their 401(k) Plan accounts, including any Applied matching contributions, be invested in any of the diversified investment funds available under the 401(k) Plan or within certain limits in the Applied Materials, Inc. Common Stock Fund (Stock Fund), which invests solely in shares of Applied common stock. The Stock Fund is a non-leveraged employee stock ownership plan (within the meaning of Section 4975(e)(7) of the Internal Revenue Code) and, as a result, participants have the option of specifying that any future cash dividends paid on shares held in the Stock Fund be either reinvested in the Stock Fund or distributed directly to them in cash no later than 90 days after the calendar year for which the dividends were paid. Applied’s matching contributions under this plan were approximately $27 million for each of fiscal 2012 and fiscal 2011, and $25 million, net of $1 million in forfeitures, for fiscal 2010.

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In addition, Applied has a defined contribution retirement plan covering all U.S. Varian employees. Generally, Applied makes a guaranteed contribution, and in some years a discretionary contribution, to each participant's account, typically based on fiscal year earnings achievement and calculated as a percentage of the participant's base pay. Participants are entitled, upon termination or retirement, to their portion of the retirement fund assets, which are held by a third-party custodian. Applied’s matching contributions under this plan were approximately $10 million for fiscal 2012.

Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits

Several of Applied’s foreign subsidiaries have defined benefit pension plans covering substantially all of their eligible employees. Benefits under these plans are typically based on years of service and final average compensation levels. The plans are managed in accordance with applicable local statutes and practices. Applied deposits funds for certain of these plans with insurance companies, pension trustees, government-managed accounts, and/or accrues the expense for the unfunded portion of the benefit obligation on its Consolidated Financial Statements. Applied’s practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements as established by applicable local governmental oversight and taxing authorities. Depending on the design of the plan, local custom and market circumstances, the liabilities of a plan may exceed qualified plan assets. The differences between the aggregate projected benefit obligations and aggregate plan assets of these plans have been recorded as liabilities by Applied and are included in employee benefits and accrued expenses in the Consolidated Balance Sheets.

Applied also has a U.S. post-retirement plan that provides certain medical and vision benefits to eligible retirees who are at least age 55 and whose years of service plus their age equals at least 65 at their date of retirement. An eligible retiree also may elect coverage for an eligible spouse or domestic partner who is not eligible for Medicare. Coverage under the plan generally ends for both the retiree and spouse or domestic partner upon becoming eligible for Medicare. Applied’s liability under this post-retirement plan, which was included in other long-term liabilities in the Consolidated Balance Sheets, was $28 million at October 28, 2012 and $13 million at October 30, 2011. The balance at October 28, 2012 includes an allowance for the potential obligations in connection with the recently announced voluntary retirement program associated with the 2012 Global Restructuring Plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for fiscal 2012 and 2011 is presented below.

	2012			2011
	(In millions, except percentages)
Change in projected benefit obligation
Beginning projected benefit obligation	$	303		$	309
Service cost	16			15
Interest cost	14			14
Plan participants’ contributions	1			1
Actuarial (gain) loss	96			(26		)
Curtailments, settlements and special termination benefits	(3		)	(9		)
Foreign currency exchange rate changes	(4		)	5
Benefits paid	(7		)	(8		)
Plan amendments and business combinations	18			2
Ending projected benefit obligation	$	434		$	303
Ending accumulated benefit obligation	$	395		$	273
Range of assumptions to determine benefit obligations
Discount rate	1.3% - 4.7%			1.7% - 6.5%
Rate of compensation increase	2.0% - 8.0%			2.0% - 5.0%
Change in plan assets
Beginning fair value of plan assets	$	183		$	162
Return on plan assets	14			3
Employer contributions	31			26
Plan participants’ contributions	1			1
Foreign currency exchange rate changes	(4		)	2
Divestitures, settlements and business combinations	(4		)	(3		)
Benefits paid	(7		)	(8		)
Ending fair value of plan assets	$	214		$	183
Funded status	$	(220	)	$	(120	)
Amounts recognized in the consolidated balance sheets
Noncurrent asset	$	5		$	13
Current liability	(4		)	(3		)
Noncurrent liability	(221		)	(130		)
Total	$	(220	)	$	(120	)
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
Actuarial loss	$	6		$	1
Prior service cost (credit)	(1		)	—
Total	$	5		$	1
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	117		$	27
Prior service cost (credit)	(3		)	(4		)
Total	$	114		$	23
Plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	$	428		$	259
Fair value of plan assets	$	202		$	126
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	$	389		$	225
Fair value of plan assets	$	202		$	116

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2012		2011
Plan assets — allocation
Equity securities	37	%	37	%
Debt securities	33	%	28	%
Insurance contracts	23	%	26	%
Commingled funds	5	%	5	%
Cash	2	%	4	%

The following table presents a summary of the ending fair value of the plan assets:

	October 28, 2012								October 30, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In millions)
Equity securities	$	79	$	—	$	—	$	79	$	67	$	—	$	—	$	67
Debt securities	70		—		—		70		51		—		—		51
Insurance contracts	—		—		49		49		—		—		48		48
Commingled funds	—		12		—		12		—		10		—		10
Cash	4		—		—		4		7		—		—		7
Total	$	153	$	12	$	49	$	214	$	125	$	10	$	48	$	183

The following table presents the activity in Level 3 instruments during fiscal 2012 and 2011:

	2012			2011
	(In millions)
Balance, beginning of year	$	48		$	44
Actual return on plan assets:
Relating to assets still held at reporting date	1			1
Purchases, sales, settlements, net	3			2
Currency impact	(3		)	1
Balance, end of year	$	49		$	48

Applied’s investment strategy for its defined benefit plans is to invest plan assets in a prudent manner, maintaining well-diversified portfolios with the long-term objective of meeting the obligations of the plans as they come due. Asset allocation decisions are typically made by plan fiduciaries with input from Applied’s international pension committee. Applied’s asset allocation strategy incorporates a sufficient equity exposure in order for the plans to benefit from the expected better long-term performance of equities relative to the plans’ liabilities. Applied retains investment managers, where appropriate, to manage the assets of the plans. Performance of investment managers is monitored by plan fiduciaries with the assistance of local investment consultants. The investment managers make investment decisions within the guidelines set forth by plan fiduciaries. Risk management practices include diversification across asset classes and investment styles, and periodic rebalancing toward target asset allocation ranges. Investment managers may use derivative instruments for efficient portfolio management purposes. Plan assets do not include any of Applied’s own equity or debt securities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost and benefit obligation calculations for fiscal 2012, 2011 and 2010 is presented below.

	2012			2011			2010
	(In millions, except percentages)
Components of net periodic benefit cost
Service cost	$	16		$	15		$	13
Interest cost	14			14			13
Expected return on plan assets	(11		)	(11		)	(7		)
Amortization of actuarial loss and prior service credit	—			2			1
Settlement and curtailment loss (gain)	6			(2		)	1
Net periodic benefit cost	$	25		$	18		$	21
Weighted average assumptions
Discount rate	4.53		%	4.33		%	4.76		%
Expected long-term return on assets	5.91		%	6.39		%	6.92		%
Rate of compensation increase	3.09		%	3.42		%	3.30		%

Asset return assumptions are derived based on actuarial and statistical methodologies, from analysis of long-term historical data relevant to the country in which each plan is in effect and the investments applicable to the corresponding plan. The discount rate for each plan was derived by reference to appropriate benchmark yields on high quality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark yields.

Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows:

	Benefit Payments
	(In millions)
2013	$	12
2014	13
2015	14
2016	14
2017	15
2018-2022	87
	$	155

Company contributions to these plans for fiscal 2013 are expected to be approximately $17 million.

Executive Deferred Compensation Plans

Applied sponsors two unfunded deferred compensation plans, the Executive Deferred Compensation Plan (Predecessor EDCP) and the 2005 Executive Deferred Compensation Plan (2005 EDCP), under which certain employees may elect to defer a portion of their following year’s eligible earnings. The Predecessor EDCP was frozen as of December 31, 2004 such that no new deferrals could be made under the plan after that date and the plan would qualify for “grandfather” relief under Section 409A of the Internal Revenue Code. The Predecessor EDCP participant accounts continue to be maintained under the plan and credited with deemed interest. The 2005 EDCP was implemented by Applied effective as of January 1, 2005 and is intended to comply with the requirements of Section 409A of the Internal Revenue Code. Amounts payable, including accrued deemed interest, totaled $50 million at October 28, 2012 and $59 million at October 30, 2011, which were included in other long-term liabilities in the Consolidated Balance Sheets.

In addition, Applied also sponsors a non-qualified deferred compensation plan as a result of the acquisition of Varian. At October 28, 2012, the liability related to this plan totaled $7 million, of which $6 million was included in other long-term liabilities in the Consolidated Balance Sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14 Income Taxes

The components of income from operations before income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(In millions)
U.S.	$	381		$	1,257	$	787
Foreign	(65		)	1,121		600
	$	316		$	2,378	$	1,387

The components of the provision for income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011			2010
	(In millions)
Current:
U.S.	$	74		$	290		$	463
Foreign	75			206			134
State	8			5			34
	157			501			631
Deferred:
U.S.	52			(95		)	(160		)
Foreign	(4		)	(23		)	4
State	2			69			(26		)
	50			(49		)	(182		)
	$	207		$	452		$	449

A reconciliation between the statutory U.S. federal income tax rate of 35 percent  and Applied’s actual effective income tax rate for fiscal 2012, 2011 and 2010 is presented below:

	2012		2011		2010
Tax provision at U.S. statutory rate	35.0	%	35.0	%	35.0	%
Favorable resolutions from audits of prior years’ income tax filings	(6.0	)	(6.9	)	—
Effect of foreign operations taxed at various rates	(8.5	)	(8.1	)	(3.0	)
State income taxes, net of federal benefit	2.0		1.6		0.9
Research and other tax credits	(1.0	)	(1.2	)	(0.3	)
Production benefit	(8.0	)	(0.8	)	(1.2	)
Goodwill impairment	47.0		—		—
Share-based compensation	4.0		0.4		0.6
Other	1.0		(1.0	)	0.4
	65.5	%	19.0	%	32.4	%

The effective income tax rate for fiscal 2012 is significantly higher than the rate for fiscal 2011 due primarily to the recording of goodwill impairment charges in fiscal 2012, which are not deductible for tax purposes.

105

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Deferred tax assets:
Inventory reserves and basis difference	$	119		$	214
Installation and warranty reserves	27			31
Foreign tax credits on undistributed foreign earnings	—			112
Accrued liabilities	224			250
Restructuring reserves	23			4
Deferred revenue	36			53
Capital loss carryforward	—			4
Tax credits and net operating losses	111			39
Deferred compensation	41			21
Share-based compensation	51			49
Intangibles	12			10
Gross deferred tax assets	644			787
Valuation allowance	(46		)	(13		)
Total deferred tax assets	598			774
Deferred tax liabilities:
Depreciation	(71		)	(61		)
Purchased technology	(190		)	(86		)
Undistributed foreign earnings	(93		)	—
Other	(25		)	(44		)
Total gross deferred tax liabilities	(379		)	(191		)
Net deferred tax assets	$	219		$	583

The following table presents the breakdown between current and non-current net deferred tax assets and liabilities:

	October 28, 2012			October 30, 2011
	(In millions)
Current deferred tax asset	$	369		$	580
Non-current deferred tax asset	51			78
Current deferred tax liability	(1		)	(1		)
Non-current deferred tax liability	(200		)	(74		)
	$	219		$	583

Current deferred tax liabilities are included in accounts payable and accrued expenses on the Consolidated Balance Sheets and non-current deferred tax liabilities are included in deferred income taxes and income taxes payable on the Consolidated Balance Sheets.

106

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A valuation allowance is recorded to reflect the estimated amount of deferred tax assets that may not be realized. A valuation allowance was established against state research and development credit carryforwards where it is believed that it is not more likely than not that the carryforwards will be realized.

Applied has been granted tax holidays for certain of its subsidiaries in Singapore and Israel. The tax benefit arising from these tax holidays was $54 million for 2012 ($0.04 per diluted share). The tax holidays expire at various times through 2025, excluding potential renewals, and are subject to certain conditions with which the Company expects to comply.

For fiscal 2012, U.S. income taxes have not been provided for approximately $1.6 billion of cumulative undistributed earnings of several non-U.S. subsidiaries. Applied intends to reinvest these earnings indefinitely in operations outside of the U.S. If these earnings were distributed to the United States in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, Applied would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.

At October 28, 2012, Applied has state research and development tax credit carryforwards of $51 million which have lives ranging from 15 years to indefinite. Applied has a $40 million federal foreign tax credit carryforward which has a 10 year life. Applied also has net operating loss carryforwards in foreign jurisdictions of $11 million and state jurisdictions of $6 million, which have lives ranging from five years to indefinite. Management believes it is more likely than not that all loss and tax credit carryforwards at October 28, 2012, net of valuation allowance, will be utilized in future periods.

Applied’s income taxes payable have been reduced by the tax benefits associated with employee stock option transactions. These benefits, credited directly to stockholders’ equity with a corresponding reduction to taxes payable, amounted to $2 million for fiscal 2012, $4 million for fiscal 2011, and $2 million for fiscal 2010.

Applied maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	2012			2011
	(In millions)
Beginning balance of gross unrecognized tax benefits	$	59		$	328
Uncertainties arising from the acquisition of Varian	76			—
Settlements with tax authorities	(16		)	(314		)
Increases in tax positions for current years	46			45
Increases in tax positions for prior years	53			—
Decreases in tax positions for prior years	(37		)	—
Ending balance of gross unrecognized tax benefits	$	181		$	59

As of October 28, 2012, Applied had unrecognized tax benefits, net of federal deduction for state tax, of $177 million, all of which, if recognized, would result in a reduction of Applied’s effective tax rate.

As of October 28, 2012, the gross liability for unrecognized tax benefits was $174 million, exclusive of interest and penalties. Increases or decreases to interest and penalties on uncertain tax positions are included in provision for income taxes in the Consolidated Statement of Operations. Interest and penalties accrued related to uncertain tax positions were $7 million as of October 28, 2012 and $1 million as of October 30, 2011, which were classified as a long-term liability in the Consolidated Balance Sheets.

In fiscal 2011, Applied received a refund of $276 million, including interest, as a result of settling an Internal Revenue Service (IRS) audit for fiscal years 2006 and 2007. This resulted in the recognition of a tax benefit of $176 million in the Consolidated Statement of Operations for fiscal 2011, which was net of previously recognized tax benefits.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During fiscal 2011, the IRS began an examination of Applied’s federal income tax returns for fiscal years 2009 and 2008. Applied believes it has adequately reserved for any income tax uncertainties that may arise as a result of this examination.

A number of Applied’s tax returns remain subject to examination by taxing authorities. These include U.S. federal returns for fiscal 2008 and later years, California returns for fiscal 2006 and later years, tax returns for certain other states for fiscal 2007 and later years, and tax returns in certain jurisdictions outside of the United States for fiscal 2005 and later years.

The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be part of the settlement process, is highly uncertain. This could cause large fluctuations in the balance sheet classification of current assets and non-current assets and liabilities. Applied estimates that unrecognized tax benefits at October 28, 2012 could be reduced by approximately $9 million in the next 12 months.

Note 15 Warranty, Guarantees and Contingencies

Leases

Applied leases some of its facilities and equipment under non-cancelable operating leases and has options to renew most leases, with rentals to be negotiated. Total rent expense was $38 million for fiscal 2012, $44 million for fiscal 2011, and $44 million for fiscal 2010.

As of October 28, 2012, future minimum lease payments are expected to be as follows:

	Lease Payments
	(In millions)
2013	$	31
2014	20
2015	12
2016	10
2017	8
Thereafter	8
	$	89

Warranty

Changes in the warranty reserves during fiscal 2012 and 2011 were as follows:

	2012			2011
	(In millions)
Beginning balance	$	168		$	155
Provisions for warranty	107			170
Consumption of reserves	(156		)	(157		)
Ending balance	$	119		$	168

Applied products are generally sold with a 12-month warranty 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 October 28, 2012, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $42 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 October 28, 2012, 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 Taiwan and South Korea since 2003, and more recently in China, involving technology used in manufacturing liquid crystal displays (LCDs). Applied believes that it has meritorious claims and defenses against Jusung that it intends to pursue vigorously.

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. Jusung filed a counterclaim against Applied. On December 31, 2010, the Hsinchu District Court dismissed both actions, and appeals by both parties remain pending at the Taiwan Intellectual Property Court. Jusung unsuccessfully sought invalidation of Applied's CVD patent in the Taiwanese Intellectual Property Office (TIPO). In September 2010, the Taipei Supreme Administrative Court dismissed Jusung's appeal of the TIPO's decision. In 2009, Jusung filed a second action with the TIPO seeking invalidation of Applied's CVD patent, which action remains pending.

In November 2009, Applied filed an action in China with the Patent Reexamination Board of the State Intellectual Property Office seeking to invalidate a Jusung patent related to separability of the transfer chamber on a CVD tool. The Patent Reexamination Board invalidated Jusung's patent in China and Jusung's appeal was dismissed by the Beijing No. 1 Intermediate People's Court. Jusung appealed this decision to the Beijing High People's Court and on June 20, 2012, the Court rejected Jusung's appeal.

Korea Criminal Proceedings

In February 2010, the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) indicted employees of several companies for the alleged improper receipt and use of confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The Prosecutor's Office did not name Applied or any of its subsidiaries as a party to the criminal action. 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. Hearings on these matters have been ongoing. On November 22, 2012, the Court held the last hearing and scheduled the announcement of its decision for January 24, 2013.

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 or these claims and proceedings cannot be predicted with certainty, Applied does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition or results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 16 Industry Segment Operations

Applied’s four reportable segments are: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions. As defined under the accounting literature, Applied’s chief operating decision-maker are both the Chief Executive Officer and the President, who 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 October 28, 2012 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 charges or adjustments 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.

In November 2011, Applied completed its acquisition of Varian. Beginning in the first quarter of fiscal 2012, the acquired business is primarily included in the results for the Silicon Systems Group and Applied Global Services segments, with certain corporate functions included in corporate and unallocated costs.

In fiscal 2010, as part of the restructuring of the Energy and Environmental Solutions segment, Applied discontinued marketing of its fully-integrated SunFab production lines but continues to offer individual tools for thin film solar manufacturing to existing customers. Applied is supporting existing SunFab customers with services, upgrades and capacity increases through its Applied Global Services segment as these products are considered to have reached a particular stage in the product lifecycle. Effective in the first quarter of fiscal 2011, Applied accounts for thin film products under its Applied Global Services segment.

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 solar photovoltaic cells and modules, high throughput roll-to-roll coating systems for flexible electronics and web products.

110

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Information for each reportable segment as of October 28, 2012, October 30, 2011 and October 31, 2010 and for the fiscal years then ended, is as follows:

	Net Sales		Operating Income  (Loss)			Depreciation/ Amortization		Capital Expenditures		Segment Assets
	(In millions)
2012:
Silicon Systems Group	$	5,536	$	1,243		$	256	$	71	$	5,106
Applied Global Services	2,285		502			17		8		2,035
Display	473		25			8		1		278
Energy and Environmental Solutions	425		(668		)	38		6		513
Total Segment	$	8,719	$	1,102		$	319	$	86	$	7,932
2011:
Silicon Systems Group	$	5,415	$	1,764		$	52	$	59	$	2,036
Applied Global Services	2,413		482			13		7		1,337
Display	699		147			7		31		459
Energy and Environmental Solutions	1,990		453			34		16		1,438
Total Segment	$	10,517	$	2,846		$	106	$	113	$	5,270
2010:
Silicon Systems Group	$	5,304	$	1,892		$	66	$	39	$	2,317
Applied Global Services	1,865		337			25		5		1,285
Display	899		267			8		5		419
Energy and Environmental Solutions	1,481		(466		)	57		41		1,402
Total Segment	$	9,549	$	2,030		$	156	$	90	$	5,423

Operating results for fiscal 2012, 2011 and 2010 included restructuring charges and asset impairments as discussed in detail in Note 11, Restructuring Charges and Asset Impairments.

Reconciliations of segment operating results to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012			2011			2010
	(In millions)
Total segment operating income	$	1,102		$	2,846		$	2,030
Corporate and unallocated costs	(580		)	(496		)	(553		)
Restructuring charges and asset impairments	(111		)	21			(93		)
Gain on sale of facility	—			27			—
Income from operations	$	411		$	2,398		$	1,384

Corporate and unallocated costs for fiscal 2012 included deal costs and other acquisition-related costs related to the Varian acquisition of $45 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reconciliations of depreciation and amortization expense to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment depreciation and amortization	$	319	$	106	$	156
Depreciation on shared facilities and information technology assets	103		140		149
Consolidated depreciation and amortization	$	422	$	246	$	305

Reconciliations of capital expenditures to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment capital expenditures	$	86	$	113	$	90
Shared facilities and information technology assets	76		96		79
Consolidated capital expenditures	$	162	$	209	$	169

Reconciliations of segment assets to Applied consolidated totals as of October 28, 2012, and October 30, 2011 are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Total segment assets	$	7,932		$	5,270
Cash and investments	2,992			7,174
Allowance for bad debts	(87		)	(73		)
Deferred income taxes	420			658
Other current assets	98			90
Common property, plant and equipment	588			620
Other assets	159			122
Consolidated total assets	$	12,102		$	13,861

112

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For geographical reporting, revenue by geographic location is determined by the location of customers’ facilities to which products were shipped. Long-lived assets consist primarily of property, plant and equipment and equity-method investments, and are attributed to the geographic location in which they are located. Net sales and long-lived assets by geographic region were as follows:

	Net Sales		Long-lived Assets
	(In millions)
2012:
United States	$	1,749	$	666
China	783		74
Taiwan	2,411		36
Korea	1,897		9
Europe	863		110
Japan	704		6
Southeast Asia	312		87
Total outside United States	6,970		322
Consolidated total	$	8,719	$	988
2011:
United States	$	1,963	$	623
China	2,574		81
Taiwan	2,093		33
Korea	1,263		8
Europe	1,120		128
Japan	912		7
Southeast Asia	592		71
Total outside United States	8,554		328
Consolidated total	$	10,517	$	951
2010:
United States	$	1,147	$	715
China	1,557		78
Taiwan	2,750		32
Korea	1,768		5
Europe	981		95
Japan	768		5
Southeast Asia	578		65
Total outside United States	8,402		280
Consolidated total	$	9,549	$	995

The following companies accounted for at least 10 percent of Applied’s net sales in fiscal 2012, 2011, and/or 2010, which were for products in multiple reportable segments.

	2012		2011		2010
Samsung Electronics Co., Ltd.	20	%	12	%	14	%
Taiwan Semiconductor Manufacturing Company Limited	16	%	10	%	11	%
Intel Corporation	*		10	%	*

 _____________________________

* Less than 10%.

113

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 17 Unaudited Quarterly Consolidated Financial Data

	Fiscal Quarter
	First		Second		Third		Fourth			Fiscal Year
	(In millions, except per share amounts)
2012:
Net sales	$	2,189	$	2,541	$	2,343	$	1,646		$	8,719
Gross margin	$	786	$	1,011	$	930	$	586		$	3,313
Net income (loss)	$	117	$	289	$	218	$	(515	)	$	109
Earnings (loss) per diluted share	$	0.09	$	0.22	$	0.17	$	(0.42	)	$	0.09
2011:
Net sales	$	2,686	$	2,862	$	2,787	$	2,182		$	10,517
Gross margin	$	1,136	$	1,189	$	1,184	$	852		$	4,360
Net income	$	506	$	489	$	476	$	456		$	1,926
Earnings per diluted share	$	0.38	$	0.37	$	0.36	$	0.34		$	1.45

114

INDEX TO EXHIBITS

These 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
3.1	Certificate of Incorporation of Applied Materials, Inc., as amended and restated through March 10, 2009	10-Q	000-06920	3.1	6/3/2009
3.2	Certificate of Designation, Preferences and Rights of the Terms of the Series A Junior Participating Preferred Stock dated as of July 9, 1999	10-Q	000-06920	3(i)(a)	9/14/1999
3.3	Bylaws of Applied Materials, Inc., amended and restated to December 6, 2011	8-K	000-06920	3.1	12/7/2011
4.1	Form of Indenture (including form of debt security) between Applied Materials, Inc. and Harris Trust Company of California, as Trustee	8-K	000-06920	4.1	8/17/1994
4.2	Indenture, dated June 8, 2011, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee	8-K	000-06920	4.1	6/10/2011
4.3	First Supplemental Indenture, dated June 8, 2011, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee	8-K	000-06920	4.2	6/10/2011
10.1*	Applied Materials, Inc. Executive Deferred Compensation Plan, as amended and restated on April 1, 1995	10-Q	000-06920	10.24	6/7/1995
10.2*	Amendment No. 1 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-Q	000-06920	10.1	9/9/1998
10.3*	Amendment No. 2 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-Q	000-06920	10.2	9/9/1998
10.4	Form of Indemnification Agreement between Applied Materials, Inc. and Non-Employee Directors	10-K	000-06920	10.44	1/31/2000
10.5	Form of Indemnification Agreement between Applied Materials, Inc. and certain of its officers	10-K	000-06920	10.46	1/31/2000
10.6*	Applied Materials, Inc. 2000 Global Equity Incentive Plan, amended and restated to April 16, 2002	10-K	000-06920	10.31	1/23/2003
10.7	Applied Materials, Inc. Profit Sharing Scheme (Ireland)	S-8	333-45011	4.1	1/27/1998
10.8*	Term Sheet for employment of Michael R. Splinter, as amended and restated December 8, 2008	10-Q	000-06920	10.57	3/3/2009
10.9*	Applied Materials, Inc. Nonemployee Director Share Purchase Plan	10-Q	000-06920	10.42	5/31/2005
10.10*	Election Form to Receive Shares in lieu of Retainer and/or Meeting Fees for use under the Applied Materials, Inc. Nonemployee Director Share Purchase Plan	10-Q	000-06920	10.43	5/31/2005
10.11*	Applied Materials, Inc. amended and restated Relocation Policy	8-K	000-06920	10.46	10/31/2005
10.12*	Amendment No. 3 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-K	000-06920	10.46	12/14/2005
10.13*	Amendment No. 4 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-K	000-06920	10.47	12/14/2005
10.14*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.53	8/31/2006
10.15*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials, Inc. 2000 Global Equity Incentive Plan, as amended	10-Q	000-06920	10.54	8/31/2006
10.16*	Applied Materials, Inc. Employee Financial Assistance Plan, amended and restated as of December 18, 2008	10-Q	000-06920	10.58	3/3/2009

115

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
10.17*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.45	5/30/2007
10.18*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials, Inc. 2000 Global Equity Incentive Plan, as amended	10-Q	000-06920	10.46	5/30/2007
10.19*	Applied Materials, Inc. amended and restated 2005 Executive Deferred Compensation Plan	8-K	000-06920	10.49	7/13/2007
10.20*	Form of Performance Shares Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-K	000-06920	10.48	12/14/2007
10.21*	Form of Performance Shares Agreement for Nonemployee Directors for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-K	000-06920	10.49	12/14/2007
10.22*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-K	000-06920	10.50	12/14/2007
10.23*	Form of Restricted Stock Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-K	000-06920	10.51	12/14/2007
10.24*	Form of Non-Qualified Stock Option Grant Agreement for use under the Applied Materials, Inc. 2000 Global Equity Incentive Plan, as amended	10-K	000-06920	10.52	12/14/2007
10.25*	Form of Restricted Stock Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.57	8/29/2008
10.26	Deed of Amendment to Applied Materials Profit Sharing Scheme, dated February 7, 2006, to amend Clause 20 of the Trust Deed thereunder	10-K	000-06920	10.48	12/12/2008
10.27	Deed of Amendment to Applied Materials Profit Sharing Scheme, dated February 7, 2006, to amend the definition of Eligible Employee in the First Schedule to the Trust Deed thereunder.	10-K	000-06920	10.49	12/12/2008
10.28*	Amendment No. 5 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-K	000-06920	10.50	12/12/2008
10.29*	Amendment No. 6 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-Q	000-06920	10.59	3/3/2009
10.30*	Amendment No. 1 to the Applied Materials, Inc. 2005 Executive Deferred Compensation Plan	10-K	000-06920	10.51	12/12/2008
10.31*	Amendment No. 2 to the Applied Materials, Inc. 2005 Executive Deferred Compensation Plan	10-Q	000-06920	10.60	3/3/2009
10.32*	Form of Performance Shares Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-K	000-06920	10.56	12/12/2008
10.33*	Form of Performance Shares Agreement for Nonemployee Directors for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.61	3/3/2009
10.34*	Form of Non-Qualified Stock Option Agreement for Employees for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.63	3/3/2009
10.35*	Form of Non-Qualified Stock Option Agreement for use under the Applied Materials, Inc. 2000 Global Equity Incentive Plan, as amended	10-Q	000-06920	10.64	3/3/2009
10.36*	Amendment No. 7 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-Q	000-06920	10.67	6/9/2010

116

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
10.37*	Amendment No. 3 to the Applied Materials, Inc. 2005 Executive Deferred Compensation Plan	10-Q	000-06920	10.68	6/9/2010
10.38*	Form of Performance Share Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.71	6/9/2010
10.39*	Form of Restricted Stock Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.72	6/9/2010
10.40*	Applied Materials, Inc. Applied Incentive Plan, amended and restated effective August 13, 2010	10-K	000-06920	10.59	12/10/2010
10.41*	Amendment No. 8 to the Applied Materials, Inc. Executive Deferred Compensation Plan	10-Q	000-06920	10.60	2/28/2011
10.42*	Amendment No. 4 to the Applied Materials, Inc. 2005 Executive Deferred Compensation Plan	10-Q	000-06920	10.61	2/28/2011
10.43	Settlement Agreement between Applied Materials, Inc. and Samsung Electronics Co., Ltd. dated November 1, 2010 (Confidential treatment has been granted for the redacted portions of the agreement)	10-Q/A	000-06920	10.62	5/19/2011
10.44	Credit Agreement, dated as of May 25, 2011, among Applied Materials, Inc., JPMorgan Chase Bank, N.A., as administrative agent, and other lenders named therein	10-Q/A	000-06920	10.64	11/18/2011
10.45*	Form of Performance Unit Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended	10-Q	000-06920	10.1	2/27/2012
10.46*	Applied Materials, Inc. Employee Stock Incentive Plan, amended and restated effective March 6, 2012	8-K	000-06920	10.1	3/9/2012
10.47*	Applied Materials, Inc. Senior Executive Bonus Plan, amended and restated effective March 6, 2012	8-K	000-06920	10.2	3/9/2012
10.48*	Form of Restricted Stock Unit Agreement for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan	10-Q	000-06920	10.3	5/24/2012
10.49*	Form of Restricted Stock Unit Agreement for Nonemployee Directors for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan	10-Q	000-06920	10.4	5/24/2012
10.50*	Form of Performance Shares Agreement for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan	10-Q	000-06920	10.5	5/24/2012
10.51	Amendment No. 1 and Extension Agreement, dated as of May 25, 2012, to Credit Agreement, dated as of May 25, 2011, among Applied Materials, Inc., JPMorgan Chase Bank, N.A. as administrative agent, and other lenders named therein	8-K	000-06920	10.1	5/30/2012
10.52*	Offer Letter, dated June 14, 2012, between Applied Materials, Inc. and Gary E. Dickerson	10-Q	000-06920	10.2	8/23/2012
10.53*	Form of Restricted Stock Agreement for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan	10-Q	000-06920	10.3	8/23/2012
10.54*	Applied Materials, Inc. Employees' Stock Purchase Plan, amended and restated effective October 28, 2012†
10.55*	Applied Materials, Inc. Stock Purchase Plan for Offshore Employees, amended and restated effective October 28, 2012†
21	Subsidiaries of Applied Materials, Inc. †
23	Consent of Independent Registered Public Accounting Firm, KPMG LLP†
24	Power of Attorney†

117

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡
32.2	Certification 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‡

* Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)3.

† Filed herewith.

‡ Furnished herewith.

118

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/    MICHAEL R. SPLINTER
	Michael R. Splinter
	Chief Executive Officer

Dated: December 5, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	Title	Date
/S/    MICHAEL R. SPLINTER	Chief Executive Officer (Principal Executive Officer)	December 5, 2012
Michael R. Splinter
/S/    GEORGE S. DAVIS	Executive Vice President, Chief Financial Officer (Principal Financial Officer)	December 5, 2012
George S. Davis
/S/    THOMAS S. TIMKO	Corporate Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)	December 5, 2012
Thomas S. Timko
Directors:
*
Michael R. Splinter	Chairman of the Board	December 5, 2012
*
Aart J. de Geus	Director	December 5, 2012
*
Stephen R. Forrest	Director	December 5, 2012
*
Thomas J. Iannotti	Director	December 5, 2012
*
Susan M. James	Director	December 5, 2012
*
Alexander A. Karsner	Director	December 5, 2012
*
Gerhard H. Parker	Director	December 5, 2012
*
Dennis D. Powell	Director	December 5, 2012
*
Willem P. Roelandts	Director	December 5, 2012
*
James E. Rogers	Director	December 5, 2012
*
Robert H. Swan	Director	December 5, 2012

Representing a majority of the members of the Board of Directors.

* By	/s/    MICHAEL R. SPLINTER
	Michael R. Splinter
	Attorney-in-Fact**

** By authority of the power of attorney filed herewith.

119

EX-10.54

Exhibit 10.54

APPLIED MATERIALS, INC.
EMPLOYEES’ STOCK PURCHASE PLAN

(Amended and Restated Effective as of October 28, 2012)

SECTION 1PURPOSE

Applied Materials, Inc. having established the Applied Materials, Inc. Employees’ Stock Purchase Plan (the “Plan”), in order to provide eligible employees of the Company with the opportunity to purchase Common Stock through payroll deductions or, if payroll deductions are not permitted under local laws, through other means as specified by the Committee, hereby amends and restates the Plan in its entirety, effective as of October 28, 2012 (except as otherwise indicated herein). The Plan is intended to qualify as an employee stock purchase plan under Section 423(b) of the Code, although the Company makes no undertaking or representation to maintain such qualification.

SECTION 2DEFINITIONS

2.1“1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific Section of the 1934 Act or regulation thereunder shall include such Section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.

2.2“Board” means the Board of Directors of the Company.

2.3“Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific Section of the Code or regulation thereunder shall include such Section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.

2.4“Committee” shall mean the committee appointed by the Board to administer the Plan. Any member of the Committee may resign at any time by notice in writing mailed or delivered to the Secretary of the Company. Until otherwise determined by the Board, the Plan shall be administered by the Human Resources and Compensation Committee of the Board.

2.5“Common Stock” means the common stock of the Company, $0.01 par value per share.

2.6“Company” means Applied Materials, Inc., a Delaware corporation.

1

2.7“Compensation” means a Participant’s base salary or base hourly wages payable for standard hours, excluding any other type of compensation such as commissions, overtime, bonuses, allowances or shift differential. The Committee, in its discretion, may, on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2(f), establish a different definition of Compensation prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering.

2.8“Eligible Employee” means every Employee of an Employer, except (a) any Employee who immediately after the grant of an option under the Plan, would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company (including stock attributed to such Employee pursuant to Section 424(d) of the Code), or (b) as provided in this Section 2.8. The Committee, in its discretion, from time to time may, prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering, determine on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2 that an Employee shall not be an Eligible Employee if he or she: (1) has not completed the required length of service with the Company, if any, as such length may be determined by the Committee in its discretion (such length of required service not to exceed two (2) years), (2) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Committee in its discretion), (3) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Committee in its discretion), (4) is a highly compensated employee under Section 414(q) of the Code, (5) is a highly compensated employee under Section 414(q) of the Code with compensation above a certain level or who is an officer or subject to the disclosure requirements of Section 16(a) of the 1934 Act, provided any exclusion be applied with respect to an individual Offering in a manner complying with Treasury Regulation Section 1.423-2(e)(2)(ii). Further, and notwithstanding the foregoing, Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from the Plan or an Offering if the participation of such Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. An Employee who otherwise is an Eligible Employee shall be treated as continuing to be such while the Employee is on sick leave or other leave of absence approved in writing by the Employer, except that if the period of leave exceeds three (3) months and the Employee’s right to reemployment is not guaranteed by statute or contract, he or she shall cease to be an Eligible Employee on the date three (3) months and one (1) day following the start of such leave. Until and unless determined otherwise by the Committee, Eligible Employees shall exclude each Employee (other than as excluded by subsection (a) of this Section 2.8) of an Employer who is customarily employed by the Company and/or a Subsidiary to work less than or equal to twenty (20) hours per week or five (5) months per calendar year.

2.9“Employee” means an individual who is a common-law employee of any Employer, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

2

2.10“Employer” or “Employers” means any one or all of the Company and those Subsidiaries which, with the consent of the Board or the Committee, have adopted the Plan or have been designated by the Board or the Committee in writing as an Employer for purposes of participation in the Plan. With respect to a particular Participant, Employer means the Company or Subsidiary, as the case may be, that directly employs the Participant.

2.11“Enrollment Date” means such dates as may be determined by the Committee, in its discretion and on a uniform and nondiscriminatory basis, from time to time.

2.12“Grant Date” means any date on which a Participant is granted an option under the Plan.

2.13“Offering” means an offer under this Plan of an option that may be exercised during the period described in Section 5.2. For purposes of the Plan, all Eligible Employees will be deemed to participate in the same Offering unless the Committee otherwise determines that Eligible Employees of one or more Employers will be deemed to participate in separate Offerings, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treasury Regulation Section 1.423-2(a)(1), the terms of each Offering need not be identical provided that the terms of the Plan and the Offering together satisfy Treasury Regulation Sections 1.423-2(a)(2) and (a)(3).

2.14“Participant” means an Eligible Employee who (a) has become a Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a Participant pursuant to Section 8 or Section 9.

2.15“Plan” means the Applied Materials, Inc. Employees’ Stock Purchase Plan, as set forth in this instrument and as hereafter amended from time to time.

2.16“Purchase Date” means such dates on which each outstanding option granted under the Plan shall be exercised (except in such instance in which the Plan has been terminated), as may be determined by the Committee, in its discretion and on a uniform and nondiscriminatory basis from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date.

2.17“Purchase Period” means the period beginning on such date as may be determined by the Committee, in its discretion and on a uniform and nondiscriminatory basis, and ending on a Purchase Date.

2.18“Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

2.19“Treasury Regulations” means the Treasury regulations of the Code. Reference to a specific Treasury Regulation or Section of the Code shall include such Treasury

3

Regulation or Section, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.

SECTION 3SHARES SUBJECT TO THE PLAN

3.1Number Available.  A maximum of 98,200,000 shares of Common Stock shall be available for issuance pursuant to the Plan. Shares issued under the Plan may be newly issued shares or treasury shares.

3.2Adjustments.  In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, spin off, combination of shares, merger, consolidation, offering of rights or other similar change in the capital structure of the Company, the Committee shall proportionately adjust the number, kind and purchase price of the shares available for purchase under the Plan, the per person share number limits on purchases and the purchase price and number of shares subject to any option under the Plan which has not yet been exercised.

SECTION 4ENROLLMENT

4.1Participation.  Each Eligible Employee may elect to become a Participant by enrolling or re-enrolling in the Plan effective as of any Enrollment Date. In order to enroll, an Eligible Employee must complete, sign and submit to the Company an enrollment form in such form, manner and by such deadline as may be specified by the Committee from time to time, in its discretion and on a nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2, and which may be in electronic form. Any Participant whose option expires and who has not withdrawn from the Plan shall be automatically re-enrolled in the Plan on the Enrollment Date immediately following the Purchase Date on which his or her option expires.

4.2Payroll Withholding and Contribution.  On his or her enrollment form, each Participant must elect to make Plan contributions via payroll withholding from his or her Compensation or, if payroll withholding is not permitted under local laws, via such other means as specified by the Committee to the extent permitted by Treasury Regulation Section 1.423-2. Pursuant to such procedures as the Committee may specify from time to time (which may be in electronic form), a Participant may elect to have withholding equal to, or otherwise contribute, a whole percentage from one percent (1%) to fifteen percent (15%) (or such greater or lesser percentage or dollar amount that the Committee may establish from time to time, in its discretion and on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2, for all options to be granted on any Enrollment Date in an Offering). Unless and until the Committee determines otherwise, no Participant may contribute more than $6,500 during any one Purchase Period. If permitted by the Committee, a Participant instead may elect to have a specific amount withheld or to contribute a specific amount, in dollars or in the applicable local currency, subject to such uniform and nondiscriminatory rules (or as otherwise

4

permitted by Treasury Regulation Section 1.423-2) as the Committee in its discretion may specify. A Participant may elect to increase or decrease his or her rate of payroll withholding or contribution by submitting an election (which may be in electronic form) in accordance with, and if and to the extent permitted by, procedures established by the Committee from time to time, which may, if permitted by the Committee, include a decrease to zero percent (0%); provided, however, that unless determined otherwise by the Committee, a decrease to zero percent (0%) shall be deemed a withdrawal from the Plan. A Participant may stop his or her payroll withholding or contribution by submitting an election in accordance with and to the extent permitted by procedures as may be established by the Committee from time to time. In order to be effective as of a specific date, an enrollment election must be received by the Company no later than the deadline specified by the Committee, in its discretion and on a nondiscriminatory basis, from time to time. Any Participant who is automatically re-enrolled in the Plan shall be deemed to have elected to continue his or her payroll withholding or contributions at the percentage last elected by the Participant. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.3 of the Plan, the Company may automatically decrease a Participant’s payroll deductions to zero percent (0%) at any time during an option period. Under such circumstances, payroll deductions shall recommence at the rate provided in such Participant’s enrollment form at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 7 of the Plan.

SECTION 5OPTIONS TO PURCHASE COMMON STOCK

5.1Grant of Option.  On each Enrollment Date on which the Participant enrolls or re-enrolls in the Plan, he or she shall be granted an option to purchase shares of Common Stock.

5.2Duration of Option.  Each option granted under the Plan shall expire on the earliest to occur of (a) the completion of the purchase of shares on the last Purchase Date occurring within 27 months of the Grant Date of such option, (b) such shorter option period as may be established by the Committee from time to time, in its discretion and on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2, prior to an Enrollment Date for all options to be granted on such Enrollment Date, or (c) the date on which the Participant ceases to be such for any reason.

5.3Number of Shares Subject to Option.  The maximum number of shares available for purchase by each Participant under the option or on any given Purchase Date shall be established by the Committee from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date, subject to this Section 5.3. Unless and until otherwise determined by the Committee, a Participant may not purchase more than 1,000 shares of Common Stock (subject to adjustment in accordance with Section 3.2) on any given Purchase Date. Notwithstanding any contrary provision of the Plan, to the extent required under Section 423(b) of the Code, an option (taken together with all other options then outstanding under this Plan and under all other similar employee stock purchase plans of the Employers) shall not give

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the Participant the right to purchase stock of the Company or any Subsidiary at a rate which accrues in excess of $25,000 worth of stock (determined using the fair market value of a share of the stock on the Grant Date of each such option) for each calendar year in which such option is outstanding, in accordance with Treasury Regulation Section 1.423-2(a)(3)(vi).

5.4Other Terms and Conditions.  Each option shall be subject to the following additional terms and conditions:

(a)payment for shares purchased under the option shall be made only through payroll withholding under Section 4.2, unless payroll withholding is not permitted under local laws as determined by the Committee, in which case the Participant may contribute by such other means as specified by the Committee to the extent permitted by Treasury Regulation Section 1.423-2;

(b)purchase of shares upon exercise of the option shall be accomplished only in accordance with Section 6.1;

(c)the price per share under the option shall be determined as provided in Section 6.1, subject to adjustment pursuant to Section 3.2;

(d)the option in all respects shall be subject to such other terms and conditions as the Committee shall determine from time to time in its discretion (applied on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2); and

(e)each option will be granted under the same Offering unless the Committee otherwise designates separate Offerings for the Eligible Employees of one or more Employers, in which case, each Participant’s option will be granted under the Offering designated for the Eligible Employees of the Participant’s Employer.

SECTION 6PURCHASE OF SHARES

6.1Exercise of Option.  Subject to Section 6.2 and the limits established under Section 5.3, on each Purchase Date, the funds then credited to each Participant’s account shall be used to purchase whole shares of Common Stock. Any cash remaining after whole shares of Common Stock have been purchased or that exceed the $25,000 cap described in Section 5.3 above, shall be refunded to the Participant without interest (except as otherwise required under local laws, in which case the Committee may determine that interest must be paid to all Participants in the relevant Offering in order to comply with Section 423 of the Code). The price per share of Common Stock of the shares purchased under any option granted under the Plan shall be determined by the Committee from time to time, in its discretion and on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2, for all options to be granted on an Enrollment Date in an Offering. However, in no event shall the price be less than eighty-five percent (85%) of the lower of:

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(a)the closing price per share of Common Stock on the Grant Date for such option on the Nasdaq Global Select Market; or

(b)the closing price per share of Common Stock on the Purchase Date on the Nasdaq Global Select Market.

If a closing price is not available on the Grant Date or Purchase Date, then the closing price per share of Common Stock referred to in 6.1(a) and (b) above shall refer to the closing price per share of Common Stock on the first Nasdaq Global Select Market trading day immediately following the Grant Date or preceding the Purchase Date, respectively.

6.2Delivery of Shares.  As directed by the Committee in its sole discretion, shares purchased on any Purchase Date shall be delivered directly to the Participant or to a custodian or broker, if any, designated by the Committee to hold shares for the benefit of the Participants. As determined by the Committee from time to time, such shares shall be delivered as physical certificates or by means of a book entry system.

6.3Exhaustion of Shares.  If at any time the shares available under the Plan are over-enrolled, enrollments shall be reduced to eliminate the over-enrollment, as the Committee determines, which determination shall be on a uniform and nondiscriminatory manner. For example, the Committee may determine that such reduction method shall be “bottom up”, with the result that all option exercises for one share shall be satisfied first, followed by all exercises for two shares, and so on, until all available shares have been exhausted. Any funds that, due to over-enrollment, cannot be applied to the purchase of whole shares shall be refunded to the Participants without interest thereon, except as otherwise required under local laws (in which case the Committee may determine that interest must be paid to all Participants in the relevant Offering in order to comply with Section 423 of the Code).

6.4Tax Withholding.  Prior to the delivery of any shares purchased under the Plan (or at any other time that a taxable event related to the Plan occurs), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all tax and social insurance liability obligations and requirements in connection with the options and shares purchased thereunder, if any, including, without limitation, all federal, state, and local taxes (including the Participant’s FICA obligation, if any) that are required to be withheld by the Company or the employing Subsidiary, the Participant’s and, to the extent required by the Company (or the employing Subsidiary), the Company’s (or the employing Subsidiary’s) fringe benefit tax liability, if any, associated with the grant, vesting, or sale of shares and any other Company (or employing Subsidiary) taxes the responsibility for which the Participant has agreed to bear with respect to such shares.

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SECTION 7WITHDRAWAL

A Participant may withdraw from the Plan by submitting a withdrawal form to the Company in such form and manner as the Committee may specify (which may be in electronic form). A withdrawal shall be effective only if it is received by the Company by the deadline specified from time to time by the Committee, in its discretion and on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2. Unless otherwise determined by the Committee, when a withdrawal becomes effective, the Participant’s payroll contributions shall cease and all amounts then credited to the Participant’s account shall be distributed to him or her, without interest thereon, except as otherwise required under local laws (in which case the Committee may determine that interest must be paid to all Participants in the relevant Offering in order to comply with Section 423 of the Code).

SECTION 8CESSATION OF PARTICIPATION

A Participant shall cease to be a Participant immediately upon the cessation of his or her status as an Eligible Employee (for example, because of his or her termination of employment from all Employers for any reason), except that the Committee, in its discretion and on a uniform and nondiscriminatory basis, may permit an individual who has ceased to be an Eligible Employee to exercise his or her option on the next Purchase Date to the extent permitted by Code Section 423. As soon as practicable after such cessation, the Participant’s payroll contributions shall cease and all amounts then credited to the Participant’s account shall be distributed to him or her without interest thereon, except as otherwise required under local laws (in which case the Committee may determine that interest must be paid to all Participants in the relevant Offering in order to comply with Section 423 of the Code).

SECTION 9DESIGNATION OF BENEFICIARY

9.1Designation.  Each Participant may, pursuant to such uniform and nondiscriminatory procedures (or as otherwise permitted by Treasury Regulation Section 1.423‑2) as the Committee may specify in its discretion from time to time, designate one or more individuals to receive any amounts credited to the Participant’s account at the time of his or her death (“Beneficiaries”). Notwithstanding any contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative only after, and for so long as, the Committee determines on a uniform and nondiscriminatory basis (or as otherwise permitted by Treasury Regulation Section 1.423-2) to permit the designation of Beneficiaries.

9.2Changes.  A Participant may designate different Beneficiaries or may revoke a prior Beneficiary designation at any time by delivering a new designation or revocation of a prior designation, as applicable, in like manner. Any designation or revocation shall be effective only if it is received by the Committee. However, when so received, the designation or revocation shall be effective as of the date the designation or revocation is executed, whether or not the Participant still is living, but without prejudice to the Committee on account of any

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payment made before the change is recorded. The last effective designation received by the Committee shall supersede all prior designations.

9.3Failed Designations.  If a Participant dies without having effectively designated a Beneficiary, or if no Beneficiary survives the Participant, the Participant’s account shall be payable to his or her estate.

SECTION 10

ADMINISTRATION

10.1Plan Administrator.  The Plan shall be administered by the Committee. The Committee shall have the authority to control and manage the operation and administration of the Plan.

10.2Actions by Committee.  Each decision of a majority of the members of the Committee then in office shall constitute the final and binding act of the Committee. The Committee may act with or without a meeting being called or held and shall keep minutes of all meetings held and a record of all actions taken by written consent.

10.3Powers of Committee.  The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation in accordance with its terms, including, but not by way of limitation, the following discretionary powers:

(a)To interpret and determine the meaning and validity of the provisions of the Plan and the options and to determine any question arising under, or in connection with, the administration, operation or validity of the Plan or the options;

(b)To determine the form and manner for Participants to make elections under the Plan;

(c)To determine any and all considerations affecting the eligibility of any Employee to become a Participant or to remain a Participant in the Plan;

(d)To cause an account or accounts to be maintained for each Participant and establish rules for the crediting of contributions and/or shares to the account(s);

(e)To determine the time or times when, and the number of shares for which, options shall be granted;

(f)To establish and revise an accounting method or formula for the Plan;

(g)To designate a custodian or broker to receive shares purchased under the Plan and to determine the manner and form in which shares are to be delivered to the designated custodian or broker;

(h)To determine the status and rights of Participants and their Beneficiaries or estates;

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(i)To employ such brokers, counsel, agents and advisers, and to obtain such broker, legal, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan;

(j)To establish, from time to time, rules for the performance of its powers and duties and for the administration of the Plan;

(k)To adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by employees who are foreign nationals or employed outside of the United States;

(l)To determine that, to the extent permitted by Treasury Regulation Section 1.423-2(f), the terms of an option granted under the Plan or an Offering to citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) will be less favorable than the terms of options granted under the Plan or the same Offering to Employees resident in the United States;

(m)To designate separate Offerings for the Eligible Employees of one or more Employers, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering; and

(n)To delegate to any one or more of its members or to any other person including, but not limited to, employees of any Employer, severally or jointly, the authority to perform for and on behalf of the Committee one or more of the functions of the Committee under the Plan.

10.4Decisions of Committee.  All actions, interpretations, and decisions of the Committee shall be made in the sole discretion of the Committee and shall be conclusive and binding on all persons, and shall be given the maximum deference permitted by law.

10.5Administrative Expenses.  All expenses incurred in the administration of the Plan by the Committee, or otherwise, including legal fees and expenses, shall be paid and borne by the Employers, except any stamp duties or transfer taxes applicable to the purchase of shares may be charged to the account of each Participant. Any brokerage fees for the purchase of shares by a Participant shall be paid by the Company, but fees and taxes (including brokerage fees) for the transfer, sale or resale of shares by a Participant, or the issuance of physical share certificates, shall be borne solely by the Participant.

10.6Eligibility to Participate.  No member of the Committee who is also an employee of an Employer shall be excluded from participating in the Plan if otherwise eligible, but he or she shall not be entitled, as a member of the Committee, to act or pass upon any matters pertaining specifically to his or her own account under the Plan.

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10.7Indemnification.  Each of the Employers shall, and hereby does, indemnify and hold harmless the members of the Committee and the Board, from and against any and all losses, claims, damages or liabilities, including attorneys’ fees and amounts paid, with the approval of the Board or the Committee, in settlement of any claim, arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

SECTION 11

AMENDMENT, TERMINATION, AND DURATION

11.1Amendment, Suspension, or Termination.  The Board or the Committee, in its sole discretion, may amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is amended, suspended or terminated, the Board or the Committee, in its discretion, may elect to terminate all outstanding options either immediately or upon completion of the purchase of shares on the next Purchase Date (which, notwithstanding Section 2.16, may be sooner than originally scheduled, if determined by the Board or the Committee in its discretion), or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all amounts then credited to Participants’ accounts that have not been used to purchase shares shall be returned to the Participants (without interest thereon, except as otherwise required under local laws, in which case the Committee may determine that interest must be paid to all Participants in the relevant Offering in order to comply with Section 423 of the Code) as soon as administratively practicable. Except as provided in Section 3.2 and this Section 11 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any Participant unless his or her consent is obtained. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval of any amendment in such a manner and to such a degree as required. In addition, an amendment will be subject to stockholder approval if the Committee or the Board, in their sole discretion, deems such amendment to be a material amendment, except with respect to such an amendment which will impact, in the aggregate, no more than five percent (5%) of the shares reserved for issuance under the Plan. The following amendments shall be deemed material amendments for purposes of the preceding sentence (i) material increases to the benefits accrued to Participants under the Plan; (ii) increases to the total number of securities that may be issued under the Plan; (iii) material modifications to the requirements for participation in the Plan, and (iv) the addition of a new provision allowing the Board or the Committee to lapse or waive restrictions at its discretion. The amendment, suspension, or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any option theretofore granted to such Participant. No option may be granted during any period of suspension or after termination of the Plan. Without stockholder approval and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Committee shall be entitled to change the duration of an option, limit the frequency and/or number of changes in the amount withheld during the duration of an option, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for

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delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Committee determines in its sole discretion advisable which are consistent with the Plan.

    Without regard to whether any Participant’s rights may be considered to have been “adversely affected”, in the event the Committee determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Committee may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

(a)Amending the Plan to conform with the safe harbor definition under Statement of Financial Accounting Standards 123(R), including with respect to an option issued at the time of the amendment;

(b)Increasing or otherwise altering the exercise price for any option including an option issued at the time of the change in exercise price;

(c)Reducing the maximum percentage of Compensation a Participant may elect to set aside as payroll deductions;

(d)Shortening the duration of any option so that the option ends on a new Purchase Date, including an option issued at the time of the Committee action; and

(e)Reducing the number of shares that may be purchased upon exercise of outstanding options.

Such modifications or amendments shall not require stockholder approval or the consent of any Participants.

11.2Duration of the Plan.  The Plan shall commence on the date specified herein, and subject to Section 11.1 (regarding the Board’s and the Committee’s right to amend or terminate the Plan), shall remain in effect thereafter.

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SECTION 12

GENERAL PROVISIONS

12.1Participation by Subsidiaries.  One or more Subsidiaries of the Company may become participating Employers by adopting the Plan and obtaining approval for such adoption from the Board or the Committee. By adopting the Plan, a Subsidiary shall be deemed to agree to all of its terms, including, but not limited to, the provisions granting exclusive authority (a) to the Board and the Committee to amend the Plan, and (b) to the Committee to administer and interpret the Plan. An Employer may terminate its participation in the Plan at any time. The liabilities incurred under the Plan to the Participants employed by each Employer shall be solely the liabilities of that Employer, and no other Employer shall be liable for benefits accrued by a Participant during any period when he or she was not employed by such Employer.

12.2Inalienability.  In no event may either a Participant, a former Participant or his or her Beneficiary, spouse or estate sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any right or interest under the Plan; and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process. Accordingly, for example, a Participant’s interest in the Plan is not transferable pursuant to a domestic relations order.

12.3Severability.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

12.4Requirements of Law.  The granting of options and the issuance of shares shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or securities exchanges as the Committee may determine are necessary or appropriate.

12.5Compliance with Rule 16b-3.  Any transactions under this Plan with respect to officers, as defined in Rule 16a-1 promulgated under the 1934 Act, are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee. Notwithstanding any contrary provision of the Plan, if the Committee specifically determines that compliance with Rule 16b-3 no longer is required, all references in the Plan to Rule 16b-3 shall be null and void.

12.6No Enlargement of Employment Rights.  Neither the establishment or maintenance of the Plan, the granting of options, the purchase of shares, nor any action of any Employer or the Committee, shall be held or construed to confer upon any individual any right to be continued as an employee of the Employer nor, upon dismissal, any right or interest in any specific assets of the Employers other than as provided in the Plan. Each Employer expressly reserves the right to discharge any employee at any time, with or without cause.

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12.7Apportionment of Costs and Duties.  All acts required of the Employers under the Plan may be performed by the Company for itself and its Subsidiaries, and the costs of the Plan may be equitably apportioned by the Committee among the Company and the other Employers. Whenever an Employer is permitted or required under the terms of the Plan to do or perform any act, matter or thing, it shall be done and performed by any officer or employee of the Employers who is thereunto duly authorized by the Employers.

12.8Construction and Applicable Law.  The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code. Any provision of the Plan which is inconsistent with Section 423(b) of the Code shall, without further act or amendment by the Company or the Committee, be reformed to comply with the requirements of Section 423(b). The provisions of the Plan shall be construed, administered and enforced in accordance with such Section and with the laws of the State of California, excluding California’s conflict of laws provisions.

12.9Captions.  The captions contained in and the table of contents prefixed to the Plan are inserted only as a matter of convenience, and in no way define, limit, enlarge or describe the scope or intent of the Plan nor in any way shall affect the construction of any provision of the Plan.

12.10Use of Funds.  Payroll withholdings and other contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company will not be obligated to segregate such payroll withholdings or other contributions except under Offerings in which applicable local law requires that such payroll withholdings or other contributions be segregated from the Company’s general corporate funds and/or deposited with an independent third party for Participants in non-U.S. jurisdictions.

12.11Automatic Transfer to Low Price Option Period.  To the extent permitted by applicable laws and specified by the Committee in advance for particular option periods, if the fair market value of the Common Stock on any Enrollment Date is higher than the fair market value of the Common Stock on the first day of any later Purchase Period during the same option period, then all Participants in such option period shall be automatically withdrawn from such option period and automatically re-enrolled in the immediately following new option period.

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EX-10.55

Exhibit 10.55

APPLIED MATERIALS, INC.

STOCK PURCHASE PLAN

FOR OFFSHORE EMPLOYEES

(Amended and Restated Effective as of October 28, 2012)

1.    ESTABLISHMENT; PURPOSE

Applied Materials, Inc. (the “Corporation”), having established the Applied Materials, Inc. Stock Purchase Plan for Offshore Employees (the “Plan”), hereby amends and restates the Plan in its entirety, effective as of October 28, 2012, as set forth herein. The Plan is intended to encourage ownership of common stock of the Corporation by selected offshore employees of affiliates of the Corporation (“Eligible Employees”) and to provide incentives for them to exert maximum efforts for the success of the Corporation. By extending to Eligible Employees the opportunity to acquire proprietary interests in the Corporation and to participate in its success, the Plan may be expected to benefit the Corporation and its shareholders by making it possible to attract and retain qualified employees.

2.     DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

2.1 “Affiliate” means any direct or indirect subsidiary of the Corporation which has been designated by the Board as a participating subsidiary, the employees of which may participate in the Plan.

2.2 “Board” means the Board of Directors of the Corporation, as from time to time constituted.

2.3 “Common Stock” means the common stock of the Corporation.

2.4 “Corporation” means Applied Materials, Inc., a Delaware Corporation.

2.5 “Eligible Employee” means any Offshore Employee eligible to participate in the Plan in accordance with Section 5.

2.6 “Grant Date” means that date specified by the Board of the Committee for the granting of Options in an Offering under the Plan.

2.7 “Offshore Employee” means a natural person employed by an Affiliate who is neither a U.S. citizen nor a U.S. resident for U.S. tax purposes.

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2.8 “Option” means an option to acquire Common Stock under the terms of this Plan.

2.9 “Participating Employee” means, with respect to each Offering under the Plan, any Eligible Employee who has elected to participate in accordance with Section 7.

2.10 “Plan” means this Stock Purchase Plan for Offshore Employees as amended from time to time.

2.11 “Plan Administrator” means the employee or employees of the Corporation selected by the Board or the Committee (if authorized by the Board under Section 4.3) to perform certain ministerial duties in the administration of the Plan.

3.     STOCK SUBJECT TO THE PLAN

No more than 35,800,000 shares of Common Stock may be issued upon the exercise of Options granted under the Plan, subject to adjustments as provided in Section 9, which may be unissued shares, reacquired shares, or shares bought on the open market. If any Option which shall have been granted shall expire or terminate for any reason without having been exercised in full, the unpurchased shares shall again become available for purposes of the Plan (unless the Plan shall have been terminated).

4.    ADMINISTRATION

4.1 The Plan shall be administered by the Board except to the extent that the Board shall delegate responsibility for the administration of the Plan as stated in Section 4.3.

4.2 The Board shall have the plenary power, subject to and within the limits of the express provisions of the Plan:

(a) To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, shall generally determine all questions of policy and expediency that may arise, and may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any instrument associated with the Plan, in such manner and to such extent as the Board shall deem necessary to make the Plan fully effective.

(b) To establish the terms of each Offering of Common Stock under the Plan.

4.3 The Board, by resolution, may delegate responsibility for the administration of the Plan or any part thereof, to a committee (the “Committee”) composed of members of the Board. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board. To the extent that responsibility for the administration of the Plan is delegated to the Committee, the Committee shall have the powers theretofore possessed by the Board, and to the extent that the Committee

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has been authorized to act, all references in this Plan to the Board shall include the Committee, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as, from time to time, may be adopted by the Board. The Board at any time, by resolution, may revoke such delegation and re-vest in the Board all or any part of the responsibility for the administration of the Plan.

4.4 The Board or Committee (if authorized by the Board) may delegate to the Plan Administrator the responsibility to perform certain ministerial duties in the administration of the Plan as are specified in the Plan. To the extent that the Board or Committee has not delegated such duties to the Plan Administrator, all references in this Plan to Plan Administrator shall include Board or Committee, as appropriate.

5.    ELIGIBILITY

The Committee shall designate the Eligible Employees who shall be eligible to participate in any Offering under the Plan.

6.    OFFERINGS

During the term of the Plan, the Corporation will make one or more offerings in which Options to purchase Common Stock will be granted to Eligible Employees under the Plan (“Offering”). The terms and conditions of Options to be granted in any such Offering will be determined by the Board under Section 7. In connection with any Offering, if the number of shares for which Eligible Employees elect to participate shall be greater than the shares remaining available, the available shares shall, at the end of the Offering Period, be allocated among the Participating Employees pro rata on the basis of the number of shares for which each has elected to participate.

7.    TERMS AND CONDITIONS OF OPTIONS

7.1 Subject to the limitations herein contained, the Board shall determine the terms of Options in each Offering all of which shall be granted on the same date (the “Grant Date”).

7.2 The Option price per share for each Offering shall be as determined by the Board.

7.3 The expiration date of the Options granted under each Offering shall be determined by the Board on or prior to the Grant Date for such Offering.

7.4 All Eligible Employees to whom Options are granted shall be entitled to purchase the number of full shares as shall be established by the Board at the Grant Date. Each eligible Employee may elect to participate for less than the maximum number of shares which he or she is entitled to purchase under his or her Option. If an Eligible Employee elects to participate for less than the maximum number of shares which he or she is entitled to purchase, his or her

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Option shall at that time terminate and become void to the extent of the number of shares for which he or she does not elect to participate.

7.5 Each Eligible Employee who desires to participate in an Offering shall elect to do so by completing and delivering to the Plan Administrator or a person designated by the Plan Administrator in a timely fashion such form or forms as may be prescribed by the Board.

7.6 A Participating Employee shall exercise his or her Option by delivering notice of exercise to the Plan Administration or a person designated by the Plan Administrator at such time and in such form and manner as the Board shall prescribe.

7.7 Upon exercise of an Option, full payment for the shares subject to the Option shall be made in such form or manner as the Board shall fix.

7.8 The Board may (but is not required to) establish on such terms and conditions as it shall determine a payroll deduction system for the purchase of shares covered by the Options hereunder. If there are payroll deductions under any Offering, the Corporation or an Affiliate shall maintain a payroll deduction account for each Participating Employee. The Board may (but is not required to) provide for interest at such rate as the Board shall determine to be credited to the payroll deduction accounts.

7.9 The Board shall establish rules, terms and conditions for each Offering governing the exercise of outstanding Options in the event of a Participating Employee’s termination of employment or change in employment status.

7.10 The Corporation will seek to obtain from each regulatory committee or agency having jurisdiction such authority as may be required to issue and sell shares of Common Stock to satisfy Options granted under the Plan. Inability of the Corporation to obtain from any such regulatory commission or agency authority which counsel for the Corporation deems necessary for the lawful issuance and sale of its Common Stock to satisfy Options granted under the Plan, shall relieve the Corporation from any liability for failure to issue and sell Common Stock to satisfy such Options pending the time when such authority is obtained or is obtainable.

7.11 Neither an Eligible Employee to whom an Option is granted under the Plan nor his or her transferee shall have any rights as a stockholder with respect to any shares covered by his or her Option until the date of the issuance of a stock certificate (which may be by book entry) to him or her for such shares.

7.12 Options granted under the Plan shall not be transferable, except by will or by the laws of descent and distribution, and may be exercised during the lifetime of a Participating Employee only by him.

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7.13 Each Option granted under the Plan shall be evidenced by such instrument or documentation, if any, as the Board shall establish, which shall be dated the Grant Date and shall comply with and be subject to the terms and conditions of the Plan.

7.14 Nothing in the Plan or in any Option granted under the Plan shall confer on any Participating Employee any right to continue in the employ of the Corporation or any of its Affiliates or to interfere in any way with the right of the Corporation or any of its Affiliates to terminate his or her employment at any time.

7.15 Prior to the delivery of any shares of Common Stock purchased under the Plan, the Corporation shall have the power and the right to deduct or withhold, or require a Participating Employee to remit to the Corporation, an amount sufficient to satisfy all tax and social insurance liability obligations and requirements in connection with the Options and shares purchased thereunder, if any, including, without limitation, all federal, state, and local taxes (including the Participating Employee’s FICA obligation, if any) that are required to be withheld by the Corporation or the employing Affiliate, the Participating Employee’s and, to the extent required by the Corporation (or the employing Affiliate), the Corporation’s (or the employing Affiliate’s) fringe benefit tax liability, if any, associated with the grant, vesting, or sale of shares and any other Corporation (or employing Affiliate) taxes, the responsibility for which the Participating Employee has agreed to bear with respect to such shares of Common Stock.

8.    FUNDS

Any amounts held by any Affiliate in payroll deduction accounts under the Plan may be used for any corporate purpose of the Affiliate.

9.    ADJUSTMENT IN NUMBER OF SHARES AND IN OPTION PRICE

    In the event there is any change in the Common Stock through declarations of stock dividends or stock split-ups, recapitalizations resulting in stock split-ups, or combinations or exchanges of shares, or otherwise, appropriate adjustments in the number of shares available for Options, as well as the shares subject to any Option and the Option price thereof, shall be made,

provided that no fractional shares shall be subject to an Option and each Option shall be adjusted down to the nearest full share.

10.    AMENDMENT OF THE PLAN

    The Board at any time, and from time to time, may amend the Plan. If the Plan is amended, suspended or terminated, the Board or the Committee, in its discretion, may elect to terminate all outstanding Options either immediately or upon completion of the purchase of shares on the next scheduled exercise/purchase (which may be sooner than originally scheduled, if determined by the Board in its discretion), or may elect to permit Options to expire in accordance with their terms (and participation to continue through such expiration dates). If the Options are terminated prior to expiration, all amounts then credited to a Participating

-5-

Employee’s account that have not been used to purchase shares shall be returned to the Participating Employee (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable. Without stockholder approval and without regard to whether any Participating Employee rights may be considered to have been “adversely affected,” the Board shall be entitled to change the duration of an Option, limit the frequency and/or number of changes in the amount withheld during the duration of an Option, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participating Employee in order to adjust for delays or mistakes in the Corporation’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participating Employee properly correspond with amounts withheld from the Participating Employee’s compensation, and establish such other limitations or procedures as the Board determines in its sole discretion advisable which are consistent with the Plan.

Without regard to whether any Participating Employee’s rights may be considered to have been “adversely affected”, in the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

(a)    Amending the Plan to conform with the safe harbor definition under Statement of Financial Accounting Standards 123(R), including with respect to an Option issued at the time of the amendment;

(b)    Increasing or otherwise altering the exercise price for any Option, including an Option issued at the time of the change in exercise price;

(c)    Reducing the maximum percentage of compensation a Participating Employee may elect to set aside as payroll deductions;

(d)    Shortening the duration of any Option so that the Option ends on a new purchase/exercise date, including an Option issued at the time of the Board action; and

(e)    Reducing the number of shares that may be purchased upon exercise of outstanding Options.

Such modifications or amendments shall not require stockholder approval or the consent of any Participating Employees.

11.    TERMINATION OR SUSPENSION OF THE PLAN

The Board may at any time suspend or terminate the Plan. No Offering shall be made under the Plan while it is suspended or after it is terminated.

-6-

EX-21

Exhibit 21

SUBSIDIARIES OF APPLIED MATERIALS, INC.

As of October 28, 2012

LEGAL ENTITY NAME		PLACE OF INCORPORATION
Applied Materials Japan, Inc.		Japan
Applied Materials (Holdings)	(1)	California
Applied Materials Asia-Pacific, LLC	(2)	Delaware
Applied Materials Israel, Ltd.	(3)	Israel
Applied Materials SPV1, Inc.	(4)	Delaware
AKT, Inc.	(5)	Japan
Etec Systems, Inc.		Nevada
AKT Japan, LLC		Delaware
Applied Materials India Private Limited		India
Metron Technology, Inc.	(6)	Delaware
Applied Ventures, LLC		Delaware
1325949 Ontario Inc.	(7)	Canada
AFCO GP, LLC		Colorado
Applied Films Taiwan Co., Ltd.		Taiwan
AFCO C.V.	(a)	The Netherlands
PT Applied Materials Indonesia		Indonesia
Semitool, Inc.	(8)	Montana
TF Solar Manufacturing LLC		Delaware
Varian Semiconductor Equipment Associates, Inc.	(9)	Delaware
Varian Japan Holdings, LLC	(b)	Delaware
(1) Applied Materials (Holdings) owns the following subsidiary:
Applied Materials UK Limited		California
(2) Applied Materials Asia-Pacific, LLC owns the following subsidiaries:
Applied Materials Korea, Ltd.		Korea
Applied Materials Taiwan, Ltd.		Taiwan
Applied Materials China, Ltd.	(c)	Hong Kong
AMAT (Thailand) Limited		Thailand
Applied Materials (Shanghai) Co., Ltd.		P.R. China
Applied Materials (China) Holdings, Ltd.	(d)	P.R. China

1

LEGAL ENTITY NAME		PLACE OF INCORPORATION
(3) Applied Materials Israel, Ltd. owns the following subsidiary:
Integrated Circuit Testing GmbH		Germany
(4) Applied Materials SPV1, Inc. owns the following subsidiary:
Applied Materials SPV2, Inc.	(e)	Delaware
(5) AKT, Inc. owns the following subsidiary:
AKT America, Inc.		California
(6) Metron Technology, Inc. owns the following subsidiaries:
Metron Technology (Europa) Ltd.		United Kingdom
Metron Technology (Asia) Ltd.		Hong Kong
Metron Technology Distribution Corporation		Nevada
(7) 1325949 Ontario Inc. owns the following subsidiary:
Applied Materials Canada, Inc.		Canada
(8) Semitool, Inc. owns the following subsidiaries:
Semitool Europe Ltd.		United Kingdom
Semitool (Asia) Pte Ltd.		Singapore
Semitool Korea, Inc.		South Korea
Semitool Semiconductor Equipment Technology (Shanghai) Co., Ltd.		PRC
Semitool (Taiwan) Inc.		Nevada
Semitool Italia SRL		Italy
Semitool Schweiz GmbH		Switzerland
(9) Varian Semiconductor Equipment Associates, Inc., owns the following subsidiaries:
4 Stanley Tucker Drive LLC		Delaware
Applied Materials 2 LLC		Delaware
Applied Materials 2 LLC Luxembourg S.C.S.	(g)	Luxembourg
(a) AFCO C.V. owns the following subsidiaries:
Applied Materials Deutschland Holding GmbH	(f)	Germany
Applied Materials 1 LLC		Delaware
Applied Materials 1 LLC Luxembourg S.C.S.	(g)	Luxembourg
Applied Materials Netherlands B.V.	(h)	The Netherlands

2

LEGAL ENTITY NAME		PLACE OF INCORPORATION
(b) Varian Japan Holdings, LLC owns the following subsidiary:
Varian Semiconductor Equipment K.K.		Japan
(c) Applied Materials China, Ltd. owns the following subsidiaries:
Applied Materials China (Tianjin) Co., Ltd.		P.R. China
Applied Materials (China), Inc.		P.R. China
(d) Applied Materials (China) Holdings, Ltd., owns the following subsidiary:
Applied Materials (Xi’an), Ltd.		P.R. China
(e) Applied Materials SPV2, Inc. owns the following 50-50 joint venture:
eLith LLC		Delaware
(f) Applied Materials Deutschland Holding GmbH owns the following subsidiaries:
Applied Materials Verwaltung GmbH		Germany
Applied Materials GmbH & Co., KG		Germany
(g) Applied Materials 1 LLC Luxembourg S.C.S. and Applied Materials 2 LLC Luxembourg S.C.S. each partially own the following subsidiary:
i Applied Materials 2 LLC Luxembourg S.C.S. 3 S.C.S	(i)	Luxembourg
(h) Applied Materials Netherlands B.V., owns the following subsidiary:
Applied Materials Italia S.r.l.	(j)	Italy
Applied Materials GmbH		Germany
Applied Materials France SARL		France
Applied Materials Ireland Ltd.		Ireland
Applied Materials Belgium N.V.		Belgium
Applied Materials Spain S.L.		Spain
(i) Applied Materials 2 Luxembourg S.C.S. 3 S.C.S. owns the following subsidiaries:
Applied Materials Europe BV	(k)	The Netherlands
Applied Materials Luxembourg S.à r.l.	(l)	Luxembourg
Varian Semiconductor Equipment Associates Overseas Holdings, Ltd.	(m)	Cayman Islands
(j) Applied Materials Italia S.r.l. owns the following subsidiary:
Baccini GmbH		Germany

3

LEGAL ENTITY NAME		PLACE OF INCORPORATION
(k) Applied Materials Europe BV owns the following subsidiary:
Applied Materials Switzerland Sàrl	(n)	Switzerland
(l) Applied Materials Luxembourg S.à r.l. owns the following subsidiary:
Applied Materials South East Asia Pte. Ltd.	(o)	Singapore
(m) Varian Semiconductor Equipment Associates Overseas Holdings, Ltd., owns the following subsidiary:
Varian Semiconductor Equipment Associates (Gibraltar), Ltd.	(p)	Gibraltar
(n) Applied Materials Switzerland Sàrl owns the following subsidiary:
HCT Shaping Systems Service (Beijing) Co., Ltd.		PRC
(o) Applied Materials South East Asia Pte. Ltd. owns the following subsidiaries:
Applied Materials (AMSEA) Sdn Bhd		Malaysia
Applied Materials Singapore Technology Pte. Ltd.		Singapore
Semitool (Philippines) Inc.		Nevada
(p) Varian Semiconductor Equipment Associates (Gibraltar), Ltd. owns the following subsidiary:
Varian Semiconductor Equipment Associates Luxembourg S.à r.l.	(q)	Luxembourg

4

LEGAL ENTITY NAME		PLACE OF INCORPORATION
(q) Varian Semiconductor Equipment Associates Luxembourg S.à r.l., owns the following subsidiaries:
Varian Semiconductor Equipment Associates Pacific LLC		Delaware
Varian Korea, Ltd.		South Korea
Varian Semiconductor Equipment Associates PacRim Pte. Ltd.		Singapore
Varian Semiconductor Equipment Associates (HK) Limited		Hong Kong
Altin Ltd.	(r)	Hong Kong
Varian Semiconductor Equipment Associates GmbH	(s)	Switzerland
Varian Semiconductor Equipment Associates GesmbH		Austria
Varian Semiconductor Equipment Associates S.A.S.		France
Varian Semiconductor Equipment Associates GmbH		Germany
Varian Semiconductor Equipment Associates International, LLC		Delaware
Varian Semiconductor Equipment Associates Italia S.r.l.		Italy
Varian Semiconductor Equipment Associates UK Limited		United Kingdom
(r) Altin Ltd., owns the following subsidiary:
Varian Precision Instruments Maintenance (Shanghai) Co., Ltd.		PRC
(s) Varian Semiconductor Equipment Associates GmbH (Swiss Entity), owns the following subsidiaries:
Varian Semiconductor Management GmbH		Switzerland
Varian Semiconductor Equipment Associates Europe B.V.		The Netherlands

____________________________

i Applied Materials 2 LLC Luxembourg S.C.S. 3 S.C.S is a partnership which is partially owned by both Applied Materials 1 LLC Luxembourg S.C.S. and Applied Materials 2 LLC Luxembourg S.C.S.

5

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Applied Materials, Inc.:

We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 333-71243; 333-71245; 333-35396; 333-52518; 333-75698; 333-116393; 333-123531; 333-124711; 333-135977; 333-143377; 333-145805; 333-157661; 333-165035; 333-178348; 333-181665; and 333-181666) and Form S-3ASR (No. 333-174636) of Applied Materials, Inc. of our reports dated December 5, 2012, with respect to the consolidated balance sheets of Applied Materials, Inc. as of October 28, 2012 and October 30, 2011, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended October 28, 2012, and the effectiveness of internal control over financial reporting as of October 28, 2012, which reports appear in the October 28, 2012 annual report on Form 10-K of Applied Materials, Inc.

/s/ KPMG LLP

KPMG LLP

Santa Clara, CaliforniaDecember 5, 2012

1

EX-24

Exhibit 24

POWER OF ATTORNEY

The undersigned directors and officers of Applied Materials, Inc., a Delaware corporation (the “Company”), hereby constitute and appoint Michael R. Splinter and George S. Davis, and each of them, with full power to act without the other, as the undersigned’s true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead in the undersigned’s capacity as an officer and/or director of the Company, to execute in the name and on behalf of the undersigned an annual report of the Company on Form 10-K for the fiscal year ended October 28, 2012 (the “Report”), under the Securities Exchange Act of 1934, as amended, and to file such Report, with exhibits thereto and other documents in connection therewith and any and all amendments thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done and to take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required of, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.

IN WITNESS WHEREOF, we have hereunto set our hands this 3rd day of December, 2012.

/s/ Aart J. de Geus	/s/ Dennis D. Powell
Aart J. de Geus	Dennis D. Powell
Director	Director
/s/ Stephen R. Forrest	/s/ Willem P. Roelandts
Stephen R. Forrest	Willem P. Roelandts
Director	Director
/s/ Thomas J. Iannotti	/s/ James E. Rogers
Thomas J. Iannotti	James E. Rogers
Director	Director
/s/ Susan M. James	/s/ Michael R. Splinter
Susan M. James	Michael R. Splinter
Director	Chairman of the Board
/s/ Alexander A. Karsner	/s/ Robert H. Swan
Alexander A. Karsner	Robert H. Swan
Director	Director
/s/ Gerhard H. Parker
Gerhard H. Parker
Director

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael R. Splinter, certify that:

1. I have reviewed this Annual Report on Form 10-K 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: December 5, 2012

/s/ MICHAEL R. SPLINTER

Michael R. Splinter

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, George S. Davis, certify that:

1. I have reviewed this Annual Report on Form 10-K 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: December 5, 2012

/s/ GEORGE S. DAVIS

George S. Davis

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

APPLIED MATERIALS, INC.

SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this Annual Report on Form 10-K of Applied Materials, Inc. for the fiscal year ended October 28, 2012, 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. this Form 10-K for the fiscal year ended October 28, 2012 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 this Form 10-K for the fiscal year ended October 28, 2012 fairly presents, in all material respects, the financial condition and results of operations of Applied Materials, Inc. for the periods presented therein.

Date: December 5, 2012

/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 this Annual Report on Form 10-K of Applied Materials, Inc. for the fiscal year ended October 28, 2012, I, George S. Davis, Executive 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. this Form 10-K for the fiscal year ended October 28, 2012 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 this Form 10-K for the fiscal year ended October 28, 2012 fairly presents, in all material respects, the financial condition and results of operations of Applied Materials, Inc. for the periods presented therein.

Date: December 5, 2012

/s/ GEORGE S. DAVIS

George S. Davis

Executive Vice President, Chief Financial Officer

XML

Warranty, Guarantees And Contingencies (Tables)

12 Months Ended

Oct. 28, 2012

Commitments and Contingencies Disclosure [Abstract]

Future minimum lease payments

As of October 28, 2012, future minimum lease payments are expected to be as follows:

	Lease Payments
	(In millions)
2013	$	31
2014	20
2015	12
2016	10
2017	8
Thereafter	8
	$	89

Changes in the warranty reserves

Changes in the warranty reserves during fiscal 2012 and 2011 were as follows:

	2012			2011
	(In millions)
Beginning balance	$	168		$	155
Provisions for warranty	107			170
Consumption of reserves	(156		)	(157		)
Ending balance	$	119		$	168

XML

Business Combinations (Details) (Varian Semiconductor Equipment Associates Inc [Member], USD $) In Millions, unless otherwise specified	Nov. 10, 2011
Varian Semiconductor Equipment Associates Inc [Member]
Purchase prices for the acquisitions
Cash and cash equivalents	$ 632
Short-term investments	56
Accounts receivable, net	194
Inventories	250
Deferred income taxes and other current assets	66
Long term investments	62
Property and equipment, net	104
Goodwill	2,604
Purchased intangible assets	1,365
Other noncurrent assets	10
Total assets acquired	5,343
Accounts payable and accrued expenses	(134)
Customer deposits and deferred revenue Liabilities	(52)
Income taxes payable	(60)
Deferred income taxes	(211)
Other liabilities	(25)
Total liabilities assumed	(482)
Purchase price allocated	$ 4,861

XML

Cash, Cash Equivalents and Investments (Details Textuals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Cash, Cash Equivalents and Investments (Textuals) [Abstract]
Impairments of investments	$ 17	$ 3	$ 13
Equity investments in privately-held companies [Member]
Cash, Cash Equivalents and Investments (Textuals) [Abstract]
Impairments of investments	$ 17	$ 3	$ 13

XML

Restructuring Charges and Asset Impairments (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 11	$ 104	$ 31
Provision for restructuring reserves	148		149
Consumption of reserves	(26)	(33)	(56)
Adjustment of restructuring reserves		(60)	(20)
Ending Balance	133	11	104
2012 Global Restructuring Plan [Member] | Severance and Other Employee-Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0	0	0
Provision for restructuring reserves	106		0
Consumption of reserves	0	0	0
Adjustment of restructuring reserves		0	0
Ending Balance	106	0	0
2012 EES Restructuring Plan [Member] | Severance and Other Employee-Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0	0	0
Provision for restructuring reserves	27		0
Consumption of reserves	(11)	0	0
Adjustment of restructuring reserves		0	0
Ending Balance	16	0	0
2012 EES Restructuring Plan [Member] | Contract cancellation and other costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0	0	0
Provision for restructuring reserves	1		0
Consumption of reserves	0	0	0
Adjustment of restructuring reserves		0	0
Ending Balance	1	0	0
2010 EES Restructuring Plan [Member] | Severance and Other Employee-Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	1	42	0
Provision for restructuring reserves	0		45
Consumption of reserves	(1)	(5)	(3)
Adjustment of restructuring reserves		(36)
Ending Balance	0	1	42
2010 Global Restructuring Plan [Member] | Severance and Other Employee-Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	5	51	0
Provision for restructuring reserves	0		104
Consumption of reserves	(5)	(27)	(33)
Adjustment of restructuring reserves		(19)	(20)
Ending Balance	0	5	51
Others [Member] | Severance and Other Employee-Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0	6	26
Provision for restructuring reserves	14		0
Consumption of reserves	(9)	(1)	(20)
Adjustment of restructuring reserves		(5)	0
Ending Balance	5	0	6
Others [Member] | Contract cancellation and other costs [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	5	5	5
Provision for restructuring reserves	0		0
Consumption of reserves	0	0	0
Adjustment of restructuring reserves		0	0
Ending Balance	$ 5	$ 5	$ 5

XML

Business Combinations (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012 Year	Nov. 10, 2011
Business Acquisition [Line Items]
Useful life, minimum	1
Useful life, maximum	15
Varian Semiconductor Equipment Associates Inc [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		$ 1,365
Varian Semiconductor Equipment Associates Inc [Member] | Developed technology [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		987
Useful life, minimum	1
Useful life, maximum	7
Varian Semiconductor Equipment Associates Inc [Member] | Customer relationships [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		150
Useful life	15
Varian Semiconductor Equipment Associates Inc [Member] | In-process technology [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		142
Varian Semiconductor Equipment Associates Inc [Member] | Patents and trademarks [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		69
Useful life	10
Varian Semiconductor Equipment Associates Inc [Member] | Backlog [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		7
Useful life	1
Varian Semiconductor Equipment Associates Inc [Member] | Covenant not to compete [Member]
Business Acquisition [Line Items]
Purchased Intangible Assets 2012		$ 10
Useful life	2

XML

Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 6) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Stock options
Beginning Balance	30	51	73
Assumed in Varian acquisition	5	0	0
Exercised	(4)	(5)	(7)
Canceled and forfeited	(10)	(16)	(15)
Ending Balance	21	30	51
Exercisable, Shares	20	24	37
Stock option weighted average exercise price
Beginning Balance	$ 13.05	$ 15.04	$ 14.72
Assumed in Varian acquisition	$ 4.85	$ 0.00	$ 0.00
Exercised	$ 7.30	$ 9.21	$ 10.88
Canceled and forfeited	$ 16.76	$ 20.28	$ 15.64
Ending Balance	$ 10.53	$ 13.05	$ 15.04
Exercisable, Weighted Average Exercise Price	$ 10.71	$ 14.23	$ 17.39

XML

Cash, Cash Equivalents and Investments (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Gains and Losses on Investments
Gross realized gains	$ 3	$ 20	$ 6
Gross realized losses	$ 3	$ 4	$ 2

XML

Goodwill, Purchased Technology and Other Intangible Assets (Tables)

12 Months Ended

Oct. 28, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of purchased technology and intangible assets

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

	October 28, 2012		October 30, 2011
	(In millions)
Purchased technology, net	$	945	$	127
Intangible assets - finite-lived, net	268		84
Intangible assets - indefinite-lived	142		—
Total	$	1,355	$	211

Indefinite-lived intangible assets

Details of goodwill and other indefinite-lived intangible assets were as follows:

	October 28, 2012						October 30, 2011
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	381	$	—	$	381
Applied Global Services	1,027		—		1,027		193		—		193
Display	116		—		116		116		—		116
Energy and Environmental Solutions	224		—		224		645		—		645
Carrying amount	$	3,518	$	142	$	3,660	$	1,335	$	—	$	1,335

Amortized intangible assets

Details of finite-lived intangible assets were as follows:

	October 28, 2012									October 30, 2011
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,300		$	252		$	1,552		$	310		$	20		$	330
Applied Global Services	28			44			72			28			40			68
Display	110			33			143			110			33			143
Energy and Environmental Solutions	105			232			337			105			232			337
Gross carrying amount	$	1,543		$	561		$	2,104		$	553		$	325		$	878
Accumulated amortization:
Silicon Systems Group	$	(411	)	$	(36	)	$	(447	)	$	(256	)	$	(8	)	$	(264	)
Applied Global Services	(22		)	(39		)	(61		)	(20		)	(31		)	(51		)
Display	(106		)	(27		)	(133		)	(102		)	(25		)	(127		)
Energy and Environmental Solutions	(59		)	(191		)	(250		)	(48		)	(177		)	(225		)
Accumulated amortization	$	(598	)	$	(293	)	$	(891	)	$	(426	)	$	(241	)	$	(667	)
Carrying amount	$	945		$	268		$	1,213		$	127		$	84		$	211

Summary of amortization expense

Details of amortization expense by segment for fiscal 2012, 2011 and 2010 were as follows:

	2012		2011		2010
	(In millions)
Silicon Systems Group	$	183	$	13	$	21
Applied Global Services	9		7		9
Display	7		8		8
Energy and Environmental Solutions	25		24		44
Total	$	224	$	52	$	82

Schedule of categories amortization expense was charged to

For fiscal 2012, 2011 and 2010, amortization expense was charged to the following categories:

	2012		2011		2010
	(In millions)
Cost of products sold	$	185	$	36	$	63
Research, development and engineering	1		—		1
Selling, general and administrative	38		16		18
Total	$	224	$	52	$	82

Future estimated amortization expense

As of October 28, 2012, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	214
2014	198
2015	184
2016	175
2017	171
Thereafter	271
Total	$	1,213

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 7) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012 Year	Oct. 30, 2011	Oct. 31, 2010
Options outstanding and exercisable
Options outstanding, Number of Shares	21
Options exercisable and expected to become exercisable, Number of Shares	21
Options outstanding, Weighted Average Exercise Price	$ 10.53
Options exercisable and expected to become exercisable, Weighted Average Exercise Price	$ 10.53
Options outstanding, Weighted Average Remaining Contractual Life	1.43
Options exercisable and expected to become exercisable, Weighted Average Remaining Contractual Life	1.43
Options outstanding, Aggregate Intrinsic Value	$ 43	$ 58	$ 73
Options exercisable and expected to become exercisable, Aggregate Intrinsic Value	43
Options exercisable, Number of Shares	20
Options exercisable, Weighted Average Exercise Price	$ 10.71
Options exercisable, Aggregate Intrinsic Value	40
Range $3.09 - $9.99 [Member]
Options outstanding and exercisable
Options outstanding, Number of Shares	15
Options outstanding, Weighted Average Exercise Price	$ 7.68
Options outstanding, Weighted Average Remaining Contractual Life	1.80
Options outstanding, Aggregate Intrinsic Value	43
Options exercisable, Number of Shares	14
Options exercisable, Weighted Average Exercise Price	$ 7.80
Options exercisable, Aggregate Intrinsic Value	40
Range $10.00 - $19.99 [Member]
Options outstanding and exercisable
Options outstanding, Number of Shares	6
Options outstanding, Weighted Average Exercise Price	$ 17.11
Options outstanding, Weighted Average Remaining Contractual Life	0.57
Options outstanding, Aggregate Intrinsic Value	0
Options exercisable, Number of Shares	6
Options exercisable, Weighted Average Exercise Price	$ 17.11
Options exercisable, Aggregate Intrinsic Value	$ 0

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 1) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Summary of stock repurchases
Shares of common stock repurchased	126	36	29
Cost of stock repurchased	$ 1,416	$ 468	$ 350
Average price paid per share	$ 11.22	$ 12.88	$ 12.15

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Components of income from operations before income taxes
U.S.	$ 381	$ 1,257	$ 787
Foreign	(65)	1,121	600
Income before income taxes	316	2,378	1,387
Current:
U.S.	74	290	463
Foreign	75	206	134
State	8	5	34
Total current provision for income taxes	157	501	631
Deferred:
U.S.	52	(95)	(160)
Foreign	(4)	(23)	4
State	2	69	(26)
Total deferred provision (benefit) for income taxes	50	(49)	(182)
Provision for income taxes	207	452	449
Reconciliation between the statutory U.S.federal income tax rate to actual effective income tax rate
Tax provision at U.S. statutory rate	35.00%	35.00%	35.00%
Favorable resolutions from audits of prior years' income tax filings	(6.00%)	(6.90%)	0.00%
Effect of foreign operations taxed at various rates	(8.50%)	(8.10%)	(3.00%)
State income taxes, net of federal benefit	2.00%	1.60%	0.90%
Research and other tax credits	(1.00%)	(1.20%)	(0.30%)
Production benefit	(8.00%)	(0.80%)	(1.20%)
Goodwill impairment	47.00%	0.00%	0.00%
Share-based compensation	4.00%	0.40%	0.60%
Other	1.00%	(1.00%)	0.40%
Effective income tax rate	65.50%	19.00%	32.40%
Deferred tax assets:
Inventory reserves and basis difference	119	214
Installation and warranty reserves	27	31
Foreign tax credits on undistributed foreign earnings	0	112
Accrued liabilities	224	250
Restructuring reserves	23	4
Deferred revenue	36	53
Capital loss carryforward	0	4
Tax credits and net operating losses	111	39
Deferred compensation	41	21
Share-based compensation	51	49
Intangibles	12	10
Gross deferred tax assets	644	787
Valuation allowance	(46)	(13)
Total deferred tax assets	598	774
Deferred tax liabilities:
Depreciation	(71)	(61)
Purchased technology	(190)	(86)
Undistributed foreign earnings	(93)	0
Other	(25)	(44)
Total gross deferred tax liabilities	(379)	(191)
Net deferred tax assets	219	583
Breakdown between current and non-current net deferred tax assets and liabilities
Current deferred tax asset	369	580
Non-current deferred tax asset	51	78
Current deferred tax liability	(1)	(1)
Non-current deferred tax liability	(200)	(74)
Net deferred tax assets	219	583
Reconciliation of gross unrecognized tax benefits
Beginning balance of gross unrecognized tax benefits	59	328
Uncertainties arising from the acquistion of Varian	76	0
Settlements with tax authorities	(16)	(314)
Increases in tax positions for current years	46	45
Increases in tax positions from prior years	53	0
Decreases in tax positions for prior years	(37)	0
Ending balance of gross unrecognized tax benefits	$ 181	$ 59	$ 328

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Business Combinations (Details 4) (Semitool Inc and Advent Solar [Member], USD $) In Millions, unless otherwise specified	Oct. 31, 2010
Semitool Inc and Advent Solar [Member]
Business Acquisition [Line Items]
Fair value of net tangible assets acquired	$ 117
Goodwill	165
Purchased intangible assets	93
Purchase price allocated	$ 375

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 4) (Stock Options [Member])	12 Months Ended
	Oct. 28, 2012 Year
Stock Options [Member]
Weighted Average Assumptions Used For Stock Options Granted
Dividend yield	2.60%
Expected volatility	38.70%
Risk-free interest rate	0.52%
Expected life (in years)	3.3

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Employee Benefit Plans (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Components of net periodic benefit costs of defined and postretirement benefit plans
Service cost	$ 16	$ 15	$ 13
Interest cost	14	14	13
Expected return on plan assets	(11)	(11)	(7)
Amortization of actuarial loss and prior service credit	0	2	1
Settlement and curtailments loss (gain)	6	(2)	1
Net periodic benefit cost	$ 25	$ 18	$ 21
Weighted average assumptions
Discount rate	4.53%	4.33%	4.76%
Expected long-term return on assets	5.91%	6.39%	6.92%
Rate of compensation increase	3.09%	3.42%	3.30%

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 9) (ESPP [Member])	12 Months Ended
	Oct. 28, 2012 Year	Oct. 30, 2011 Year	Oct. 31, 2010 Year
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	3.01%	2.53%	2.44%
Expected volatility	29.60%	31.10%	33.30%
Risk-free interest rate	0.13%	0.09%	0.19%
Expected life (in years)	0.5	0.5	0.5

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Employee Benefit Plans (Details 4) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract]
2013	$ 12
2014	13
2015	14
2016	14
2017	15
2018-2022	87
Total	$ 155

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 5) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Equity [Abstract]
Aggregate intrinsic value of outstanding stock options	$ 43	$ 58	$ 73
Total intrinsic value of stock options exercised	21	23	15
Total fair value of stock options vested	41	17	21
Cash received from stock option exercises	33	41	78
Actual tax benefit realized from options exercised	$ 7	$ 11	$ 4

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Restructuring Charges and Asset Impairments (Details Textuals) (USD $) In Millions, unless otherwise specified	12 Months Ended				0 Months Ended		12 Months Ended				0 Months Ended		12 Months Ended	0 Months Ended		12 Months Ended				0 Months Ended	12 Months Ended			0 Months Ended			12 Months Ended			0 Months Ended		12 Months Ended		0 Months Ended	12 Months Ended
	Oct. 30, 2011	Oct. 31, 2010	Oct. 28, 2012	Oct. 25, 2009	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Minimum [Member] positions	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Maximum [Member] positions	Oct. 28, 2012 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 30, 2011 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 31, 2010 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 25, 2009 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member] Minimum [Member]	Oct. 03, 2012 2012 Global Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member] Maximum [Member]	Oct. 28, 2012 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	Oct. 28, 2012 2012 EES Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 30, 2011 2012 EES Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 31, 2010 2012 EES Restructuring Plan [Member] Severance and Other Employee-Related Costs [Member]	Oct. 25, 2009 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]	Oct. 28, 2012 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	Oct. 30, 2011 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	Oct. 31, 2010 2012 EES Restructuring Plan [Member] Asset Impairments [Member]	May 10, 2012 2012 EES Restructuring Plan [Member] Asset Impairments [Member] Maximum [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]	Oct. 28, 2012 Varian Integration [Member] Severance and Other Employee-Related Costs [Member]	Oct. 30, 2011 2010 EES Restructuring Plan [Member] Position	Oct. 31, 2010 2010 EES Restructuring Plan [Member]	Jul. 21, 2010 2010 EES Restructuring Plan [Member] Minimum [Member] Position	Jul. 21, 2010 2010 EES Restructuring Plan [Member] Maximum [Member] Position	Oct. 30, 2011 2010 Global Restructuring Plan [Member]	Oct. 31, 2010 2010 Global Restructuring Plan [Member]	Nov. 12, 2008 Restructuring program - 2008 [Member] Position	Oct. 30, 2011 Restructuring program - 2008 [Member]
Restructuring and Asset Impairments (Textuals) [Abstract]
Reduction in Global Workforce (in positions)					900	1,300									250													200		400	500			2,000
Reduction in Global Workforce in percent					6.00%	9.00%
Expected restructuring charges											$ 180	$ 230		$ 70	$ 100					$ 40				$ 30	$ 15	$ 15
Restructuring charges							106	0	0				48			27	0	0			20	0	0				14		45				84
Term of restructuring plan (in months)														12 months	18 months
Favorable adjustment to restructuring reserves																												36				19			5
Inventory related charges													13																330
Assets impairment charges	3																												108
Impairment of properties	3	9
Restructuring reserve	11	104	133	31			106	0	0	0						16	0	0	0								5
Impairment charges	$ 24

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Unaudited Quarterly Consolidated Financial Data

12 Months Ended

Oct. 28, 2012

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Consolidated Financial Data

Unaudited Quarterly Consolidated Financial Data

	Fiscal Quarter
	First		Second		Third		Fourth			Fiscal Year
	(In millions, except per share amounts)
2012:
Net sales	$	2,189	$	2,541	$	2,343	$	1,646		$	8,719
Gross margin	$	786	$	1,011	$	930	$	586		$	3,313
Net income (loss)	$	117	$	289	$	218	$	(515	)	$	109
Earnings (loss) per diluted share	$	0.09	$	0.22	$	0.17	$	(0.42	)	$	0.09
2011:
Net sales	$	2,686	$	2,862	$	2,787	$	2,182		$	10,517
Gross margin	$	1,136	$	1,189	$	1,184	$	852		$	4,360
Net income	$	506	$	489	$	476	$	456		$	1,926
Earnings per diluted share	$	0.38	$	0.37	$	0.36	$	0.34		$	1.45

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Fair Value Measurements (Details Textuals) (USD $)	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Fair Value Measurements (Textuals) [Abstract]
Fair value of level one and level two transfers amount	$ 0	$ 0
Equity investments in privately-held companies	70,000,000	62,000,000
Cost-method investments, aggregate carrying amount	57,000,000	40,000,000
Impairments of investments	17,000,000	3,000,000	13,000,000
Long-term debt at carrying value	1,900,000,000	1,900,000,000
Long-term debt, fair value	2,300,000,000	2,200,000,000
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member]
Fair Value Measurements (Textuals) [Abstract]
Equity investments in privately-held companies measured on non-recurring basis	13,000,000	22,000,000
Equity investments in privately-held companies [Member]
Fair Value Measurements (Textuals) [Abstract]
Impairments of investments	$ 17,000,000	$ 3,000,000	$ 13,000,000

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Summary of Significant Accounting Policies (Details)	3 Months Ended												12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 31, 2010	Aug. 01, 2010	May 02, 2010	Jan. 31, 2010	Oct. 28, 2012 Year	Oct. 30, 2011	Oct. 31, 2010
Summary of Significant Accounting Policies (Textuals) [Abstract]
Operating cycle	P13W	P13W	P13W	P13W	P13W	P13W	P13W	P13W	P13W	P13W	P13W	P14W	P52W	P52W	P53W
Intangible assets, useful life, minimum (in years)													1
Intangible assets, useful life, maximum (in years)													15
Purchased technology and other intangible assets [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Intangible assets, useful life, minimum (in years)													1
Intangible assets, useful life, maximum (in years)													15
Building and improvements [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Property, Plant and Equipment, useful life, minimum													3
Property, Plant and Equipment, useful life, maximum													30
Demonstration and manufacturing equipment [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Property, Plant and Equipment, useful life, minimum													3
Property, Plant and Equipment, useful life, maximum													5
Software [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Property, Plant and Equipment, useful life, minimum													3
Property, Plant and Equipment, useful life, maximum													5
Furniture, fixtures and other equipment [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Property, Plant and Equipment, useful life, minimum													3
Property, Plant and Equipment, useful life, maximum													15
Land improvements [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Term of amortization													shorter of 15 years or the estimated useful life
Leasehold improvements [Member]
Summary of Significant Accounting Policies (Textuals) [Abstract]
Term of amortization													shorter of five years or the lease term

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	$ 182	$ 146	$ 126
Cost of products sold [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	54	48	32
Research, development, and engineering [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	54	46	43
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share-based compensation	$ 74	$ 52	$ 51

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Industry Segment Operations (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Reconciliation of capital expenditures to applied's consolidated totals
Capital expenditures	$ 162	$ 209	$ 169
Operating Segments [Member]
Reconciliation of capital expenditures to applied's consolidated totals
Capital expenditures	86	113	90
Unallocated Amount to Segment [Member]
Reconciliation of capital expenditures to applied's consolidated totals
Capital expenditures	$ 76	$ 96	$ 79

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Employee Benefit Plans (Tables)

12 Months Ended

Oct. 28, 2012

Compensation and Retirement Disclosure [Abstract]

Changes in benefit obligations and plan assets including post-retirement benefits

A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for fiscal 2012 and 2011 is presented below.

	2012			2011
	(In millions, except percentages)
Change in projected benefit obligation
Beginning projected benefit obligation	$	303		$	309
Service cost	16			15
Interest cost	14			14
Plan participants’ contributions	1			1
Actuarial (gain) loss	96			(26		)
Curtailments, settlements and special termination benefits	(3		)	(9		)
Foreign currency exchange rate changes	(4		)	5
Benefits paid	(7		)	(8		)
Plan amendments and business combinations	18			2
Ending projected benefit obligation	$	434		$	303
Ending accumulated benefit obligation	$	395		$	273
Range of assumptions to determine benefit obligations
Discount rate	1.3% - 4.7%			1.7% - 6.5%
Rate of compensation increase	2.0% - 8.0%			2.0% - 5.0%
Change in plan assets
Beginning fair value of plan assets	$	183		$	162
Return on plan assets	14			3
Employer contributions	31			26
Plan participants’ contributions	1			1
Foreign currency exchange rate changes	(4		)	2
Divestitures, settlements and business combinations	(4		)	(3		)
Benefits paid	(7		)	(8		)
Ending fair value of plan assets	$	214		$	183
Funded status	$	(220	)	$	(120	)
Amounts recognized in the consolidated balance sheets
Noncurrent asset	$	5		$	13
Current liability	(4		)	(3		)
Noncurrent liability	(221		)	(130		)
Total	$	(220	)	$	(120	)
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
Actuarial loss	$	6		$	1
Prior service cost (credit)	(1		)	—
Total	$	5		$	1
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	117		$	27
Prior service cost (credit)	(3		)	(4		)
Total	$	114		$	23
Plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	$	428		$	259
Fair value of plan assets	$	202		$	126
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	$	389		$	225
Fair value of plan assets	$	202		$	116

	2012		2011
Plan assets — allocation
Equity securities	37	%	37	%
Debt securities	33	%	28	%
Insurance contracts	23	%	26	%
Commingled funds	5	%	5	%
Cash	2	%	4	%

Summary of ending fair value of the plan assets

The following table presents a summary of the ending fair value of the plan assets:

	October 28, 2012								October 30, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In millions)
Equity securities	$	79	$	—	$	—	$	79	$	67	$	—	$	—	$	67
Debt securities	70		—		—		70		51		—		—		51
Insurance contracts	—		—		49		49		—		—		48		48
Commingled funds	—		12		—		12		—		10		—		10
Cash	4		—		—		4		7		—		—		7
Total	$	153	$	12	$	49	$	214	$	125	$	10	$	48	$	183

Activity in Level 3 instruments

The following table presents the activity in Level 3 instruments during fiscal 2012 and 2011:

	2012			2011
	(In millions)
Balance, beginning of year	$	48		$	44
Actual return on plan assets:
Relating to assets still held at reporting date	1			1
Purchases, sales, settlements, net	3			2
Currency impact	(3		)	1
Balance, end of year	$	49		$	48

Components of net periodic benefit costs of defined and postretirement benefit plans

A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost and benefit obligation calculations for fiscal 2012, 2011 and 2010 is presented below.

	2012			2011			2010
	(In millions, except percentages)
Components of net periodic benefit cost
Service cost	$	16		$	15		$	13
Interest cost	14			14			13
Expected return on plan assets	(11		)	(11		)	(7		)
Amortization of actuarial loss and prior service credit	—			2			1
Settlement and curtailment loss (gain)	6			(2		)	1
Net periodic benefit cost	$	25		$	18		$	21
Weighted average assumptions
Discount rate	4.53		%	4.33		%	4.76		%
Expected long-term return on assets	5.91		%	6.39		%	6.92		%
Rate of compensation increase	3.09		%	3.42		%	3.30		%

Schedule of Expected Benefit Payments

Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows:

	Benefit Payments
	(In millions)
2013	$	12
2014	13
2015	14
2016	14
2017	15
2018-2022	87
	$	155

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Accounts Receivable, Net (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Sale and Discounting of Accounts Receivable
Discounted letters of credit	$ 0	$ 211	$ 230
Factored accounts receivable and discounted promissory notes	93	80	157
Total	93	291	387
Accounts Receivable, Net (Textual) [Abstract]
Allowance for doubtful accounts	87	73
Changes in allowance for doubtful accounts
Beginning balance	73	74	67
Provision	14	5	17
Recoveries	0	(6)	(10)
Ending balance	$ 87	$ 73	$ 74

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Borrowing Facilities and Long-Term Debt (Details Textuals) (USD $)			1 Months Ended	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	May 31, 2012 Revolving Credit [Member]	Oct. 28, 2012 Revolving Credit [Member]
Borrowing Facilities and Long Term Debt (Textuals) [Abstract]
Available revolving credit agreement	$ 1,600,000,000			$ 1,500,000,000
Credit revolving extension period			1 year
Expiration of revolving credit period				May 2016
Other credit facilities	100,000,000
Outstanding credit facilities	0	0
Unsecured senior notes issued under underwriting agreement	$ 1,750,000,000

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Goodwill, Purchased Technology and Other Intangible Assets (Details 2) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Amortized intangible assets
Gross carrying amount	$ 2,104	$ 878
Accumulated amortization	(891)	(667)
Carrying amount	1,213	211
Silicon Systems Group [Member]
Amortized intangible assets
Gross carrying amount	1,552	330
Accumulated amortization	(447)	(264)
Applied Global Services [Member]
Amortized intangible assets
Gross carrying amount	72	68
Accumulated amortization	(61)	(51)
Display [Member]
Amortized intangible assets
Gross carrying amount	143	143
Accumulated amortization	(133)	(127)
Energy and Environmental Solutions [Member]
Amortized intangible assets
Gross carrying amount	337	337
Accumulated amortization	(250)	(225)
Purchased Technology [Member]
Amortized intangible assets
Gross carrying amount	1,543	553
Accumulated amortization	(598)	(426)
Carrying amount	945	127
Purchased Technology [Member] | Silicon Systems Group [Member]
Amortized intangible assets
Gross carrying amount	1,300	310
Accumulated amortization	(411)	(256)
Purchased Technology [Member] | Applied Global Services [Member]
Amortized intangible assets
Gross carrying amount	28	28
Accumulated amortization	(22)	(20)
Purchased Technology [Member] | Display [Member]
Amortized intangible assets
Gross carrying amount	110	110
Accumulated amortization	(106)	(102)
Purchased Technology [Member] | Energy and Environmental Solutions [Member]
Amortized intangible assets
Gross carrying amount	105	105
Accumulated amortization	(59)	(48)
Other [Member]
Amortized intangible assets
Gross carrying amount	561	325
Accumulated amortization	(293)	(241)
Carrying amount	268	84
Other [Member] | Silicon Systems Group [Member]
Amortized intangible assets
Gross carrying amount	252	20
Accumulated amortization	(36)	(8)
Other [Member] | Applied Global Services [Member]
Amortized intangible assets
Gross carrying amount	44	40
Accumulated amortization	(39)	(31)
Other [Member] | Display [Member]
Amortized intangible assets
Gross carrying amount	33	33
Accumulated amortization	(27)	(25)
Other [Member] | Energy and Environmental Solutions [Member]
Amortized intangible assets
Gross carrying amount	232	232
Accumulated amortization	$ (191)	$ (177)

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Cash, Cash Equivalents and Investments (Details 3) (USD $) In Millions, unless otherwise specified	Oct. 30, 2011
Gross Unrealized Losses and the Fair Market Value of Investments
In Loss Position for Less Than 12 Months, Fair Value	$ 109
In Loss Position for Less Than 12 Months, Gross Unrealized Losses	2
Total, Fair Value	109
Total, Gross Unrealized Losses	2
Commercial paper, corporate bonds and medium-term notes [Member]
Gross Unrealized Losses and the Fair Market Value of Investments
In Loss Position for Less Than 12 Months, Fair Value	32
In Loss Position for Less Than 12 Months, Gross Unrealized Losses	1
Total, Fair Value	32
Total, Gross Unrealized Losses	1
Asset-backed and mortgage-backed securities [Member]
Gross Unrealized Losses and the Fair Market Value of Investments
In Loss Position for Less Than 12 Months, Fair Value	77
In Loss Position for Less Than 12 Months, Gross Unrealized Losses	1
Total, Fair Value	77
Total, Gross Unrealized Losses	$ 1

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Summary of Significant Accounting Policies

12 Months Ended

Oct. 28, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2012 and 2011 contained 52 weeks each, while fiscal 2010 contained 53 weeks. Each fiscal quarter of 2012 and 2011 contained 13 weeks. The first quarter of fiscal 2010 contained 14 weeks, while the second, third, and fourth quarters of fiscal 2010 each contained 13 weeks.

In November 2011, Applied completed its acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian). Beginning in the first quarter of fiscal 2012, the acquired business is included in Applied's consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.

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.

Cash Equivalents

All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Investments

All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the gains and losses on 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.

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.

Inventories

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully reserves for inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required.

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.

Intangible Assets

Goodwill and indefinite-lived assets are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method.

Long-Lived Assets

Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets.

Research, Development and Engineering Costs

Research, development and engineering costs are expensed as incurred.

Sales and Value Added Taxes

Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Statements of Operations.

Warranty

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. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required.

Income Taxes

Income tax expense is based on pretax earnings. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards.

Restructuring

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. Costs associated with restructuring activities are included in restructuring charges and asset impairments in the Consolidated Statements of Operations.

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.

Derivative Financial Instruments

Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. 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. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges of anticipated foreign currency denominated transactions, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Foreign Currencies

As of October 28, 2012, primarily all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in the Consolidated Statements of Operations as incurred.

Concentrations of Credit Risk

Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance on the presentation of comprehensive income to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The authoritative guidance also required presentation of adjustments for items that are reclassified from other comprehensive income in the statement where the components of net income and the components of other compressive income are presented, which was indefinitely deferred by the FASB in December 2011. Applied early adopted this authoritative guidance in fiscal 2012. The implementation of this authoritative guidance did not have an impact on Applied’s financial position or results of operations.

In July 2012, the FASB amended its existing guidance for goodwill and other intangible assets. This authoritative guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. To perform a qualitative assessment, a company must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. This authoritative guidance becomes effective for Applied in the first quarter of fiscal 2013, with early adoption permitted. The implementation of this authoritative guidance is not expected to have a material impact on Applied's financial position or results of operations.

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Goodwill, Purchased Technology and Other Intangible Assets (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Indefinite-lived Intangible Assets by Segment [Line Items]
Amortization expense	$ 224	$ 52	$ 82
Silicon Systems Group [Member]
Indefinite-lived Intangible Assets by Segment [Line Items]
Amortization expense	183	13	21
Applied Global Services [Member]
Indefinite-lived Intangible Assets by Segment [Line Items]
Amortization expense	9	7	9
Display [Member]
Indefinite-lived Intangible Assets by Segment [Line Items]
Amortization expense	7	8	8
Energy and Environmental Solutions [Member]
Indefinite-lived Intangible Assets by Segment [Line Items]
Amortization expense	$ 25	$ 24	$ 44

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Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Numerator:
Net income	$ (515)	$ 218	$ 289	$ 117	$ 456	$ 476	$ 489	$ 506	$ 109	$ 1,926	$ 938
Denominator:
Weighted average common shares outstanding									1,266	1,319	1,340
Effect of dilutive stock options, restricted stock units and employee stock purchase plans shares									11	11	9
Denominator for diluted earnings per share									1,277	1,330	1,349
Basic earnings per share									$ 0.09	$ 1.46	$ 0.70
Diluted earnings (loss) per share	$ (0.42)	$ 0.17	$ 0.22	$ 0.09	$ 0.34	$ 0.36	$ 0.37	$ 0.38	$ 0.09	$ 1.45	$ 0.70
Potentially dilutive securities									9	16	34

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Fair Value Measurements (Tables)

12 Months Ended

Oct. 28, 2012

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 October 28, 2012 and October 30, 2011:

	October 28, 2012						October 30, 2011
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	483	$	—	$	483	$	5,663	$	—	$	5,663
U.S. Treasury and agency securities	128		246		374		109		76		185
Non-U.S. government securities	—		29		29		—		40		40
Municipal securities	—		431		431		—		373		373
Commercial paper, corporate bonds and medium-term notes	—		384		384		—		218		218
Asset-backed and mortgage-backed securities	—		298		298		—		309		309
Publicly traded equity securities	47		—		47		27		—		27
Total	$	658	$	1,388	$	2,046	$	5,799	$	1,016	$	6,815
Liabilities:
Deferred compensation	$	7	$	—	$	7	$	—	$	—	$	—
Total	$	7	$	—	$	7	$	—	$	—	$	—

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Cash, Cash Equivalents and Investments (Tables)

12 Months Ended

Oct. 28, 2012

Cash and Cash Equivalents [Abstract]

Summary of cash, cash equivalents and investments

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

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

 _________________________

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

October 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	297	$	—	$	—	$	297
Cash equivalents:
Money market funds	5,663		—		—		5,663
Total Cash equivalents	5,663		—		—		5,663
Total Cash and Cash equivalents	$	5,960	$	—	$	—	$	5,960
Short-term and long-term investments:
U.S. Treasury and agency securities	$	184	$	1	$	—	$	185
Non-U.S. government securities	40		—		—		40
Municipal securities	371		2		—		373
Commercial paper, corporate bonds and medium-term notes	216		3		1		218
Asset-backed and mortgage-backed securities	307		3		1		309
Total fixed income securities	1,118		9		2		1,125
Publicly traded equity securities	8		19		—		27
Equity investments in privately-held companies	62		—		—		62
Total short-term and long-term investments	$	1,188	$	28	$	2	$	1,214
Total Cash, Cash equivalents and Investments	$	7,148	$	28	$	2	$	7,174

Contractual maturities of investments

The following table summarizes the contractual maturities of Applied’s investments at October 28, 2012:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	515	$	516
Due after one through five years	663		668
Due after five years	1		2
No single maturity date**	396		414
	$	1,575	$	1,600

 _________________________

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

Schedule of gross realized gains and losses on sales of investments

Gross realized gains and losses on sales of investments during fiscal 2012, 2011, and 2010 were as follows:

	2012		2011		2010
	(In millions)
Gross realized gains	$	3	$	20	$	6
Gross realized losses	$	3	$	4	$	2

Schedule of unrealized loss on investments

The following table provides the fair market value of Applied’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired as of October 30, 2011.

	In Loss Position  for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Commercial paper, corporate bonds and medium-term notes	$	32	$	1	$	32	$	1
Asset-backed and mortgaged-backed securities	77		1		77		1
Total	$	109	$	2	$	109	$	2

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Industry Segment Operations (Details 6)	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Samsung Electronics Co., Ltd. [Member]
Companies accounted for at least 10 percent of Applied's net sales
Accounted net sales in percent	20.00%	12.00%	14.00%
Taiwan Semiconductor Manufacturing Company Limited [Member]
Companies accounted for at least 10 percent of Applied's net sales
Accounted net sales in percent	16.00%	10.00%	11.00%
Intel Corporation [Member]
Companies accounted for at least 10 percent of Applied's net sales
Accounted net sales in percent		10.00%

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Business Combinations (Details 3) (Varian Semiconductor Equipment Associates Inc [Member], USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
Varian Semiconductor Equipment Associates Inc [Member]
Business Acquisition [Line Items]
Net Sales	$ 8,719	$ 11,734
Net income	$ 167	$ 1,862
Basic earnings per share	$ 0.13	$ 1.41
Diluted earnings per share	$ 0.13	$ 1.40

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Cash, Cash Equivalents and Investments (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012		Oct. 30, 2011
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	$ 2,967		$ 7,148
Cash, Cash Equivalents and Investments Gross Unrealized Gains	25		28
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		2
Cash, Cash Equivalents and Investments Estimated Fair Value	2,992		7,174
Total cash and cash equivalents [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	1,392		5,960
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0		0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	1,392		5,960
Cash [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	876		297
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0		0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	876		297
Total fixed income securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	1,473		1,118
Cash, Cash Equivalents and Investments Gross Unrealized Gains	10		9
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		2
Cash, Cash Equivalents and Investments Estimated Fair Value	1,483		1,125
Cash equivalents [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	516		5,663
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0		0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	516		5,663
Cash equivalents [Member] | Money market funds [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	483		5,663
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0		0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	483		5,663
Cash equivalents [Member] | Municipal securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	33
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0
Cash, Cash Equivalents and Investments Estimated Fair Value	33
Short-term and long-term investments [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	1,575		1,188
Cash, Cash Equivalents and Investments Gross Unrealized Gains	25		28
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		2
Cash, Cash Equivalents and Investments Estimated Fair Value	1,600		1,214
Short-term and long-term investments [Member] | U.S. Treasury and agency securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	373		184
Cash, Cash Equivalents and Investments Gross Unrealized Gains	1		1
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	374		185
Short-term and long-term investments [Member] | Non-US government securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	29	[1]	40
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0	[1]	0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0	[1]	0
Cash, Cash Equivalents and Investments Estimated Fair Value	29	[1]	40
Short-term and long-term investments [Member] | Municipal securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	396		371
Cash, Cash Equivalents and Investments Gross Unrealized Gains	2		2
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	398		373
Short-term and long-term investments [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	381		216
Cash, Cash Equivalents and Investments Gross Unrealized Gains	3		3
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		1
Cash, Cash Equivalents and Investments Estimated Fair Value	384		218
Short-term and long-term investments [Member] | Asset-backed and mortgage-backed securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	294		307
Cash, Cash Equivalents and Investments Gross Unrealized Gains	4		3
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		1
Cash, Cash Equivalents and Investments Estimated Fair Value	298		309
Short-term and long-term investments [Member] | Publicly traded equity securities [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	32		8
Cash, Cash Equivalents and Investments Gross Unrealized Gains	15		19
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	47		27
Short-term and long-term investments [Member] | Equity investments in privately-held companies [Member]
Summary of Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments Cost	70		62
Cash, Cash Equivalents and Investments Gross Unrealized Gains	0		0
Cash, Cash Equivalents and Investments Gross Unrealized Losses	0		0
Cash, Cash Equivalents and Investments Estimated Fair Value	$ 70		$ 62

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

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Accounts Receivable, Net (Tables)

12 Months Ended

Oct. 28, 2012

Receivables [Abstract]

Sale and discounting of accounts receivable

Details of discounted letters of credit, factored accounts receivable and discounted promissory notes for fiscal years ended October 28, 2012, October 30, 2011 and October 31, 2010 were as follows:

	2012		2011		2010
	(In millions)
Discounted letters of credit	$	—	$	211	$	230
Factored accounts receivable and discounted promissory notes	93		80		157
Total	$	93	$	291	$	387

Changes in allowance for doubtful accounts

Changes in allowance for doubtful accounts were as follows:

	2012		2011			2010
	(In millions)
Beginning balance	$	73	$	74		$	67
Provision	14		5			17
Recoveries	—		(6		)	(10		)
Ending balance	$	87	$	73		$	74

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Balance Sheet Detail (Tables)

12 Months Ended

Oct. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories

	October 28, 2012		October 30, 2011
	(In millions)
Inventories
Customer service spares	$	312	$	328
Raw materials	331		407
Work-in-process	234		336
Finished goods	395		630
	$	1,272	$	1,701

Property, plant and equipment, net

	Useful Life	October 28, 2012			October 30, 2011
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	169		$	163
Buildings and improvements	3-30	1,196			1,155
Demonstration and manufacturing equipment	3-5	760			686
Furniture, fixtures and other equipment	3-15	734			722
Construction in progress		58			12
Gross property, plant and equipment		2,917			2,738
Accumulated depreciation		(2,007		)	(1,872		)
		$	910		$	866

Accounts payable and accrued expenses

	October 28, 2012		October 30, 2011
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	396	$	484
Compensation and employee benefits	426		455
Warranty	119		168
Dividends payable	108		104
Other accrued taxes	18		81
Interest payable	30		31
Restructuring reserve	133		11
Other	206		186
	$	1,436	$	1,520

Customer deposits and deferred revenue

	October 28, 2012		October 30, 2011
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	143	$	249
Deferred revenue	612		867
	$	755	$	1,116

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Cash flows from operating activities:
Net income	$ 109	$ 1,926	$ 938
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization	422	246	305
Net loss (gain) on dispositions and fixed asset retirements	7	(13)	20
Provision for bad debts	14	5	17
Impairment of goodwill	421	0	0
Restructuring charges and asset impairments	168	(30)	246
Deferred income taxes	161	122	(186)
Net recognized loss on investments	23	19	20
Impairments of strategic investments	17	3	13
Share-based compensation	182	146	126
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	493	292	(767)
Inventories	679	(163)	145
Other current assets	37	(23)	179
Other assets	9	(38)	(7)
Accounts payable and accrued expenses	(435)	(221)	469
Customer deposits and deferred revenue	(412)	267	(23)
Income taxes payable	(34)	(89)	262
Employee benefits and other liabilities	(10)	(20)	(34)
Cash provided by operating activities	1,851	2,429	1,723
Cash flows from investing activities:
Capital expenditures	(162)	(209)	(169)
Cash paid for acquisitions, net of cash acquired	(4,190)	0	(323)
Proceeds from sale of facilities and dispositions	0	130	0
Proceeds from sales and maturities of investments	1,019	1,923	1,408
Purchases of investments	(1,327)	(1,137)	(1,778)
Cash provided by (used in) investing activities	(4,660)	707	(862)
Cash flows from financing activities:
Debt borrowings (repayments), net	(1)	1,744	(6)
Payments of debt issuance costs	0	(14)	0
Proceeds from common stock issuances	97	95	129
Common stock repurchases	(1,416)	(468)	(350)
Payments of dividends to stockholders	(434)	(397)	(349)
Cash provided by (used in) financing activities	(1,754)	960	(576)
Effect of exchange rate changes on cash and cash equivalents	(5)	6	(3)
Increase (decrease) in cash and cash equivalents	(4,568)	4,102	282
Cash and cash equivalents - beginning of year	5,960	1,858	1,576
Cash and cash equivalents - end of year	1,392	5,960	1,858
Supplemental cash flow information:
Cash payments for income taxes	243	761	388
Cash refunds from income taxes	79	289	201
Cash payments for interest	$ 94	$ 14	$ 14

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Business Combinations (Tables)

12 Months Ended

Oct. 28, 2012

Varian Semiconductor Equipment Associates Inc [Member]

Business Combination [Line Items]

Purchase price allocation for acquisitions

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition date:

	Acquisition 2012
Estimated Fair Values	(In millions)
Cash and cash equivalents	$	632
Short-term investments	56
Accounts receivable, net	194
Inventories	250
Deferred income taxes and other current assets	66
Long-term investments	62
Property and equipment, net	104
Goodwill	2,604
Purchased intangible assets	1,365
Other assets	10
Total assets acquired	5,343
Accounts payable and accrued expenses	(134		)
Customer deposits and deferred revenue	(52		)
Income taxes payable	(60		)
Deferred income taxes	(211		)
Other liabilities	(25		)
Total liabilities assumed	(482		)
Purchase price allocated	$	4,861

Intangible assets acquired as part of a business combination

The following table presents details of the purchase price allocated to purchased intangible assets of Varian at the acquisition date:

	Useful Life	Purchased Intangible  Assets 2012
	(In years)	(In millions)
Developed technology	1 - 7	$	987
Customer relationships	15	150
In-process technology		142
Patents and trademarks	10	69
Backlog	1	7
Covenant not to compete	2	10
Total purchased intangible assets		$	1,365

Business acquisition, pro forma information

	2012		2011
	(In millions, except per share amounts)
Net sales	$	8,719	$	11,734
Net income	$	167	$	1,862
Basic earnings per share	$	0.13	$	1.41
Diluted earnings per share	$	0.13	$	1.40

Semitool Inc and Advent Solar [Member]

Business Combination [Line Items]

Purchase price allocation for acquisitions

Estimated Fair Values	Acquisitions 2010
	(In millions)
Fair value of net tangible assets acquired	$	117
Goodwill	165
Purchased intangible assets	93
Purchase price allocated	$	375

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Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Change in projected benefit obligation
Beginning projected benefit obligation	$ 303	$ 309
Service cost	16	15	13
Interest cost	14	14	13
Plan participants contributions	1	1
Actuarial (gain) loss	96	(26)
Curtailments, settlements and special termination benefits	(3)	(9)
Foreign currency exchange rate changes	(4)	5
Benefits paid	(7)	(8)
Plan amendments and business combinations	18	2
Ending projected benefit obligation	434	303	309
Ending accumulated benefit obligation	395	273
Change in plan assets
Beginning fair value of plan assets	183	162
Return on plan assets	14	3
Employer contributions	31	26
Plan participants contributions	1	1
Foreign currency exchange rate changes	(4)	2
Divestitures, settlements and business combinations	(4)	(3)
Benefits paid	(7)	(8)
Ending fair value of plan assets	214	183	162
Funded status	(220)	(120)
Amounts recognized in the consolidated balance sheets
Noncurrent asset	5	13
Current liability	(4)	(3)
Noncurrent liability	(221)	(130)
Total	(220)	(120)
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
Actuarial loss	6	1
Prior service cost (credit)	(1)	0
Total	5	1
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	117	27
Prior service cost (credit)	(3)	(4)
Total	114	23
Plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	428	259
Fair value of plan assets	202	126
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	389	225
Fair value of plan assets	$ 202	$ 116
Plan assets allocation
Equity securities	37.00%	37.00%
Debt securities	33.00%	28.00%
Insurance Contracts	23.00%	26.00%
Commingled funds	5.00%	5.00%
Cash	2.00%	4.00%
Minimum [Member]
Range of assumptions to determine benefit obligations
Discount rate	1.30%	1.70%
Rate of compensation increase	2.00%	2.00%
Maximum [Member]
Range of assumptions to determine benefit obligations
Discount rate	4.70%	6.50%
Rate of compensation increase	8.00%	5.00%

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Industry Segment Operations (Tables)

12 Months Ended

Oct. 28, 2012

Segment Reporting [Abstract]

Net sales and operating income (loss) for each reportable segment

Information for each reportable segment as of October 28, 2012, October 30, 2011 and October 31, 2010 and for the fiscal years then ended, is as follows:

	Net Sales		Operating Income  (Loss)			Depreciation/ Amortization		Capital Expenditures		Segment Assets
	(In millions)
2012:
Silicon Systems Group	$	5,536	$	1,243		$	256	$	71	$	5,106
Applied Global Services	2,285		502			17		8		2,035
Display	473		25			8		1		278
Energy and Environmental Solutions	425		(668		)	38		6		513
Total Segment	$	8,719	$	1,102		$	319	$	86	$	7,932
2011:
Silicon Systems Group	$	5,415	$	1,764		$	52	$	59	$	2,036
Applied Global Services	2,413		482			13		7		1,337
Display	699		147			7		31		459
Energy and Environmental Solutions	1,990		453			34		16		1,438
Total Segment	$	10,517	$	2,846		$	106	$	113	$	5,270
2010:
Silicon Systems Group	$	5,304	$	1,892		$	66	$	39	$	2,317
Applied Global Services	1,865		337			25		5		1,285
Display	899		267			8		5		419
Energy and Environmental Solutions	1,481		(466		)	57		41		1,402
Total Segment	$	9,549	$	2,030		$	156	$	90	$	5,423

Reconciliations of total segment operating income to Applied's consolidated operating income (loss)

Reconciliations of segment operating results to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012			2011			2010
	(In millions)
Total segment operating income	$	1,102		$	2,846		$	2,030
Corporate and unallocated costs	(580		)	(496		)	(553		)
Restructuring charges and asset impairments	(111		)	21			(93		)
Gain on sale of facility	—			27			—
Income from operations	$	411		$	2,398		$	1,384

Reconciliations of depreciation and amortization expense to Applied's consolidated totals

Reconciliations of depreciation and amortization expense to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment depreciation and amortization	$	319	$	106	$	156
Depreciation on shared facilities and information technology assets	103		140		149
Consolidated depreciation and amortization	$	422	$	246	$	305

Reconciliation of capital expenditures to Applied's consolidated totals

Reconciliations of capital expenditures to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment capital expenditures	$	86	$	113	$	90
Shared facilities and information technology assets	76		96		79
Consolidated capital expenditures	$	162	$	209	$	169

Reconciliation of segment assets to Applied's consolidated totals

Reconciliations of segment assets to Applied consolidated totals as of October 28, 2012, and October 30, 2011 are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Total segment assets	$	7,932		$	5,270
Cash and investments	2,992			7,174
Allowance for bad debts	(87		)	(73		)
Deferred income taxes	420			658
Other current assets	98			90
Common property, plant and equipment	588			620
Other assets	159			122
Consolidated total assets	$	12,102		$	13,861

Net sales and long-lived assets by geographic region

Net sales and long-lived assets by geographic region were as follows:

	Net Sales		Long-lived Assets
	(In millions)
2012:
United States	$	1,749	$	666
China	783		74
Taiwan	2,411		36
Korea	1,897		9
Europe	863		110
Japan	704		6
Southeast Asia	312		87
Total outside United States	6,970		322
Consolidated total	$	8,719	$	988
2011:
United States	$	1,963	$	623
China	2,574		81
Taiwan	2,093		33
Korea	1,263		8
Europe	1,120		128
Japan	912		7
Southeast Asia	592		71
Total outside United States	8,554		328
Consolidated total	$	10,517	$	951
2010:
United States	$	1,147	$	715
China	1,557		78
Taiwan	2,750		32
Korea	1,768		5
Europe	981		95
Japan	768		5
Southeast Asia	578		65
Total outside United States	8,402		280
Consolidated total	$	9,549	$	995

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 in fiscal 2012, 2011, and/or 2010, which were for products in multiple reportable segments.

	2012		2011		2010
Samsung Electronics Co., Ltd.	20	%	12	%	14	%
Taiwan Semiconductor Manufacturing Company Limited	16	%	10	%	11	%
Intel Corporation	*		10	%	*

 _____________________________

* Less than 10%.

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Balance Sheet Detail (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Inventories
Customer service spares	$ 312	$ 328
Raw materials	331	407
Work-in-process	234	336
Finished goods	395	630
Total Inventories	1,272	1,701
Property, Plant and Equipment, Net
Land and improvements	169	163
Buildings and improvements	1,196	1,155
Demonstration and manufacturing equipment	760	686
Furniture, fixtures and other equipment	734	722
Construction in progress	58	12
Gross property, plant and equipment	2,917	2,738
Accumulated depreciation	(2,007)	(1,872)
Net property, plant and equipment	910	866
Accounts Payable and Accrued Expenses
Accounts payable	396	484
Compensation and employee benefits	426	455
Warranty	119	168
Dividends payable	108	104
Other accrued taxes	18	81
Interest payable	30	31
Restructuring reserve	133	11
Other	206	186
Total Accounts Payable and Accrued Expenses	1,436	1,520
Customer Deposits and Deferred Revenue
Customer deposits	143	249
Deferred revenue	612	867
Total Customer Deposits and Deferred Revenue	755	1,116
Balance Sheet Detail (Textuals) [Abstract]
Inventory at customer locations included in finished goods	60	224
Evaluation inventory	176	140
Proceeds from sale of property	0	130	0
Gain incurred on sale of property	0	27	0
Proceeds on sale of certain assets held for sale		31
Untendered shares obligation	12
North America [Member]
Balance Sheet Detail (Textuals) [Abstract]
Proceeds from sale of property		99
Number of properties sold		2
Gain incurred on sale of property		27
Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, useful life, minimum	3
Property, Plant and Equipment, useful life, maximum	30
Demonstration and manufacturing equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, useful life, minimum	3
Property, Plant and Equipment, useful life, maximum	5
Furniture, fixtures and other equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, useful life, minimum	3
Property, Plant and Equipment, useful life, maximum	15
2012 EES Restructuring Plan [Member]
Balance Sheet Detail (Textuals) [Abstract]
Fixed asset impairment charges	$ 20

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Components of accumulated other comprehensive loss, after-tax basis
Unrealized gain (loss) on investments, net	$ 16	$ 17
Unrealized gain (loss) on derivative instruments qualifying as cash flow hedges	1	0
Pension liability	(90)	(25)
Cumulative translation adjustments	12	14
Accumulated other comprehensive income	$ (61)	$ 6

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Consolidated Statements of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Income Statement [Abstract]
Net sales	$ 8,719	$ 10,517	$ 9,549
Cost of products sold	5,406	6,157	5,834
Gross margin	3,313	4,360	3,715
Operating expenses:
Research, development and engineering	1,237	1,118	1,143
Selling, general and administrative	1,076	901	942
Impairment of goodwill (Note 9)	421	0	0
Restructuring charges and asset impairments (Note 11)	168	(30)	246
Gain on sale of facilities, net (Note 7)	0	(27)	0
Total operating expenses	2,902	1,962	2,331
Income from operations	411	2,398	1,384
Impairments of strategic investments	17	3	13
Interest and other expenses (Note 10)	95	59	21
Interest and other income, net	17	42	37
Income before income taxes	316	2,378	1,387
Provision for income taxes	207	452	449
Net income	$ 109	$ 1,926	$ 938
Earnings per share:
Basic (in dollars)	$ 0.09	$ 1.46	$ 0.70
Diluted (in dollars)	$ 0.09	$ 1.45	$ 0.70
Weighted average number of shares:
Basic (in shares)	1,266	1,319	1,340
Diluted (in shares)	1,277	1,330	1,349

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Cash, Cash Equivalents and Investments (Details 1) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012
Contractual maturities of investments
Due in one year or less, Cost	$ 515
Due in one year or less, Estimated Fair value	516
Due after one through five years, Cost	663
Due after one through five years, Estimated Fair Value	668
Due after five years, Cost	1
Due after five years, Estimated Fair Value	2
No single maturity date, Cost	396	[1]
No single maturity date, Estimated Fair Value	414	[1]
Investments maturities amortized cost	1,575
Investments maturities fair value	$ 1,600

[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 (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Reconciliations of depreciation and amortization expense to Applied consolidated totals
Depreciation and amortization	$ 422	$ 246	$ 305
Operating Segments [Member]
Reconciliations of depreciation and amortization expense to Applied consolidated totals
Depreciation and amortization	319	106	156
Unallocated Amount to Segment [Member]
Reconciliations of depreciation and amortization expense to Applied consolidated totals
Depreciation and amortization	$ 103	$ 140	$ 149

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Consolidated Statements of Stockholders' Equity (USD $) In Millions	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Oct. 25, 2009	$ 7,094	$ 13	$ 5,195	$ 10,934	$ (9,046)	$ (2)
Beginning Balance, Shares at Oct. 25, 2009		1,341			508
Net income	938			938
Other comprehensive income (loss), net of tax	4					4
Dividends	(361)			(361)
Share-based compensation	126		126
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other	85		85
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other, shares		16
Common stock repurchases	(350)				(350)
Common stock repurchases, shares	29	(29)			29
Ending Balance at Oct. 31, 2010	7,536	13	5,406	11,511	(9,396)	2
Ending Balance, Shares at Oct. 31, 2010		1,328			537
Net income	1,926			1,926
Other comprehensive income (loss), net of tax	4					4
Dividends	(408)			(408)
Share-based compensation	146		146
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other	64		64
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other, shares		14
Common stock repurchases	(468)				(468)
Common stock repurchases, shares	36	(36)			36
Ending Balance at Oct. 30, 2011	8,800	13	5,616	13,029	(9,864)	6
Ending Balance, Shares at Oct. 30, 2011		1,306			573
Net income	109			109
Other comprehensive income (loss), net of tax	(67)					(67)
Dividends	(438)			(438)
Share-based compensation	182		182
Stock options assumed in connection with acquisition	11		11
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other	54		54
Issuance under stock plans, net of a tax detriment of $12, 5 and 28 for 2012, 2011 and 2010 respectively and other, shares		17
Common stock repurchases	(1,416)	(1)			(1,415)
Common stock repurchases, shares	126	(126)			126
Ending Balance at Oct. 28, 2012	$ 7,235	$ 12	$ 5,863	$ 12,700	$ (11,279)	$ (61)
Ending Balance, Shares at Oct. 28, 2012		1,197			699

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Industry Segment Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Net sales and operating income (loss) for each reportable segment
Net Sales	$ 1,646	$ 2,343	$ 2,541	$ 2,189	$ 2,182	$ 2,787	$ 2,862	$ 2,686	$ 8,719	$ 10,517	$ 9,549
Operating income (loss)									411	2,398	1,384
Depreciation/Amortization									422	246	305
Capital Expenditures									162	209	169
Segment Assets	12,102				13,861				12,102	13,861
Silicon Systems Group [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales									5,536	5,415	5,304
Operating income (loss)									1,243	1,764	1,892
Depreciation/Amortization									256	52	66
Capital Expenditures									71	59	39
Segment Assets	5,106				2,036				5,106	2,036	2,317
Applied Global Services [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales									2,285	2,413	1,865
Operating income (loss)									502	482	337
Depreciation/Amortization									17	13	25
Capital Expenditures									8	7	5
Segment Assets	2,035				1,337				2,035	1,337	1,285
Display [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales									473	699	899
Operating income (loss)									25	147	267
Depreciation/Amortization									8	7	8
Capital Expenditures									1	31	5
Segment Assets	278				459				278	459	419
Energy and Environmental Solutions [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales									425	1,990	1,481
Operating income (loss)									(668)	453	(466)
Depreciation/Amortization									38	34	57
Capital Expenditures									6	16	41
Segment Assets	513				1,438				513	1,438	1,402
Operating Segments [Member]
Net sales and operating income (loss) for each reportable segment
Net Sales									8,719	10,517	9,549
Operating income (loss)									1,102	2,846	2,030
Depreciation/Amortization									319	106	156
Capital Expenditures									86	113	90
Segment Assets	$ 7,932				$ 5,270				$ 7,932	$ 5,270	$ 5,423

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Goodwill, Purchased Technology and Other Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	$ 1,213	$ 211
Intangible assets - indefinite-lived	142	0
Total	1,355	211
Purchased Technology [Member]
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	945	127
Intangible Assets [Member]
Summary of Purchased Technology and Intangible Assets [Line Items]
Carrying amount	$ 268	$ 84

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Industry Segment Operations (Details 5) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Net sales and long-lived assets by geographic region
Net Sales	$ 1,646	$ 2,343	$ 2,541	$ 2,189	$ 2,182	$ 2,787	$ 2,862	$ 2,686	$ 8,719	$ 10,517	$ 9,549
Long-lived Assets	988				951				988	951	995
United States [Member]
Net sales and long-lived assets by geographic region
Net Sales									1,749	1,963	1,147
Long-lived Assets	666				623				666	623	715
China [Member]
Net sales and long-lived assets by geographic region
Net Sales									783	2,574	1,557
Long-lived Assets	74				81				74	81	78
Taiwan [Member]
Net sales and long-lived assets by geographic region
Net Sales									2,411	2,093	2,750
Long-lived Assets	36				33				36	33	32
Korea [Member]
Net sales and long-lived assets by geographic region
Net Sales									1,897	1,263	1,768
Long-lived Assets	9				8				9	8	5
Europe [Member]
Net sales and long-lived assets by geographic region
Net Sales									863	1,120	981
Long-lived Assets	110				128				110	128	95
Japan [Member]
Net sales and long-lived assets by geographic region
Net Sales									704	912	768
Long-lived Assets	6				7				6	7	5
Southeast Asia [Member]
Net sales and long-lived assets by geographic region
Net Sales									312	592	578
Long-lived Assets	87				71				87	71	65
Total outside United States [Member]
Net sales and long-lived assets by geographic region
Net Sales									6,970	8,554	8,402
Long-lived Assets	$ 322				$ 328				$ 322	$ 328	$ 280

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Restructuring Charges and Asset Impairments (Tables)

12 Months Ended

Oct. 28, 2012

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 fiscal 2012, 2011 and 2010:

	2012		2011			2010
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs	$	106	$	—		$	—
2012 EES Restructuring Plan
Severance and other employee-related costs	27		—			—
Contract cancellation and other costs	1		—			—
Asset impairments	20		—			—
2010 EES Restructuring Plan
Severance and other employee-related costs	—		(36		)	45
Asset impairments	—		—			108
2010 Global Restructuring Plan
Severance and other employee-related costs	—		(19		)	84
Others
Severance and other employee-related costs	14		(5		)	—
Non-Restructuring Related
Asset impairments	—		30			9
	$	168	$	(30	)	$	246

Restructuring and asset impairment charges by segment

Restructuring and asset impairment charges were recorded as follows:

	2012		2011			2010
	(In millions)
Silicon Systems Group	$	4	$	—		$	—
Applied Global Services	15		24			—
Energy and Environmental Solutions	38		(33		)	153
Corporate Unallocated	111		(21		)	93
Total	$	168	$	(30	)	$	246

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

Changes in restructuring reserves for fiscal 2012, 2011, and 2010 related to other restructuring plans and facilities realignment programs initiated in prior periods were as follows:

	2012 Global Restructuring Plan		2012 EES Restructuring Plan					2010 EES Restructuring Plan			2010 Global 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			Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 25, 2009	$	—	$	—		$	—	$	—		$	—		$	26		$	5	$	31
Provision for restructuring reserves	—		—			—		45			104			—			—		149
Consumption of reserves	—		—			—		(3		)	(33		)	(20		)	—		(56		)
Adjustment of restructuring reserves	—		—			—		—			(20		)	—			—		(20		)
Balance, October 31, 2010	$	—	$	—		$	—	$	42		$	51		$	6		$	5	$	104
Consumption of reserves	—		—			—		(5		)	(27		)	(1		)	—		(33		)
Adjustment of restructuring reserves	—		—			—		(36		)	(19		)	(5		)	—		(60		)
Balance, October 30, 2011	$	—	$	—		$	—	$	1		$	5		$	—		$	5	$	11
Provision for restructuring reserves	106		27			1		—			—			14			—		148
Consumption of reserves	—		(11		)	—		(1		)	(5		)	(9		)	—		(26		)
Balance, October 28, 2012	$	106	16			1		—			—			$	5		$	5	$	133

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Goodwill, Purchased Technology and Other Intangible Assets (Details Textual) (USD $)	12 Months Ended
	Oct. 28, 2012 Year	Oct. 30, 2011	Oct. 31, 2010
Goodwill, Purchased Technology and Other Intangible Assets (Textual) [Abstract]
Impairment of goodwill	$ 421,000,000	$ 0	$ 0
Increase in goodwill and other indefinite-lived intangible assets	2,300,000,000
Impairment charges of intangible assets		24,000,000
Intangible assets, useful life, minimum (in years)	1
Intangible assets, useful life, maximum (in years)	15
Change in gross carrying amount of the amortized intangible assets	1,200,000,000
Applied Global Services [Member]
Goodwill, Purchased Technology and Other Intangible Assets (Textual) [Abstract]
Impairment charges of intangible assets		6,000,000
Change in gross carrying amount of the amortized intangible assets		25,000,000
Energy and Environmental Solutions [Member]
Goodwill, Purchased Technology and Other Intangible Assets (Textual) [Abstract]
Impairment charges of intangible assets			31,000,000
Trade Names [Member]
Goodwill, Purchased Technology and Other Intangible Assets (Textual) [Abstract]
Impairment charges of intangible assets		$ 18,000,000

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Income Taxes

12 Months Ended

Oct. 28, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income from operations before income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(In millions)
U.S.	$	381		$	1,257	$	787
Foreign	(65		)	1,121		600
	$	316		$	2,378	$	1,387

The components of the provision for income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011			2010
	(In millions)
Current:
U.S.	$	74		$	290		$	463
Foreign	75			206			134
State	8			5			34
	157			501			631
Deferred:
U.S.	52			(95		)	(160		)
Foreign	(4		)	(23		)	4
State	2			69			(26		)
	50			(49		)	(182		)
	$	207		$	452		$	449

A reconciliation between the statutory U.S. federal income tax rate of 35 percent  and Applied’s actual effective income tax rate for fiscal 2012, 2011 and 2010 is presented below:

	2012		2011		2010
Tax provision at U.S. statutory rate	35.0	%	35.0	%	35.0	%
Favorable resolutions from audits of prior years’ income tax filings	(6.0	)	(6.9	)	—
Effect of foreign operations taxed at various rates	(8.5	)	(8.1	)	(3.0	)
State income taxes, net of federal benefit	2.0		1.6		0.9
Research and other tax credits	(1.0	)	(1.2	)	(0.3	)
Production benefit	(8.0	)	(0.8	)	(1.2	)
Goodwill impairment	47.0		—		—
Share-based compensation	4.0		0.4		0.6
Other	1.0		(1.0	)	0.4
	65.5	%	19.0	%	32.4	%

The effective income tax rate for fiscal 2012 is significantly higher than the rate for fiscal 2011 due primarily to the recording of goodwill impairment charges in fiscal 2012, which are not deductible for tax purposes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Deferred tax assets:
Inventory reserves and basis difference	$	119		$	214
Installation and warranty reserves	27			31
Foreign tax credits on undistributed foreign earnings	—			112
Accrued liabilities	224			250
Restructuring reserves	23			4
Deferred revenue	36			53
Capital loss carryforward	—			4
Tax credits and net operating losses	111			39
Deferred compensation	41			21
Share-based compensation	51			49
Intangibles	12			10
Gross deferred tax assets	644			787
Valuation allowance	(46		)	(13		)
Total deferred tax assets	598			774
Deferred tax liabilities:
Depreciation	(71		)	(61		)
Purchased technology	(190		)	(86		)
Undistributed foreign earnings	(93		)	—
Other	(25		)	(44		)
Total gross deferred tax liabilities	(379		)	(191		)
Net deferred tax assets	$	219		$	583

The following table presents the breakdown between current and non-current net deferred tax assets and liabilities:

	October 28, 2012			October 30, 2011
	(In millions)
Current deferred tax asset	$	369		$	580
Non-current deferred tax asset	51			78
Current deferred tax liability	(1		)	(1		)
Non-current deferred tax liability	(200		)	(74		)
	$	219		$	583

Current deferred tax liabilities are included in accounts payable and accrued expenses on the Consolidated Balance Sheets and non-current deferred tax liabilities are included in deferred income taxes and income taxes payable on the Consolidated Balance Sheets.

A valuation allowance is recorded to reflect the estimated amount of deferred tax assets that may not be realized. A valuation allowance was established against state research and development credit carryforwards where it is believed that it is not more likely than not that the carryforwards will be realized.

Applied has been granted tax holidays for certain of its subsidiaries in Singapore and Israel. The tax benefit arising from these tax holidays was $54 million for 2012 ($0.04 per diluted share). The tax holidays expire at various times through 2025, excluding potential renewals, and are subject to certain conditions with which the Company expects to comply.

For fiscal 2012, U.S. income taxes have not been provided for approximately $1.6 billion of cumulative undistributed earnings of several non-U.S. subsidiaries. Applied intends to reinvest these earnings indefinitely in operations outside of the U.S. If these earnings were distributed to the United States in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, Applied would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.

At October 28, 2012, Applied has state research and development tax credit carryforwards of $51 million which have lives ranging from 15 years to indefinite. Applied has a $40 million federal foreign tax credit carryforward which has a 10 year life. Applied also has net operating loss carryforwards in foreign jurisdictions of $11 million and state jurisdictions of $6 million, which have lives ranging from five years to indefinite. Management believes it is more likely than not that all loss and tax credit carryforwards at October 28, 2012, net of valuation allowance, will be utilized in future periods.

Applied’s income taxes payable have been reduced by the tax benefits associated with employee stock option transactions. These benefits, credited directly to stockholders’ equity with a corresponding reduction to taxes payable, amounted to $2 million for fiscal 2012, $4 million for fiscal 2011, and $2 million for fiscal 2010.

Applied maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	2012			2011
	(In millions)
Beginning balance of gross unrecognized tax benefits	$	59		$	328
Uncertainties arising from the acquisition of Varian	76			—
Settlements with tax authorities	(16		)	(314		)
Increases in tax positions for current years	46			45
Increases in tax positions for prior years	53			—
Decreases in tax positions for prior years	(37		)	—
Ending balance of gross unrecognized tax benefits	$	181		$	59

As of October 28, 2012, Applied had unrecognized tax benefits, net of federal deduction for state tax, of $177 million, all of which, if recognized, would result in a reduction of Applied’s effective tax rate.

As of October 28, 2012, the gross liability for unrecognized tax benefits was $174 million, exclusive of interest and penalties. Increases or decreases to interest and penalties on uncertain tax positions are included in provision for income taxes in the Consolidated Statement of Operations. Interest and penalties accrued related to uncertain tax positions were $7 million as of October 28, 2012 and $1 million as of October 30, 2011, which were classified as a long-term liability in the Consolidated Balance Sheets.

In fiscal 2011, Applied received a refund of $276 million, including interest, as a result of settling an Internal Revenue Service (IRS) audit for fiscal years 2006 and 2007. This resulted in the recognition of a tax benefit of $176 million in the Consolidated Statement of Operations for fiscal 2011, which was net of previously recognized tax benefits.

During fiscal 2011, the IRS began an examination of Applied’s federal income tax returns for fiscal years 2009 and 2008. Applied believes it has adequately reserved for any income tax uncertainties that may arise as a result of this examination.

A number of Applied’s tax returns remain subject to examination by taxing authorities. These include U.S. federal returns for fiscal 2008 and later years, California returns for fiscal 2006 and later years, tax returns for certain other states for fiscal 2007 and later years, and tax returns in certain jurisdictions outside of the United States for fiscal 2005 and later years.

The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be part of the settlement process, is highly uncertain. This could cause large fluctuations in the balance sheet classification of current assets and non-current assets and liabilities. Applied estimates that unrecognized tax benefits at October 28, 2012 could be reduced by approximately $9 million in the next 12 months.

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

12 Months Ended

Oct. 28, 2012

Equity [Abstract]

Components of accumulated other comprehensive loss, after-tax basis

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

	October 28, 2012			October 30, 2011
	(In millions)
Unrealized gain (loss) on investments, net	$	16		$	17
Unrealized gain (loss) on derivative instruments qualifying as cash flow hedges	1			—
Pension liability	(90		)	(25		)
Cumulative translation adjustments	12			14
	$	(61	)	$	6

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases:

	2012		2011		2010
	(In millions, except per share amounts)
Shares of common stock repurchased	126		36		29
Cost of stock repurchased	$	1,416	$	468	$	350
Average price paid per share	$	11.22	$	12.88	$	12.15

Total share-based compensation and related tax benefits

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

	2012		2011		2010
	(In millions)
Share-based compensation	$	182	$	146	$	126
Tax benefit recognized	$	52	$	42	$	38

Effect of share-based compensation on the results of operations

The effect of share-based compensation on the results of operations for fiscal 2012, 2011, and 2010 was as follows:

	2012		2011		2010
	(In millions)
Cost of products sold	$	54	$	48	$	32
Research, development, and engineering	54		46		43
Selling, general and administrative	74		52		51
Total	$	182	$	146	$	126

Weighted average assumptions used for stock options assumed

The weighted average assumptions used in the model for the stock options assumed are outlined below:

	2012
Stock Options:
Dividend yield	2.6	%
Expected volatility	38.7	%
Risk-free interest rate	0.52	%
Expected life (in years)	3.3

Information with repsect to stock options

Information with respect to stock options is as follows:

	2012		2011		2010
	(In millions)
Aggregate intrinsic value of outstanding stock options	$	43	$	58	$	73
Total intrinsic value of stock options exercised	$	21	$	23	$	15
Total fair value of stock options vested	$	41	$	17	$	21
Cash received from stock option exercises	$	33	$	41	$	78
Actual tax benefit realized from options exercised	$	7	$	11	$	4

Stock option activity

Stock option activity for fiscal 2012, 2011 and 2010 was as follows:

	2012				2011				2010
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding, beginning of year	30		$	13.05	51		$	15.04	73		$	14.72
Assumed in Varian acquisition	5		$	4.85	—		$	—	—		$	—
Exercised	(4	)	$	7.30	(5	)	$	9.21	(7	)	$	10.88
Canceled and forfeited	(10	)	$	16.76	(16	)	$	20.28	(15	)	$	15.64
Outstanding, end of year	21		$	10.53	30		$	13.05	51		$	15.04
Exercisable, end of year	20		$	10.71	24		$	14.23	37		$	17.39

Options outstanding and exercisable

The following table summarizes information with respect to options outstanding and exercisable at October 28, 2012:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In millions)			(In years)	(In millions)		(In millions)			(In millions)
$3.09 — $9.99	15	$	7.68	1.80	$	43	14	$	7.80	$	40
$10.00 — $19.99	6	$	17.11	0.57	—		6	$	17.11	—
	21	$	10.53	1.43	$	43	20	$	10.71	$	40
Options exercisable and expected to become exercisable	21	$	10.53	1.43	$	43

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 fiscal 2012 are presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2009	12		$	16.16	2.4 Years	$	157
Granted	13		$	12.36
Vested	(5	)	$	17.13
Canceled	(2	)	$	15.41
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 31, 2010	18		$	13.33	2.8 Years	$	227
Granted	17		$	12.62
Vested	(5	)	$	14.64
Canceled	(2	)	$	13.11
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2011	28		$	12.64	2.8 Years	$	345
Granted	19		$	10.61
Vested	(9	)	$	12.87
Canceled	(2	)	$	12.26
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 Years	$	376
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	34		$	11.81	2.3 Years	$	357

Significant valuation assumptions in relation to ESPP

Underlying assumptions used in the model for fiscal 2012, 2011 and 2010 are outlined in the following table:

	2012		2011		2010
ESPP:
Dividend yield	3.01	%	2.53	%	2.44	%
Expected volatility	29.6	%	31.1	%	33.3	%
Risk-free interest rate	0.13	%	0.09	%	0.19	%
Expected life (in years)	0.5		0.5		0.5

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Industry Segment Operations (Details 4) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Reconciliation of segment assets to Applied's consolidated totals
Consolidated total assets	$ 12,102	$ 13,861
Allowance for bad debts	(87)	(73)
Deferred income taxes	598	774
Other current assets	304	299
Property, plant and equipment	910	866
Operating Segments [Member]
Reconciliation of segment assets to Applied's consolidated totals
Consolidated total assets	7,932	5,270	5,423
Unallocated Amount to Segment [Member]
Reconciliation of segment assets to Applied's consolidated totals
Cash and investments	2,992	7,174
Allowance for bad debts	(87)	(73)
Deferred income taxes	420	658
Other current assets	98	90
Property, plant and equipment	588	620
Other assets	$ 159	$ 122

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Industry Segment Operations

12 Months Ended

Oct. 28, 2012

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 under the accounting literature, Applied’s chief operating decision-maker are both the Chief Executive Officer and the President, who 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 October 28, 2012 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 charges or adjustments 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.

In November 2011, Applied completed its acquisition of Varian. Beginning in the first quarter of fiscal 2012, the acquired business is primarily included in the results for the Silicon Systems Group and Applied Global Services segments, with certain corporate functions included in corporate and unallocated costs.

In fiscal 2010, as part of the restructuring of the Energy and Environmental Solutions segment, Applied discontinued marketing of its fully-integrated SunFab production lines but continues to offer individual tools for thin film solar manufacturing to existing customers. Applied is supporting existing SunFab customers with services, upgrades and capacity increases through its Applied Global Services segment as these products are considered to have reached a particular stage in the product lifecycle. Effective in the first quarter of fiscal 2011, Applied accounts for thin film products under its Applied Global Services segment.

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 solar photovoltaic cells and modules, high throughput roll-to-roll coating systems for flexible electronics and web products.

Information for each reportable segment as of October 28, 2012, October 30, 2011 and October 31, 2010 and for the fiscal years then ended, is as follows:

	Net Sales		Operating Income  (Loss)			Depreciation/ Amortization		Capital Expenditures		Segment Assets
	(In millions)
2012:
Silicon Systems Group	$	5,536	$	1,243		$	256	$	71	$	5,106
Applied Global Services	2,285		502			17		8		2,035
Display	473		25			8		1		278
Energy and Environmental Solutions	425		(668		)	38		6		513
Total Segment	$	8,719	$	1,102		$	319	$	86	$	7,932
2011:
Silicon Systems Group	$	5,415	$	1,764		$	52	$	59	$	2,036
Applied Global Services	2,413		482			13		7		1,337
Display	699		147			7		31		459
Energy and Environmental Solutions	1,990		453			34		16		1,438
Total Segment	$	10,517	$	2,846		$	106	$	113	$	5,270
2010:
Silicon Systems Group	$	5,304	$	1,892		$	66	$	39	$	2,317
Applied Global Services	1,865		337			25		5		1,285
Display	899		267			8		5		419
Energy and Environmental Solutions	1,481		(466		)	57		41		1,402
Total Segment	$	9,549	$	2,030		$	156	$	90	$	5,423

Operating results for fiscal 2012, 2011 and 2010 included restructuring charges and asset impairments as discussed in detail in Note 11, Restructuring Charges and Asset Impairments.

Reconciliations of segment operating results to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012			2011			2010
	(In millions)
Total segment operating income	$	1,102		$	2,846		$	2,030
Corporate and unallocated costs	(580		)	(496		)	(553		)
Restructuring charges and asset impairments	(111		)	21			(93		)
Gain on sale of facility	—			27			—
Income from operations	$	411		$	2,398		$	1,384

Corporate and unallocated costs for fiscal 2012 included deal costs and other acquisition-related costs related to the Varian acquisition of $45 million.

Reconciliations of depreciation and amortization expense to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment depreciation and amortization	$	319	$	106	$	156
Depreciation on shared facilities and information technology assets	103		140		149
Consolidated depreciation and amortization	$	422	$	246	$	305

Reconciliations of capital expenditures to Applied consolidated totals for fiscal 2012, 2011 and 2010 are as follows:

	2012		2011		2010
	(In millions)
Total segment capital expenditures	$	86	$	113	$	90
Shared facilities and information technology assets	76		96		79
Consolidated capital expenditures	$	162	$	209	$	169

Reconciliations of segment assets to Applied consolidated totals as of October 28, 2012, and October 30, 2011 are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Total segment assets	$	7,932		$	5,270
Cash and investments	2,992			7,174
Allowance for bad debts	(87		)	(73		)
Deferred income taxes	420			658
Other current assets	98			90
Common property, plant and equipment	588			620
Other assets	159			122
Consolidated total assets	$	12,102		$	13,861

For geographical reporting, revenue by geographic location is determined by the location of customers’ facilities to which products were shipped. Long-lived assets consist primarily of property, plant and equipment and equity-method investments, and are attributed to the geographic location in which they are located. Net sales and long-lived assets by geographic region were as follows:

	Net Sales		Long-lived Assets
	(In millions)
2012:
United States	$	1,749	$	666
China	783		74
Taiwan	2,411		36
Korea	1,897		9
Europe	863		110
Japan	704		6
Southeast Asia	312		87
Total outside United States	6,970		322
Consolidated total	$	8,719	$	988
2011:
United States	$	1,963	$	623
China	2,574		81
Taiwan	2,093		33
Korea	1,263		8
Europe	1,120		128
Japan	912		7
Southeast Asia	592		71
Total outside United States	8,554		328
Consolidated total	$	10,517	$	951
2010:
United States	$	1,147	$	715
China	1,557		78
Taiwan	2,750		32
Korea	1,768		5
Europe	981		95
Japan	768		5
Southeast Asia	578		65
Total outside United States	8,402		280
Consolidated total	$	9,549	$	995

The following companies accounted for at least 10 percent of Applied’s net sales in fiscal 2012, 2011, and/or 2010, which were for products in multiple reportable segments.

	2012		2011		2010
Samsung Electronics Co., Ltd.	20	%	12	%	14	%
Taiwan Semiconductor Manufacturing Company Limited	16	%	10	%	11	%
Intel Corporation	*		10	%	*

 _____________________________

* Less than 10%.

XML

Restructuring Charges and Asset Impairments (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Restructuring Cost and Reserve [Line Items]
Asset impairment charges	$ 0	$ 30	$ 9
Restructuring charges and asset impairments	168	(30)	246
2012 Global Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	106	0	0
2012 EES Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	48
2012 EES Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	27	0	0
2012 EES Restructuring Plan [Member] | Contract cancellation and other costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1	0	0
2012 EES Restructuring Plan [Member] | Asset impairments [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	20	0	0
2010 EES Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	(36)	45
2010 EES Restructuring Plan [Member] | Asset impairments [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	108
2010 Global Restructuring Plan [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	(19)	84
Others [Member] | Severance and other employee-related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 14	$ (5)	$ 0

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Statement of Stockholders' Equity [Abstract]
Tax detriment included in issuance under stock plans	$ (12)	$ (5)	$ (28)

XML

Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 109	$ 1,926	$ 938
Other comprehensive income, net of tax [Abstract]
Change in unrealized net gain (loss) on investments	(1)	(8)	4
Change in unrealized net gain (loss) on derivative investments	1	(4)	4
Change in defined benefit plan liability (Notes 12 and 13)	(65)	14	(6)
Change in cumulative translation adjustments	(2)	2	2
Other comprehensive income (loss), net of tax	(67)	4	4
Comprehensive income	$ 42	$ 1,930	$ 942

XML

Goodwill, Purchased Technology and Other Intangible Assets

12 Months Ended

Oct. 28, 2012

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 cost of the acquisition 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.

In fiscal 2011, Applied adopted authoritative guidance which allows entities to use a qualitative approach to test goodwill for impairment. This authoritative guidance permits an entity to first perform 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, it is necessary to perform 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’s reporting units are consistent with the reportable segments identified in Note 16, Industry Segment Operations, which are based on the manner in which Applied operates its business and the nature of those operations. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. Under the income approach, Applied calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Estimated future cash flows will be impacted by a number of factors including anticipated future operating results, estimated cost of capital and/or discount rates. Under the market approach, Applied estimates the fair value based on market multiples of revenue or earnings for comparable companies, as appropriate. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then Applied would perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. In the second step, Applied would then allocate the reporting unit's fair value to all of the assets and liabilities of that unit including the fair value of unrecorded intangible assets, in a hypothetical analysis, as if Applied had acquired the reporting unit in a business combination, with the fair value of the reporting unit being the “purchase price.” The excess of the “purchase price” over the carrying amounts assigned to assets and liabilities represents the implied fair value of goodwill. If Applied determined that the carrying value of a reporting unit’s goodwill exceeded its implied fair value, Applied would record an impairment charge equal to the difference.

In the fourth quarter of fiscal 2012, Applied performed a qualitative assessment to test goodwill for all reporting units for impairment and determined that it was more likely than not that each of the Silicon Systems Group, Applied Global Services, and Display reporting units' fair values exceeded its respective carrying values and that it was not necessary to perform the two-step goodwill impairment test for these reporting units.

Applied tested goodwill of the Energy and Environmental Solutions reporting unit for potential impairment during the second quarter of fiscal 2012 in light of second quarter developments that included current industry trends, financial performance, weaker short-term outlooks, and other adverse operating conditions within the solar industry. The results of the first step of the impairment test indicated that goodwill of the Energy and Environmental Solutions reporting unit was not impaired at that time. During the third quarter of fiscal 2012, Applied noted no events that would significantly impact the results of the impairment test performed in the second quarter of fiscal 2012. However, during the fourth quarter, the solar industry faced increasing challenges of solar panel manufacturing overcapacity and weaker operating performance and outlook, leading to the deterioration of the solar equipment market and Applied's customers' financial condition, coupled with lower market valuations. Taking these factors into account, Applied reassessed its financial outlook of the Energy and Environmental Solutions reporting unit, and consequently reevaluated the recoverability of Energy and Environmental Solutions' goodwill and performed the two-step impairment test.

Applied utilized an equal weighting of both the discounted cash flow method of the income approach and the guideline company method of the market approach to estimate the fair value of the Energy and Environmental Solutions reporting unit. The estimates used in the impairment testing were consistent with the discrete forecasts that Applied uses to manage its business, and considered the significant developments that occurred during the quarter. Under the discounted cash flow method, cash flows beyond the discrete forecasts were estimated using a terminal growth rate, which considered the long-term earnings growth rate specific to the Energy and Environmental Solutions reporting unit. The estimated future cash flows were discounted to present value using a discount rate that was the value-weighted average of the reporting unit's estimated cost of equity and debt derived using both known and estimated market metrics, and was adjusted to reflect risk factors that considered both the timing and risks associated with the estimated cash flows. The tax rate used in the discounted cash flow method reflected the international structure currently in place, which is consistent with the market participant perspective. Under the guideline company method, market multiples were applied to forecasted revenues and earnings before interest, taxes, depreciation and amortization. The market multiples used were consistent with comparable publicly-traded companies.

Applied then allocated the fair value of the reporting unit to all of the assets and liabilities of the Energy and Environmental Solutions reporting unit. Based on Applied's analyses, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the Energy and Environmental Solutions reporting unit. As a result, Applied recorded a $421 million goodwill impairment charge in the fourth quarter of fiscal 2012.

The evaluation of goodwill 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 analyses are lower than current estimates, a material impairment charge may result at that time.

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

	October 28, 2012		October 30, 2011
	(In millions)
Purchased technology, net	$	945	$	127
Intangible assets - finite-lived, net	268		84
Intangible assets - indefinite-lived	142		—
Total	$	1,355	$	211

Details of goodwill and other indefinite-lived intangible assets were as follows:

	October 28, 2012						October 30, 2011
	Goodwill		Other Intangible Assets		Total		Goodwill		Other Intangible Assets		Total
	(In millions)
Silicon Systems Group	$	2,151	$	142	$	2,293	$	381	$	—	$	381
Applied Global Services	1,027		—		1,027		193		—		193
Display	116		—		116		116		—		116
Energy and Environmental Solutions	224		—		224		645		—		645
Carrying amount	$	3,518	$	142	$	3,660	$	1,335	$	—	$	1,335

During fiscal 2012, goodwill and other indefinite-lived intangible assets increased by $2.3 billion due to the acquisition of Varian as discussed in Note 8, Business Combinations, partially offset by the impairment of goodwill recorded in the fourth quarter of fiscal 2012.

In fiscal 2011, Applied negotiated the divestiture of certain assets and determined the trade name, which was included in assets held for sale, to be impaired, and, accordingly, recorded $18 million of impairment charges.

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 based on 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.

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 environment, technological advances, and changes in cost structure. In the fourth quarter of fiscal 2012, Applied performed an impairment analysis on the carrying value of its intangible assets and determined that there was no impairment.

Details of finite-lived intangible assets were as follows:

	October 28, 2012									October 30, 2011
	Purchased Technology			Other Intangible Assets			Total			Purchased Technology			Other Intangible Assets			Total
	(In millions)
Gross carrying amount:
Silicon Systems Group	$	1,300		$	252		$	1,552		$	310		$	20		$	330
Applied Global Services	28			44			72			28			40			68
Display	110			33			143			110			33			143
Energy and Environmental Solutions	105			232			337			105			232			337
Gross carrying amount	$	1,543		$	561		$	2,104		$	553		$	325		$	878
Accumulated amortization:
Silicon Systems Group	$	(411	)	$	(36	)	$	(447	)	$	(256	)	$	(8	)	$	(264	)
Applied Global Services	(22		)	(39		)	(61		)	(20		)	(31		)	(51		)
Display	(106		)	(27		)	(133		)	(102		)	(25		)	(127		)
Energy and Environmental Solutions	(59		)	(191		)	(250		)	(48		)	(177		)	(225		)
Accumulated amortization	$	(598	)	$	(293	)	$	(891	)	$	(426	)	$	(241	)	$	(667	)
Carrying amount	$	945		$	268		$	1,213		$	127		$	84		$	211

During fiscal 2012, the change in gross carrying amount of the finite-lived intangible assets was $1.2 billion due to the acquisition of Varian as discussed in Note 8, Business Combinations.

In fiscal 2011, Applied entered into an agreement to divest certain assets held in the Applied Global Services segment and determined certain identified purchased technology and finite-lived intangible assets, which were included in the assets held for sale, to be impaired, and, accordingly, recorded $6 million of impairment charges. The gross carrying amount of the divested amortized intangible assets was approximately $25 million. In fiscal 2010, Applied incurred intangible impairment charges of $31 million related to a plan to restructure its Energy and Environmental Solutions segment.

Details of amortization expense by segment for fiscal 2012, 2011 and 2010 were as follows:

	2012		2011		2010
	(In millions)
Silicon Systems Group	$	183	$	13	$	21
Applied Global Services	9		7		9
Display	7		8		8
Energy and Environmental Solutions	25		24		44
Total	$	224	$	52	$	82

For fiscal 2012, 2011 and 2010, amortization expense was charged to the following categories:

	2012		2011		2010
	(In millions)
Cost of products sold	$	185	$	36	$	63
Research, development and engineering	1		—		1
Selling, general and administrative	38		16		18
Total	$	224	$	52	$	82

As of October 28, 2012, future estimated amortization expense is expected to be as follows:

	Amortization Expense
	(In millions)
2013	214
2014	198
2015	184
2016	175
2017	171
Thereafter	271
Total	$	1,213

XML

Warranty, Guarantees and Contingencies (Details Textuals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Warranty, Guarantees and Contingencies (Textuals) [Abstract]
Total rent expense	$ 38	$ 44	$ 44
Products warranty period, General	12 months
Maximum potential amount of future payments for letters of credit or other guarantee instruments	42
Liability in connection with guarantee arrangements	0
Parent guarantees to banks	$ 102

XML

Warranty, Guarantees and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012
Future minimum lease payments
2013	$ 31
2014	20
2015	12
2016	10
2017	8
Thereafter	8
Total	$ 89

XML

Document and Entity Information (USD $)	12 Months Ended
	Oct. 28, 2012	Nov. 21, 2012	Apr. 29, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	APPLIED MATERIALS INC /DE
Entity Central Index Key	0000006951
Current Fiscal Year End Date	--10-28
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Oct. 28, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock Shares Outstanding		1,197,659,704
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 15,382,534,908

XML

Borrowing Facilities and Long-Term Debt

12 Months Ended

Oct. 30, 2011

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 2012 and is scheduled to expire in May 2016. 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 October 28, 2012. Remaining credit facilities in the amount of approximately $100 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 October 28, 2012 and October 30, 2011 and Applied has not utilized these credit facilities.

In June 2011, Applied issued senior unsecured notes due 2016, 2021, and 2041 in the aggregate principal amount of $1.75 billion (collectively, the Notes) pursuant to the terms of an indenture and first supplemental indenture (collectively, the Indenture). The Indenture contains certain covenants with which Applied was in compliance at October 28, 2012. Applied used the net proceeds of the Notes to fund a portion of the consideration payable in, and certain costs associated with, Applied’s acquisition of Varian.

Long-term debt outstanding was as follows:

	Principal Amount
	October 28, 2012			October 30, 2011			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			600			5.879%	June 15, December 15
Other debt	—			1
	1,950			1,951
Total unamortized discount	(4		)	(4		)
Total long-term debt	$	1,946		$	1,947

Applied has debt agreements that contain financial and other covenants. These covenants require Applied to maintain certain minimum financial ratios. At October 28, 2012, Applied was in compliance with all such covenants.

XML

Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 8) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Oct. 28, 2012 Year	Oct. 30, 2011 Year	Oct. 31, 2010 Year	Oct. 25, 2009 Year
Restricted stock units, restricted stock, performance shares and performance units
Beginning Balance	28	18	12
Granted	19	17	13
Vested	(9)	(5)	(5)
Canceled	(2)	(2)	(2)
Ending Balance	36	28	18	12
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	34
Weighted Average Grant Date Fair Value
Beginning of Period	$ 12.64	$ 13.33	$ 16.16
Granted	$ 10.61	$ 12.62	$ 12.36
Vested	$ 12.87	$ 14.64	$ 17.13
Canceled	$ 12.26	$ 13.11	$ 15.41
Ending Balance	$ 11.53	$ 12.64	$ 13.33	$ 16.16
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Weighted Average Remaining Fair Value	$ 11.81
Weighted Average Remaining Contractual Term
Weighted average remaining contractual term	2.6	2.8	2.8	2.4
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Weighted Average Remaining Contractual Term	2.3
Aggregate Intrinsic Value
End of the period	$ 376	$ 345	$ 227	$ 157
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Aggregate Intrinsic Value	$ 357

XML

Income Taxes (Details Textuals) (USD $)	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Income Taxes (Textual) [Abstract]
Statutory U.S. federal income tax rate	35.00%	35.00%	35.00%
Tax holiday benefit	$ 54,000,000
Tax holiday benefit per diluted share	$ 0.04
Undistributed earnings from foregin subsidiaries	1,600,000,000
Expiration date of net operating loss carryforwards	five years to indefinite
Income tax benefits allocated directly to stockholders' equity	2,000,000	4,000,000	2,000,000
Unrecognized tax benefits, net of federal deduction for state tax	177,000,000
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	174,000,000
Interest and penalties related to uncertain tax positions	7,000,000	1,000,000
Income tax refund		276,000,000
Tax benefit recognized in relation to the tax refund received		176,000,000
Approximate reduction to unrecognized tax benefits in the next 12 months	9,000,000
Internal Revenue Service [Member]
Income Taxes (Textual) [Abstract]
Tax jurisdiction and years under examination		fiscal years 2009 and 2008
Open tax years	2008 and later years
California [Member]
Income Taxes (Textual) [Abstract]
Open tax years	2006 and later years
State and Local Jurisdiction [Member]
Income Taxes (Textual) [Abstract]
Net operating loss carryforwards	6,000,000
Open tax years	2007 and later years
Jurisdictions Outside Country [Member]
Income Taxes (Textual) [Abstract]
Net operating loss carryforwards	11,000,000
Open tax years	2005 and later years
Research [Member] | State and Local Jurisdiction [Member]
Income Taxes (Textual) [Abstract]
Tax credit carryforwards	51,000,000
Expiration date of tax credit carryforwards	15 years to indefinite
General Business [Member] | Internal Revenue Service [Member]
Income Taxes (Textual) [Abstract]
Tax credit carryforwards	$ 40,000,000
Expiration date of tax credit carryforwards	10 year life

XML

Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Current assets:
Cash and cash equivalents (Notes 3 and 4)	$ 1,392	$ 5,960
Short-term investments (Notes 3 and 4)	545	283
Accounts receivable, net (Note 6)	1,220	1,532
Inventories (Note 7)	1,272	1,701
Deferred income taxes, net (Note 14)	369	580
Other current assets	304	299
Total current assets	5,102	10,355
Long-term investments (Notes 3 and 4)	1,055	931
Property, plant and equipment, net (Note 7)	910	866
Goodwill (Notes 8 and 9)	3,518	1,335
Purchased technology and other intangible assets, net (Notes 8 and 9)	1,355	211
Deferred income taxes and other assets (Note 14)	162	163
Total assets	12,102	13,861
Current liabilities:
Accounts payable and accrued expenses (Note 7)	1,436	1,520
Customer deposits and deferred revenue (Note 7)	755	1,116
Income taxes payable (Note 14)	74	158
Total current liabilities	2,265	2,794
Long-term debt (Note 10)	1,946	1,947
Deferred income taxes and income taxes payable (Note 14)	341	104
Employee benefits and other liabilities (Note 13)	315	216
Total liabilities	4,867	5,061
Commitments and contingencies (Note 15)
Stockholders' equity (Note 12):
Preferred stock: $.01 par value per share; 1 shares authorized; no shares issued	0	0
Common stock: $.01 par value per share; 2,500 shares authorized; 1,197 and 1,306 shares outstanding at 2012 and 2011, respectively	12	13
Additional paid-in capital	5,863	5,616
Retained earnings	12,700	13,029
Treasury stock: 699 and 573 shares at 2012 and 2011, respectively, net	(11,279)	(9,864)
Accumulated other comprehensive income (loss)	(61)	6
Total stockholders' equity	7,235	8,800
Total liabilities and stockholders' equity	$ 12,102	$ 13,861

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Fair Value Measurements

12 Months Ended

Oct. 28, 2012

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 held 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 October 28, 2012, 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 October 28, 2012 and October 30, 2011:

	October 28, 2012						October 30, 2011
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In millions)
Assets:
Money market funds	$	483	$	—	$	483	$	5,663	$	—	$	5,663
U.S. Treasury and agency securities	128		246		374		109		76		185
Non-U.S. government securities	—		29		29		—		40		40
Municipal securities	—		431		431		—		373		373
Commercial paper, corporate bonds and medium-term notes	—		384		384		—		218		218
Asset-backed and mortgage-backed securities	—		298		298		—		309		309
Publicly traded equity securities	47		—		47		27		—		27
Total	$	658	$	1,388	$	2,046	$	5,799	$	1,016	$	6,815
Liabilities:
Deferred compensation	$	7	$	—	$	7	$	—	$	—	$	—
Total	$	7	$	—	$	7	$	—	$	—	$	—

The deferred compensation liability represents our obligation to pay certain benefits under a non-qualified deferred compensation plan. The related investments, held in a rabbi trust, consist of equity securities, primarily mutual funds, and are classified as Level 1 in the valuation hierarchy.

There were no transfers between Level 1 and Level 2 fair value measurements during fiscal 2012 and 2011 and Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of October 28, 2012 or October 30, 2011.

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. Equity investments in privately-held companies totaled $70 million at October 28, 2012, 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. Equity investments in privately-held companies totaled $62 million at October 30, 2011, of which $40 million of investments were accounted for under the cost method of accounting and $22 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.

During fiscal 2012, 2011 and 2010, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $17 million, $3 million and $13 million, respectively.

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 the short maturities of these financial instruments. At October 28, 2012, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.3 billion. At October 30, 2011, the carrying amount of long-term debt was $1.9 billion and the estimated fair value was $2.2 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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Cash, Cash Equivalents and Investments

12 Months Ended

Oct. 28, 2012

Cash and Cash Equivalents [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:

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

 _________________________

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

October 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair  Value
	(In millions)
Cash	$	297	$	—	$	—	$	297
Cash equivalents:
Money market funds	5,663		—		—		5,663
Total Cash equivalents	5,663		—		—		5,663
Total Cash and Cash equivalents	$	5,960	$	—	$	—	$	5,960
Short-term and long-term investments:
U.S. Treasury and agency securities	$	184	$	1	$	—	$	185
Non-U.S. government securities	40		—		—		40
Municipal securities	371		2		—		373
Commercial paper, corporate bonds and medium-term notes	216		3		1		218
Asset-backed and mortgage-backed securities	307		3		1		309
Total fixed income securities	1,118		9		2		1,125
Publicly traded equity securities	8		19		—		27
Equity investments in privately-held companies	62		—		—		62
Total short-term and long-term investments	$	1,188	$	28	$	2	$	1,214
Total Cash, Cash equivalents and Investments	$	7,148	$	28	$	2	$	7,174

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at October 28, 2012:

	Cost		Estimated Fair  Value
	(In millions)
Due in one year or less	$	515	$	516
Due after one through five years	663		668
Due after five years	1		2
No single maturity date**	396		414
	$	1,575	$	1,600

 _________________________

** 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

Gross realized gains and losses on sales of investments during fiscal 2012, 2011, and 2010 were as follows:

	2012		2011		2010
	(In millions)
Gross realized gains	$	3	$	20	$	6
Gross realized losses	$	3	$	4	$	2

At 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 October 28, 2012, October 30, 2011 and October 31, 2010 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for fiscal 2012, fiscal 2011 or fiscal 2010. During fiscal 2012, 2011 and 2010, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $17 million, $3 million and $13 million, respectively.

The following table provides the fair market value of Applied’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired as of October 30, 2011.

	In Loss Position  for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Commercial paper, corporate bonds and medium-term notes	$	32	$	1	$	32	$	1
Asset-backed and mortgaged-backed securities	77		1		77		1
Total	$	109	$	2	$	109	$	2

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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Warranty, Guarantees and Contingencies

12 Months Ended

Oct. 28, 2012

Commitments and Contingencies Disclosure [Abstract]

Warranty, Guarantees and Contingencies

Warranty, Guarantees and Contingencies

Leases

Applied leases some of its facilities and equipment under non-cancelable operating leases and has options to renew most leases, with rentals to be negotiated. Total rent expense was $38 million for fiscal 2012, $44 million for fiscal 2011, and $44 million for fiscal 2010.

As of October 28, 2012, future minimum lease payments are expected to be as follows:

	Lease Payments
	(In millions)
2013	$	31
2014	20
2015	12
2016	10
2017	8
Thereafter	8
	$	89

Warranty

Changes in the warranty reserves during fiscal 2012 and 2011 were as follows:

	2012			2011
	(In millions)
Beginning balance	$	168		$	155
Provisions for warranty	107			170
Consumption of reserves	(156		)	(157		)
Ending balance	$	119		$	168

Applied products are generally sold with a 12-month warranty 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 October 28, 2012, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $42 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 October 28, 2012, 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 Taiwan and South Korea since 2003, and more recently in China, involving technology used in manufacturing liquid crystal displays (LCDs). Applied believes that it has meritorious claims and defenses against Jusung that it intends to pursue vigorously.

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. Jusung filed a counterclaim against Applied. On December 31, 2010, the Hsinchu District Court dismissed both actions, and appeals by both parties remain pending at the Taiwan Intellectual Property Court. Jusung unsuccessfully sought invalidation of Applied's CVD patent in the Taiwanese Intellectual Property Office (TIPO). In September 2010, the Taipei Supreme Administrative Court dismissed Jusung's appeal of the TIPO's decision. In 2009, Jusung filed a second action with the TIPO seeking invalidation of Applied's CVD patent, which action remains pending.

In November 2009, Applied filed an action in China with the Patent Reexamination Board of the State Intellectual Property Office seeking to invalidate a Jusung patent related to separability of the transfer chamber on a CVD tool. The Patent Reexamination Board invalidated Jusung's patent in China and Jusung's appeal was dismissed by the Beijing No. 1 Intermediate People's Court. Jusung appealed this decision to the Beijing High People's Court and on June 20, 2012, the Court rejected Jusung's appeal.

Korea Criminal Proceedings

In February 2010, the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) indicted employees of several companies for the alleged improper receipt and use of confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The Prosecutor's Office did not name Applied or any of its subsidiaries as a party to the criminal action. 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. Hearings on these matters have been ongoing. On November 22, 2012, the Court held the last hearing and scheduled the announcement of its decision for January 24, 2013.

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 or these claims and proceedings cannot be predicted with certainty, Applied does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition or results of operations.

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Restructuring Charges and Asset Impairments

12 Months Ended

Oct. 28, 2012

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.

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 are 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. In addition, 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. Applied expects to substantially complete this plan by the end of the third quarter of fiscal 2013, depending on local legal requirements.

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 $180 million to $230 million, substantially all of which will be paid in cash. Applied began recording these restructuring charges in the fourth quarter of fiscal 2012 and expects that the remainder will be recorded during fiscal 2013.

During the fourth quarter of fiscal 2012, Applied recognized $106 million of severance and other employee-related costs in connection with the 2012 Global Restructuring Plan, all of which remain outstanding as of October 28, 2012. These costs were not allocated to the segments and were based on an estimated number of employees who are impacted by the workforce reduction. Incremental charges will coincide with the acceptances of the voluntary retirement plan in the first quarter of fiscal 2013.

Due to the nature of this plan, the costs and charges incurred are subject to subsequent adjustments due to multiple assumptions and estimates used, including with respect to: the number and job levels of employees who participate in the voluntary retirement program, the nature and extent of additional workforce actions required to complete this plan, and other factors.

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 of October 28, 2012, as part of the 2012 EES Restructuring Plan, Applied was still in the process of relocating certain manufacturing, business operations and customer support functions of its precision wafering systems business and has ceased LED development activities. The 2012 EES Restructuring 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 12 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 impacted up to approximately 250 positions globally. During fiscal 2012, Applied recognized $48 million of restructuring and asset impairment charges in connection with the 2012 EES Restructuring Plan. These costs were primarily reported in the Energy and Environmental Solutions and Applied Global Services segments. As of October 28, 2012, remaining severance accrual associated with restructuring reserves under this program was $16 million.

Integration of Varian and Prior Year Restructuring Plans

During fiscal 2012, Applied also recognized $14 million of severance and other employee-related costs in connection with the integration of Varian. These costs were reported in the Silicon Systems Group and Applied Global Services segments. As of October 28, 2012, remaining severance accrual associated with restructuring reserves under this program was $5 million.

On July 21, 2010, Applied announced a plan (the 2010 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment, which was expected to impact between 400 to 500 positions globally. During fiscal 2011, as a result of changes in Applied’s operating environment and business requirements, Applied revised its workforce reduction under this program to approximately 200 positions and recorded a favorable adjustment of $36 million. During fiscal 2010, Applied incurred employee severance charges of $45 million associated with this program. As of October 28, 2012, the 2010 EES Restructuring Plan was complete.

On November 11, 2009, Applied announced a restructuring program (the 2010 Global Restructuring Plan) to reduce its global workforce as of October 25, 2009. During fiscal 2010, Applied recorded restructuring charges of $84 million under this program. The improved economic environment continued in the first half of fiscal 2011, and as a result Applied recorded an additional favorable adjustment of $19 million. As of October 28, 2012, the 2010 Global Restructuring Plan was complete.

On November 12, 2008, Applied initiated a restructuring program to reduce its global workforce by approximately 2,000 positions. During fiscal 2011, Applied favorably adjusted the severance accrual associated with this program by $5 million. As of October 28, 2012, this program was complete.

The following table summarizes major components of the restructuring and asset impairment charges during fiscal 2012, 2011 and 2010:

	2012		2011			2010
	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs	$	106	$	—		$	—
2012 EES Restructuring Plan
Severance and other employee-related costs	27		—			—
Contract cancellation and other costs	1		—			—
Asset impairments	20		—			—
2010 EES Restructuring Plan
Severance and other employee-related costs	—		(36		)	45
Asset impairments	—		—			108
2010 Global Restructuring Plan
Severance and other employee-related costs	—		(19		)	84
Others
Severance and other employee-related costs	14		(5		)	—
Non-Restructuring Related
Asset impairments	—		30			9
	$	168	$	(30	)	$	246

In fiscal 2012, Applied incurred inventory-related charges of $13 million associated with 2012 EES Restructuring Plan that were recorded in cost of products sold and reported in the Energy and Environmental Solutions segment.

In fiscal 2011, Applied incurred impairment charges of $24 million associated with certain intangible assets and purchased technology. See Note 9, Goodwill, Purchased Technology and Other Intangible Assets. Applied also incurred asset impairment charges of $3 million related to certain fixed assets.

In fiscal 2010, Applied recorded asset impairment charges of $108 million related to the 2010 EES Restructuring Plan and $9 million to write down a facility to its estimated fair value based on prices for comparable local properties. In fiscal 2011, Applied recorded additional impairment charges of $3 million related to this facility. In addition, during fiscal 2010, inventory-related charges of $330 million were recorded in costs of products sold associated with SunFab^TM thin film solar equipment.

Restructuring and asset impairment charges were recorded as follows:

	2012		2011			2010
	(In millions)
Silicon Systems Group	$	4	$	—		$	—
Applied Global Services	15		24			—
Energy and Environmental Solutions	38		(33		)	153
Corporate Unallocated	111		(21		)	93
Total	$	168	$	(30	)	$	246

Changes in restructuring reserves for fiscal 2012, 2011, and 2010 related to other restructuring plans and facilities realignment programs initiated in prior periods were as follows:

	2012 Global Restructuring Plan		2012 EES Restructuring Plan					2010 EES Restructuring Plan			2010 Global 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			Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs		Total
	(In millions)
Balance, October 25, 2009	$	—	$	—		$	—	$	—		$	—		$	26		$	5	$	31
Provision for restructuring reserves	—		—			—		45			104			—			—		149
Consumption of reserves	—		—			—		(3		)	(33		)	(20		)	—		(56		)
Adjustment of restructuring reserves	—		—			—		—			(20		)	—			—		(20		)
Balance, October 31, 2010	$	—	$	—		$	—	$	42		$	51		$	6		$	5	$	104
Consumption of reserves	—		—			—		(5		)	(27		)	(1		)	—		(33		)
Adjustment of restructuring reserves	—		—			—		(36		)	(19		)	(5		)	—		(60		)
Balance, October 30, 2011	$	—	$	—		$	—	$	1		$	5		$	—		$	5	$	11
Provision for restructuring reserves	106		27			1		—			—			14			—		148
Consumption of reserves	—		(11		)	—		(1		)	(5		)	(9		)	—		(26		)
Balance, October 28, 2012	$	106	16			1		—			—			$	5		$	5	$	133

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Employee Benefit Plans (Details 1) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Summary of ending fair value of the plan assets
Fair value of plan of assets	$ 214	$ 183	$ 162
Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	153	125
Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	12	10
Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	49	48	44
Equity securities [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	79	67
Equity securities [Member] | Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	79	67
Equity securities [Member] | Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Equity securities [Member] | Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Debt securities [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	70	51
Debt securities [Member] | Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	70	51
Debt securities [Member] | Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Debt securities [Member] | Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Insurance contracts [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	49	48
Insurance contracts [Member] | Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Insurance contracts [Member] | Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Insurance contracts [Member] | Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	49	48
Commingled funds [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	12	10
Commingled funds [Member] | Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Commingled funds [Member] | Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	12	10
Commingled funds [Member] | Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Cash [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	4	7
Cash [Member] | Level 1 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	4	7
Cash [Member] | Level 2 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	0	0
Cash [Member] | Level 3 [Member]
Summary of ending fair value of the plan assets
Fair value of plan of assets	$ 0	$ 0

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Balance Sheet Detail

12 Months Ended

Oct. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Detail

Balance Sheet Detail

	October 28, 2012		October 30, 2011
	(In millions)
Inventories
Customer service spares	$	312	$	328
Raw materials	331		407
Work-in-process	234		336
Finished goods	395		630
	$	1,272	$	1,701

Included in finished goods inventory is $60 million at October 28, 2012, and $224 million at October 30, 2011, 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 $176 million and $140 million of evaluation inventory at October 28, 2012 and October 30, 2011, respectively.

	Useful Life	October 28, 2012			October 30, 2011
	(In years)	(In millions)
Property, Plant and Equipment, Net
Land and improvements		$	169		$	163
Buildings and improvements	3-30	1,196			1,155
Demonstration and manufacturing equipment	3-5	760			686
Furniture, fixtures and other equipment	3-15	734			722
Construction in progress		58			12
Gross property, plant and equipment		2,917			2,738
Accumulated depreciation		(2,007		)	(1,872		)
		$	910		$	866

During fiscal 2012, fixed asset impairment charges of $20 million were recorded in relation to the Energy and Environmental Solutions segment restructuring plan, as discussed in Note 11, Restructuring Charges and Asset Impairments.

In fiscal 2011, Applied received $99 million in proceeds from the sale of two properties located in North America and recognized a net gain of $27 million on the transactions. Applied also completed the divestiture of certain assets held for sale for proceeds of $31 million.

	October 28, 2012		October 30, 2011
	(In millions)
Accounts Payable and Accrued Expenses
Accounts payable	$	396	$	484
Compensation and employee benefits	426		455
Warranty	119		168
Dividends payable	108		104
Other accrued taxes	18		81
Interest payable	30		31
Restructuring reserve	133		11
Other	206		186
	$	1,436	$	1,520

Other accrued expenses included acquisition obligation for untendered Varian shares of $12 million as of October 28, 2012.

	October 28, 2012		October 30, 2011
	(In millions)
Customer Deposits and Deferred Revenue
Customer deposits	$	143	$	249
Deferred revenue	612		867
	$	755	$	1,116

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

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Goodwill, Purchased Technology and Other Intangible Assets (Details 1) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Indefinite-lived intangible assets
Goodwill	$ 3,518	$ 1,335
Other Intangible Assets	142	0
Total	3,660	1,335
Silicon Systems Group [Member]
Indefinite-lived intangible assets
Goodwill	2,151	381
Other Intangible Assets	142	0
Total	2,293	381
Applied Global Services [Member]
Indefinite-lived intangible assets
Goodwill	1,027	193
Other Intangible Assets	0	0
Total	1,027	193
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	224	645
Other Intangible Assets	0	0
Total	$ 224	$ 645

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Derivative Instruments and Hedging Activities

12 Months Ended

Oct. 28, 2012

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 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 within 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 October 28, 2012 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 fiscal 2012, 2011 or 2010.

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 effects of derivative instruments in Applied's consolidated financial statements were not material for the periods presented.

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 October 28, 2012.

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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Accounts Receivable, Net

12 Months Ended

Oct. 28, 2012

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 also discounts letters of credit through various financial institutions. Applied sells its accounts receivable without recourse. Details of discounted letters of credit, factored accounts receivable and discounted promissory notes for fiscal years ended October 28, 2012, October 30, 2011 and October 31, 2010 were as follows:

	2012		2011		2010
	(In millions)
Discounted letters of credit	$	—	$	211	$	230
Factored accounts receivable and discounted promissory notes	93		80		157
Total	$	93	$	291	$	387

Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented.

Accounts receivable are presented net of allowance for doubtful accounts of $87 million at October 28, 2012 and $73 million at October 30, 2011. Changes in allowance for doubtful accounts were as follows:

	2012		2011			2010
	(In millions)
Beginning balance	$	73	$	74		$	67
Provision	14		5			17
Recoveries	—		(6		)	(10		)
Ending balance	$	87	$	73		$	74

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 October 28, 2012, 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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Business Combinations

12 Months Ended

Oct. 28, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

Varian Semiconductor Equipment Associates, Inc.

On November 10, 2011, Applied completed the acquisition of Varian, a public company manufacturer of semiconductor processing equipment and the leading supplier of ion implantation equipment used by chip makers globally, for an aggregate purchase price of $4.2 billion in cash, net of cash acquired and assumed earned equity awards of $27 million, pursuant to an Agreement and Plan of Merger (the Merger Agreement) dated as of May 3, 2011. Applied's primary reasons for this acquisition were to complement existing product offerings and to provide opportunities for future growth. Varian designs, markets, manufactures and services ion implantation systems. These systems are primarily used in the manufacture of transistors, which are a basic building block of integrated circuits (ICs) or microchips. Ion implantation systems create a beam of electrically charged particles called ions, which are implanted into transistor structures at precise locations and depths, changing the electrical properties of the semiconductor device. These implantation systems may also be used in other areas of IC manufacture for modifying the material properties of the semiconductor devices, as well as in manufacturing crystalline-silicon solar cells.

Applied allocated the purchase price of this acquisition to tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values. These estimates were determined through established and generally accepted valuation techniques. Applied recorded $2.6 billion in goodwill, which represented the excess of the purchase price over the aggregate estimated fair values of the assets acquired and liabilities assumed in the acquisition. Of this amount, $1.8 billion of goodwill was allocated to the Silicon Systems Group segment, and the remainder was allocated to the Applied Global Services segment. Goodwill associated with the acquisition was primarily attributable to the opportunities from the addition of Varian's product portfolio which complement Applied's Silicon Systems Group's suite of products, including providing integrated process solutions to customers. Goodwill is not deductible for tax purposes. During the third quarter of fiscal 2012, Applied completed the purchase price allocation for the Varian acquisition.

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition date:

	Acquisition 2012
Estimated Fair Values	(In millions)
Cash and cash equivalents	$	632
Short-term investments	56
Accounts receivable, net	194
Inventories	250
Deferred income taxes and other current assets	66
Long-term investments	62
Property and equipment, net	104
Goodwill	2,604
Purchased intangible assets	1,365
Other assets	10
Total assets acquired	5,343
Accounts payable and accrued expenses	(134		)
Customer deposits and deferred revenue	(52		)
Income taxes payable	(60		)
Deferred income taxes	(211		)
Other liabilities	(25		)
Total liabilities assumed	(482		)
Purchase price allocated	$	4,861

The following table presents details of the purchase price allocated to purchased intangible assets of Varian at the acquisition date:

	Useful Life	Purchased Intangible  Assets 2012
	(In years)	(In millions)
Developed technology	1 - 7	$	987
Customer relationships	15	150
In-process technology		142
Patents and trademarks	10	69
Backlog	1	7
Covenant not to compete	2	10
Total purchased intangible assets		$	1,365

The results of operations of Varian are included in Applied's consolidated results of operations, primarily in the results for the Silicon Systems Group and Applied Global Services segments, beginning in the first quarter of fiscal 2012. For the fiscal year ended October 28, 2012, net sales of approximately $1.0 billion and operating loss of approximately $148 million attributable to Varian were included in the consolidated results of operations. For the year ended October 28, 2012, results of operations included charges of $332 million, attributable to inventory fair value adjustments on products sold, amortization of purchased intangible assets, share-based compensation associated with accelerated vesting, deal costs and other integration costs associated with the acquisition. Of these amounts, deal costs and other acquisition-related costs of $45 million were not allocated to the segments for the year ended October 28, 2012. Deal costs are included in selling, general and administrative expenses in Applied's consolidated results of operations.

The following unaudited pro forma consolidated results of operations assume the acquisition was completed as of the beginning of fiscal 2011. The pro forma consolidated results of operations for the year ended October 30, 2011 combine the results of Applied for the year ended October 30, 2011, with the results of Varian for the year ended September 30, 2011.

The pro forma results below include adjustments related to the purchase price allocation and financing of the acquisition, primarily to increase depreciation and amortization with the higher values of property, plant and equipment and identifiable intangible assets, to increase interest expense for the additional debt incurred to complete the acquisition, and to reflect the related income tax effect. The pro forma results for the fiscal year ended October 30, 2011 include costs of $128 million, which reduced net income due to inventory fair value adjustments on products sold, share-based compensation associated with accelerated vesting and acquisition-related costs, which are not expected to occur in future quarters. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it necessarily indicative of future operating results. The pro forma information does not include any potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition.

	2012		2011
	(In millions, except per share amounts)
Net sales	$	8,719	$	11,734
Net income	$	167	$	1,862
Basic earnings per share	$	0.13	$	1.41
Diluted earnings per share	$	0.13	$	1.40

Semitool, Inc. and Advent Solar

On December 21, 2009, Applied acquired Semitool, Inc. (Semitool), a public company based in the state of Montana, for a purchase price of $323 million in cash, net of cash acquired, pursuant to a tender offer and subsequent short-form merger. The acquired business is a leading supplier of electrochemical plating and wafer surface preparation equipment used by semiconductor packaging and manufacturing companies globally. Applied’s primary reasons for this acquisition were to complement its existing product offerings and to provide opportunities for future growth. The acquired business is included in results for the Silicon Systems Group segment.

In November 2009, Applied acquired substantially all the assets, including the intellectual property, of Advent Solar, a developer of advanced technology for c-Si solar photovoltaic cells and modules (PVs), for a purchase price of $14 million.

Applied allocated the purchase price of each of these acquisitions to tangible assets, liabilities and identifiable intangible assets acquired, based on their estimated fair values. The excess of purchase price over the aggregate fair values was recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. These estimates were determined through established and generally accepted valuation techniques. Applied calculated the fair value of the tangible and intangible assets acquired to allocate the purchase prices at the respective acquisition dates. Based upon these calculations, the purchase prices for the above acquisitions were allocated as follows:

Estimated Fair Values	Acquisitions 2010
	(In millions)
Fair value of net tangible assets acquired	$	117
Goodwill	165
Purchased intangible assets	93
Purchase price allocated	$	375

The results of operations of Semitool and Advent Solar were not material in relation to those of Applied.

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Goodwill, Purchased Technology and Other Intangible Assets (Details 5) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012
Future estimated amortization expense
Future estimated amortization expense, 2013	$ 214
Future estimated amortization expense, 2014	198
Future estimated amortization expense, 2015	184
Future estimated amortization expense, 2016	175
Future estimated amortization expense, 2017	171
Future estimated amortization expense, Thereafter	271
Total	$ 1,213

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Employee Benefit Plans (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
Activity in Level 3 instruments
Beginning fair value of plan assets	$ 183	$ 162
Actual return on plan assets:
Purchases, sales, settlements, net	(4)	(3)
Currency impact	(4)	2
Ending fair value of plan assets	214	183
Level 3 [Member]
Activity in Level 3 instruments
Beginning fair value of plan assets	48	44
Actual return on plan assets:
Relating to assets still held at reporting date	1	1
Purchases, sales, settlements, net	3	2
Currency impact	(3)	1
Ending fair value of plan assets	$ 49	$ 48

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Borrowing Facilities and Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Schedule of Long term debt
Principal amount	$ 1,950	$ 1,951
Less unamortized discount	(4)	(4)
Total long-term debt	1,946	1,947
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%
Interest pay dates	--06-15	--06-15
Interest pay dates	--12-15	--12-15
Principal amount	400	400
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%
Interest pay dates	--04-15	--04-15
Interest pay dates	--10-15	--10-15
Principal amount	200	200
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%
Interest pay dates	--06-15	--06-15
Interest pay dates	--12-15	--12-15
Principal amount	750	750
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%
Interest pay dates	--06-15	--06-15
Interest pay dates	--12-15	--12-15
Principal amount	600	600
Other debt [Member]
Schedule of Long term debt
Principal amount	$ 0	$ 1

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Unaudited Quarterly Consolidated Financial Data (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Unaudited Quarterly Consolidated Financial Data
Net sales	$ 1,646	$ 2,343	$ 2,541	$ 2,189	$ 2,182	$ 2,787	$ 2,862	$ 2,686	$ 8,719	$ 10,517	$ 9,549
Gross margin	586	930	1,011	786	852	1,184	1,189	1,136	3,313	4,360	3,715
Net income (loss)	$ (515)	$ 218	$ 289	$ 117	$ 456	$ 476	$ 489	$ 506	$ 109	$ 1,926	$ 938
Diluted earnings (loss) per share	$ (0.42)	$ 0.17	$ 0.22	$ 0.09	$ 0.34	$ 0.36	$ 0.37	$ 0.38	$ 0.09	$ 1.45	$ 0.70

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Goodwill, Purchased Technology and Other Intangible Assets (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Indefinite Lived Intangible Assets By Category [Abstract]
Amortization expense	$ 224	$ 52	$ 82
Cost of products sold [Member]
Indefinite Lived Intangible Assets By Category [Abstract]
Amortization expense	185	36	63
Research, development and engineering [Member]
Indefinite Lived Intangible Assets By Category [Abstract]
Amortization expense	1	0	1
Selling, general and administrative [Member]
Indefinite Lived Intangible Assets By Category [Abstract]
Amortization expense	$ 38	$ 16	$ 18

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Warranty, Guarantees and Contingencies (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
Changes in the warranty reserves
Beginning balance	$ 168	$ 155
Provisions for warranty	107	170
Consumption of reserves	(156)	(157)
Ending balance	$ 119	$ 168

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Borrowing Facilities and Long-Term Debt (Tables)

12 Months Ended

Oct. 28, 2012

Debt Disclosure [Abstract]

Long Term Debt Outstanding

Long-term debt outstanding was as follows:

	Principal Amount
	October 28, 2012			October 30, 2011			Effective Interest Rate	Interest Pay Dates
	(In millions)
2.650% Senior Notes Due 2016	$	400		$	400		2.666%	June 15, December 15
7.125% Senior Notes Due 2017	200			200			7.190%	April 15, October 15
4.300% Senior Notes Due 2021	750			750			4.326%	June 15, December 15
5.850% Senior Notes Due 2041	600			600			5.879%	June 15, December 15
Other debt	—			1
	1,950			1,951
Total unamortized discount	(4		)	(4		)
Total long-term debt	$	1,946		$	1,947

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Derivative Instruments and Hedging Activities (Details)	12 Months Ended
	Oct. 28, 2012
Derivative Instruments and Hedging Activities (Textuals) [Abstract]
Time period for hedging of foreign currency transactions	24
Time period over which majority of after tax gain loss related to derivatives to be reclassified into earnings	12

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Employee Benefit Plans

12 Months Ended

Oct. 28, 2012

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Employee Bonus Plans

Applied has various employee bonus plans. A discretionary bonus plan provides for the distribution of a percentage of pre-tax income to Applied employees who are not participants in other performance-based incentive plans, up to a maximum percentage of eligible compensation. Other plans provide for bonuses to Applied’s executives and other key contributors based on the achievement of profitability and/or other specified performance criteria. Charges under these plans were $271 million for fiscal 2012, $319 million for fiscal 2011, and $320 million charges for fiscal 2010.

Employee Savings and Retirement Plan

Applied’s Employee Savings and Retirement Plan (401(k) Plan) is qualified under Sections 401(a) and (k) of the Internal Revenue Code. Eligible employees may make salary deferral and catch-up contributions under the 401(k) Plan on a pre-tax basis. Applied matches a percentage of each participant’s salary deferral contributions with cash contributions. Plan participants who were employed by Applied or any of its affiliates on or after January 1, 2010 became 100% vested in their Applied matching contribution account balances. Participants may direct that funds held in their 401(k) Plan accounts, including any Applied matching contributions, be invested in any of the diversified investment funds available under the 401(k) Plan or within certain limits in the Applied Materials, Inc. Common Stock Fund (Stock Fund), which invests solely in shares of Applied common stock. The Stock Fund is a non-leveraged employee stock ownership plan (within the meaning of Section 4975(e)(7) of the Internal Revenue Code) and, as a result, participants have the option of specifying that any future cash dividends paid on shares held in the Stock Fund be either reinvested in the Stock Fund or distributed directly to them in cash no later than 90 days after the calendar year for which the dividends were paid. Applied’s matching contributions under this plan were approximately $27 million for each of fiscal 2012 and fiscal 2011, and $25 million, net of $1 million in forfeitures, for fiscal 2010.

In addition, Applied has a defined contribution retirement plan covering all U.S. Varian employees. Generally, Applied makes a guaranteed contribution, and in some years a discretionary contribution, to each participant's account, typically based on fiscal year earnings achievement and calculated as a percentage of the participant's base pay. Participants are entitled, upon termination or retirement, to their portion of the retirement fund assets, which are held by a third-party custodian. Applied’s matching contributions under this plan were approximately $10 million for fiscal 2012.

Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits

Several of Applied’s foreign subsidiaries have defined benefit pension plans covering substantially all of their eligible employees. Benefits under these plans are typically based on years of service and final average compensation levels. The plans are managed in accordance with applicable local statutes and practices. Applied deposits funds for certain of these plans with insurance companies, pension trustees, government-managed accounts, and/or accrues the expense for the unfunded portion of the benefit obligation on its Consolidated Financial Statements. Applied’s practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements as established by applicable local governmental oversight and taxing authorities. Depending on the design of the plan, local custom and market circumstances, the liabilities of a plan may exceed qualified plan assets. The differences between the aggregate projected benefit obligations and aggregate plan assets of these plans have been recorded as liabilities by Applied and are included in employee benefits and accrued expenses in the Consolidated Balance Sheets.

Applied also has a U.S. post-retirement plan that provides certain medical and vision benefits to eligible retirees who are at least age 55 and whose years of service plus their age equals at least 65 at their date of retirement. An eligible retiree also may elect coverage for an eligible spouse or domestic partner who is not eligible for Medicare. Coverage under the plan generally ends for both the retiree and spouse or domestic partner upon becoming eligible for Medicare. Applied’s liability under this post-retirement plan, which was included in other long-term liabilities in the Consolidated Balance Sheets, was $28 million at October 28, 2012 and $13 million at October 30, 2011. The balance at October 28, 2012 includes an allowance for the potential obligations in connection with the recently announced voluntary retirement program associated with the 2012 Global Restructuring Plan.

A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for fiscal 2012 and 2011 is presented below.

	2012			2011
	(In millions, except percentages)
Change in projected benefit obligation
Beginning projected benefit obligation	$	303		$	309
Service cost	16			15
Interest cost	14			14
Plan participants’ contributions	1			1
Actuarial (gain) loss	96			(26		)
Curtailments, settlements and special termination benefits	(3		)	(9		)
Foreign currency exchange rate changes	(4		)	5
Benefits paid	(7		)	(8		)
Plan amendments and business combinations	18			2
Ending projected benefit obligation	$	434		$	303
Ending accumulated benefit obligation	$	395		$	273
Range of assumptions to determine benefit obligations
Discount rate	1.3% - 4.7%			1.7% - 6.5%
Rate of compensation increase	2.0% - 8.0%			2.0% - 5.0%
Change in plan assets
Beginning fair value of plan assets	$	183		$	162
Return on plan assets	14			3
Employer contributions	31			26
Plan participants’ contributions	1			1
Foreign currency exchange rate changes	(4		)	2
Divestitures, settlements and business combinations	(4		)	(3		)
Benefits paid	(7		)	(8		)
Ending fair value of plan assets	$	214		$	183
Funded status	$	(220	)	$	(120	)
Amounts recognized in the consolidated balance sheets
Noncurrent asset	$	5		$	13
Current liability	(4		)	(3		)
Noncurrent liability	(221		)	(130		)
Total	$	(220	)	$	(120	)
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
Actuarial loss	$	6		$	1
Prior service cost (credit)	(1		)	—
Total	$	5		$	1
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	117		$	27
Prior service cost (credit)	(3		)	(4		)
Total	$	114		$	23
Plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	$	428		$	259
Fair value of plan assets	$	202		$	126
Plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	$	389		$	225
Fair value of plan assets	$	202		$	116

	2012		2011
Plan assets — allocation
Equity securities	37	%	37	%
Debt securities	33	%	28	%
Insurance contracts	23	%	26	%
Commingled funds	5	%	5	%
Cash	2	%	4	%

The following table presents a summary of the ending fair value of the plan assets:

	October 28, 2012								October 30, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In millions)
Equity securities	$	79	$	—	$	—	$	79	$	67	$	—	$	—	$	67
Debt securities	70		—		—		70		51		—		—		51
Insurance contracts	—		—		49		49		—		—		48		48
Commingled funds	—		12		—		12		—		10		—		10
Cash	4		—		—		4		7		—		—		7
Total	$	153	$	12	$	49	$	214	$	125	$	10	$	48	$	183

The following table presents the activity in Level 3 instruments during fiscal 2012 and 2011:

	2012			2011
	(In millions)
Balance, beginning of year	$	48		$	44
Actual return on plan assets:
Relating to assets still held at reporting date	1			1
Purchases, sales, settlements, net	3			2
Currency impact	(3		)	1
Balance, end of year	$	49		$	48

Applied’s investment strategy for its defined benefit plans is to invest plan assets in a prudent manner, maintaining well-diversified portfolios with the long-term objective of meeting the obligations of the plans as they come due. Asset allocation decisions are typically made by plan fiduciaries with input from Applied’s international pension committee. Applied’s asset allocation strategy incorporates a sufficient equity exposure in order for the plans to benefit from the expected better long-term performance of equities relative to the plans’ liabilities. Applied retains investment managers, where appropriate, to manage the assets of the plans. Performance of investment managers is monitored by plan fiduciaries with the assistance of local investment consultants. The investment managers make investment decisions within the guidelines set forth by plan fiduciaries. Risk management practices include diversification across asset classes and investment styles, and periodic rebalancing toward target asset allocation ranges. Investment managers may use derivative instruments for efficient portfolio management purposes. Plan assets do not include any of Applied’s own equity or debt securities.

A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost and benefit obligation calculations for fiscal 2012, 2011 and 2010 is presented below.

	2012			2011			2010
	(In millions, except percentages)
Components of net periodic benefit cost
Service cost	$	16		$	15		$	13
Interest cost	14			14			13
Expected return on plan assets	(11		)	(11		)	(7		)
Amortization of actuarial loss and prior service credit	—			2			1
Settlement and curtailment loss (gain)	6			(2		)	1
Net periodic benefit cost	$	25		$	18		$	21
Weighted average assumptions
Discount rate	4.53		%	4.33		%	4.76		%
Expected long-term return on assets	5.91		%	6.39		%	6.92		%
Rate of compensation increase	3.09		%	3.42		%	3.30		%

Asset return assumptions are derived based on actuarial and statistical methodologies, from analysis of long-term historical data relevant to the country in which each plan is in effect and the investments applicable to the corresponding plan. The discount rate for each plan was derived by reference to appropriate benchmark yields on high quality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark yields.

Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows:

	Benefit Payments
	(In millions)
2013	$	12
2014	13
2015	14
2016	14
2017	15
2018-2022	87
	$	155

Company contributions to these plans for fiscal 2013 are expected to be approximately $17 million.

Executive Deferred Compensation Plans

Applied sponsors two unfunded deferred compensation plans, the Executive Deferred Compensation Plan (Predecessor EDCP) and the 2005 Executive Deferred Compensation Plan (2005 EDCP), under which certain employees may elect to defer a portion of their following year’s eligible earnings. The Predecessor EDCP was frozen as of December 31, 2004 such that no new deferrals could be made under the plan after that date and the plan would qualify for “grandfather” relief under Section 409A of the Internal Revenue Code. The Predecessor EDCP participant accounts continue to be maintained under the plan and credited with deemed interest. The 2005 EDCP was implemented by Applied effective as of January 1, 2005 and is intended to comply with the requirements of Section 409A of the Internal Revenue Code. Amounts payable, including accrued deemed interest, totaled $50 million at October 28, 2012 and $59 million at October 30, 2011, which were included in other long-term liabilities in the Consolidated Balance Sheets.

In addition, Applied also sponsors a non-qualified deferred compensation plan as a result of the acquisition of Varian. At October 28, 2012, the liability related to this plan totaled $7 million, of which $6 million was included in other long-term liabilities in the Consolidated Balance Sheets.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Oct. 28, 2012

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2012 and 2011 contained 52 weeks each, while fiscal 2010 contained 53 weeks. Each fiscal quarter of 2012 and 2011 contained 13 weeks. The first quarter of fiscal 2010 contained 14 weeks, while the second, third, and fourth quarters of fiscal 2010 each contained 13 weeks.

In November 2011, Applied completed its acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian). Beginning in the first quarter of fiscal 2012, the acquired business is included in Applied's consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.

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.

Cash Equivalents

Cash Equivalents

All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Investments

Investments

All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the gains and losses on 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.

Allowances for Doubtful Accounts

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.

Inventories

Inventories

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully reserves for inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term.

Intangible Assets

Intangible Assets

Goodwill and indefinite-lived assets are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method.

Long-Lived Assets

Long-Lived Assets

Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets.

Research, Development and Engineering Costs

Research, Development and Engineering Costs

Research, development and engineering costs are expensed as incurred.

Sales and Value Added Taxes

Sales and Value Added Taxes

Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Statements of Operations.

Warranty

Warranty

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. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required.

Income Taxes

Income Taxes

Income tax expense is based on pretax earnings. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards.

Restructuring

Restructuring

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. Costs associated with restructuring activities are included in restructuring charges and asset impairments in the Consolidated Statements of Operations.

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.

Derivative Financial Instruments

Derivative Financial Instruments

Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. 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. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges of anticipated foreign currency denominated transactions, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes.

Foreign Currency Translation

Foreign Currencies

As of October 28, 2012, primarily all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in the Consolidated Statements of Operations as incurred.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance on the presentation of comprehensive income to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The authoritative guidance also required presentation of adjustments for items that are reclassified from other comprehensive income in the statement where the components of net income and the components of other compressive income are presented, which was indefinitely deferred by the FASB in December 2011. Applied early adopted this authoritative guidance in fiscal 2012. The implementation of this authoritative guidance did not have an impact on Applied’s financial position or results of operations.

In July 2012, the FASB amended its existing guidance for goodwill and other intangible assets. This authoritative guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. To perform a qualitative assessment, a company must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. This authoritative guidance becomes effective for Applied in the first quarter of fiscal 2013, with early adoption permitted. The implementation of this authoritative guidance is not expected to have a material impact on Applied's financial position or results of operations.

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Industry Segment Operations (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Reconciliations of total segment operating income to Applied's consolidated operating income (loss)
Income (loss) from operations	$ 411	$ 2,398	$ 1,384
Operating Segments [Member]
Reconciliations of total segment operating income to Applied's consolidated operating income (loss)
Income (loss) from operations	1,102	2,846	2,030
Unallocated Amount to Segment [Member]
Reconciliations of total segment operating income to Applied's consolidated operating income (loss)
Corporate and unallocated costs	(580)	(496)	(553)
Restructuring charges and asset impairments	(111)	21	(93)
Gain on sale of facility	$ 0	$ 27	$ 0

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Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	Oct. 28, 2012	Oct. 30, 2011
Assets:
Total	$ 2,046	$ 6,815
Fair Value, Measurements, Recurring [Member]
Liabilities
Deferred Compensation	7	0
Total	7	0
Fair Value, Measurements, Recurring [Member] | Money market funds [Member]
Assets:
Investment securities	483	5,663
Fair Value, Measurements, Recurring [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	374	185
Fair Value, Measurements, Recurring [Member] | Non-US government securities [Member]
Assets:
Investment securities	29	40
Fair Value, Measurements, Recurring [Member] | Municipal securities [Member]
Assets:
Investment securities	431	373
Fair Value, Measurements, Recurring [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	384	218
Fair Value, Measurements, Recurring [Member] | Asset-backed and mortgage-backed securities [Member]
Assets:
Investment securities	298	309
Fair Value, Measurements, Recurring [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	47	27
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Assets:
Total	658	5,799
Liabilities
Deferred Compensation	7	0
Total	7	0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Money market funds [Member]
Assets:
Investment securities	483	5,663
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	128	109
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Non-US government securities [Member]
Assets:
Investment securities	0	0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Municipal securities [Member]
Assets:
Investment securities	0	0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	0	0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Asset-backed and mortgage-backed securities [Member]
Assets:
Investment securities	0	0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	47	27
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Assets:
Total	1,388	1,016
Liabilities
Deferred Compensation	0	0
Total	0	0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Money market funds [Member]
Assets:
Investment securities	0	0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Treasury and agency securities [Member]
Assets:
Investment securities	246	76
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Non-US government securities [Member]
Assets:
Investment securities	29	40
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Municipal securities [Member]
Assets:
Investment securities	431	373
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Commercial paper, corporate bonds and medium-term notes [Member]
Assets:
Investment securities	384	218
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Asset-backed and mortgage-backed securities [Member]
Assets:
Investment securities	298	309
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Publicly traded equity securities [Member]
Assets:
Investment securities	$ 0	$ 0

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Unaudited Quarterly Consolidated Financial Data (Tables)

12 Months Ended

Oct. 28, 2012

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Consolidated Financial Data

	Fiscal Quarter
	First		Second		Third		Fourth			Fiscal Year
	(In millions, except per share amounts)
2012:
Net sales	$	2,189	$	2,541	$	2,343	$	1,646		$	8,719
Gross margin	$	786	$	1,011	$	930	$	586		$	3,313
Net income (loss)	$	117	$	289	$	218	$	(515	)	$	109
Earnings (loss) per diluted share	$	0.09	$	0.22	$	0.17	$	(0.42	)	$	0.09
2011:
Net sales	$	2,686	$	2,862	$	2,787	$	2,182		$	10,517
Gross margin	$	1,136	$	1,189	$	1,184	$	852		$	4,360
Net income	$	506	$	489	$	476	$	456		$	1,926
Earnings per diluted share	$	0.38	$	0.37	$	0.36	$	0.34		$	1.45

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Consolidated Balance Sheets (Parenthetical) (USD $)	Oct. 28, 2012	Oct. 30, 2011
Stockholders' equity (Note 12):
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	2,500,000,000	2,500,000,000
Common stock, shares outstanding	1,197,000,000	1,306,000,000
Treasury stock, shares	699,000,000	573,000,000

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Employee Benefit Plans (Details Textuals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012 Age	Oct. 30, 2011	Oct. 31, 2010
Employee Benefits Plans (Textuals) [Abstract]
Charges to expense under Employee bonus plans	$ 271	$ 319	$ 320
Percentage vested in matching contribution account for participants employed after January 1, 2010	100.00%
Number of days for future cash dividends paid on shares held in the Stock Fund either reinvested or distributed	90 days
Contributions under Employee Savings and Retirement Plan, net	27	27	25
Contributions under Employee Savings and Retirement Plan - Forfeitures			1
Minimum age limit for medical and vision benefits, years	55
Minimum service limit for medical and vision benefits, years	years of service plus their age equals at least 65 at their date of retirement
Liability under U.S. post retirement plan	221	130
Period of estimated future benefit payments	next ten fiscal years
Estimated company contributions to pension plans and the post-retirement plan	17
Other Postretirement Benefit Plans, Defined Benefit [Member]
Employee Benefits Plans (Textuals) [Abstract]
Liability under U.S. post retirement plan	28	13
Executive Deferred Compensation Plans [Member]
Employee Benefits Plans (Textuals) [Abstract]
Amounts payable under EDCP - Noncurrent	50	59
Varian Semiconductor Equipment Associates Inc [Member]
Employee Benefits Plans (Textuals) [Abstract]
Contributions under Employee Savings and Retirement Plan, net	10
Amounts payable under EDCP - Noncurrent	6
Amounts payable under EDCP - Current and Noncurrent	$ 7

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Earnings Per Share

12 Months Ended

Oct. 28, 2012

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. Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure.

	2012		2011		2010
	(In millions, except per share amounts)
Numerator:
Net income	$	109	$	1,926	$	938
Denominator:
Weighted average common shares outstanding	1,266		1,319		1,340
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	11		11		9
Denominator for diluted earnings per share	1,277		1,330		1,349
Basic earnings per share	$	0.09	$	1.46	$	0.70
Diluted earnings per share	$	0.09	$	1.45	$	0.70
Potentially dilutive securities	9		16		34

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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Business Combinations (Details Textuals) (USD $)	3 Months Ended								12 Months Ended								12 Months Ended
	Oct. 28, 2012	Jul. 29, 2012	Apr. 29, 2012	Jan. 29, 2012	Oct. 30, 2011	Jul. 31, 2011	May 01, 2011	Jan. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010	Oct. 28, 2012 Varian Semiconductor Equipment Associates, Inc [Member]	Oct. 30, 2011 Varian Semiconductor Equipment Associates, Inc [Member]	Nov. 10, 2011 Varian Semiconductor Equipment Associates, Inc [Member]	Dec. 21, 2009 Semitool, Inc [Member]	Nov. 30, 2009 Advent Solar [Member]	Oct. 28, 2012 Silicon Systems Group [Member]	Oct. 30, 2011 Silicon Systems Group [Member]	Oct. 31, 2010 Silicon Systems Group [Member]	Oct. 28, 2012 Silicon Systems Group [Member] Varian Semiconductor Equipment Associates, Inc [Member]
Business Combination (Textuals) [Abstract]
Acquisition completion date												November 10, 2011
Purchase price, net of cash acquired														$ 4,200,000,000	$ 323,000,000
Assumed equity awards														27,000,000
Merger agreement date												May 3, 2011
Goodwill acquired												2,600,000,000								1,800,000,000
Net sales	1,646,000,000	2,343,000,000	2,541,000,000	2,189,000,000	2,182,000,000	2,787,000,000	2,862,000,000	2,686,000,000	8,719,000,000	10,517,000,000	9,549,000,000	1,000,000,000					5,536,000,000	5,415,000,000	5,304,000,000
Operating income (loss)									411,000,000	2,398,000,000	1,384,000,000	148,000,000					1,243,000,000	1,764,000,000	1,892,000,000
Business acquisition charges												332,000,000
Business acquisition costs not allocated to segments												45,000,000
Pro forma non recurring adjustments													128,000,000
Total purchase price for acquired entity																$ 14,000,000

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details Textuals) (USD $)	12 Months Ended
	Oct. 28, 2012 Year Plan	Oct. 30, 2011	Oct. 31, 2010	Mar. 06, 2012	Mar. 05, 2012
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Change in defined benefit plan liability	$ 65,000,000	$ (14,000,000)	$ 6,000,000
Change in defined benefit plan liability tax effect	23,000,000
Amount authorized by Board of directors to repurchase shares					3,000,000,000
Period of stock repurchase program					three years
Remaining number of shares authorized to be repurchased	1,800,000,000
Dividend declared, amount	438,000,000	408,000,000	361,000,000
Number of employee stock purchase plans	2
Total unrecognized compensation expense	259,000,000
Weighted average period for unrecognized compensation expense to be recognized	2.5
Change in number of shares available for grant				125,000,000
Number of shares made unavailable for grant				76,000,000
Number of shares available for grant	195,000,000
Stock options scheduled to be vested	over three to four years
Stock options scheduled to expire	no later than seven years from the grant date
Assumed in Varian acquisition	5,000,000	0	0
Performance-based restricted stock units granted	3,000,000	2,000,000	2,000,000
Performance-based shares of restricted stock granted	1,000,000	100,000	100,000
Additional performance-based awards to be earned upon certain levels of achievment	2,000,000
Purchase price in percent of the lower of the fair market value of Applied common stock	85.00%
Purchase period for ESPP	6-month
Weighted average estimated fair value of purchase rights under ESPP	$ 2.73	$ 3.03	$ 2.76
Number of shares issued under the ESPP	7,000,000	6,000,000	5,000,000
Restricted Stock Awards [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Tax benefit realized	$ 27,000,000	$ 22,000,000	$ 22,000,000
Employee Stock Purchase Plan [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Number of shares available for grant	47,000,000
Performance Based Awards 2012 [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Percentage of performance based awards earned	0.00%
Performance Based Awards 2011 [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Percentage of performance based awards earned	100.00%
Performance Based Awards 2010 [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Percentage of performance based awards earned	82.00%
Percentage of performance based awards unearned remaining	18.00%
First Quarter Dividend [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Cash dividend declared	$ 0.08	$ 0.07	$ 0.06
Second Quarter Dividend [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Cash dividend declared	$ 0.09	$ 0.08	$ 0.07
Third Quarter Dividend [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Cash dividend declared	$ 0.09	$ 0.08	$ 0.07
Fourth Quarter Dividend [Member]
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Textuals) [Abstract]
Cash dividend declared	$ 0.09	$ 0.08	$ 0.07

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Restructuring Charges and Asset Impairments (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 168	$ (30)	$ 246
Silicon Systems Group [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	4	0	0
Applied Global Services [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	15	24	0
Energy and Environmental Solutions [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	38	(33)	153
Corporate Unallocated [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges and asset impairments	$ 111	$ (21)	$ 93

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Earnings Per Share (Tables)

12 Months Ended

Oct. 28, 2012

Earnings Per Share [Abstract]

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

	2012		2011		2010
	(In millions, except per share amounts)
Numerator:
Net income	$	109	$	1,926	$	938
Denominator:
Weighted average common shares outstanding	1,266		1,319		1,340
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares	11		11		9
Denominator for diluted earnings per share	1,277		1,330		1,349
Basic earnings per share	$	0.09	$	1.46	$	0.70
Diluted earnings per share	$	0.09	$	1.45	$	0.70
Potentially dilutive securities	9		16		34

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 31, 2010
Total share-based compensation and related tax benefits
Share-based compensation	$ 182	$ 146	$ 126
Tax benefit recognized	$ 52	$ 42	$ 38

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Income Taxes (Tables)

12 Months Ended

Oct. 28, 2012

Income Tax Disclosure [Abstract]

Components of income from operations before income taxes

The components of income from operations before income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011		2010
	(In millions)
U.S.	$	381		$	1,257	$	787
Foreign	(65		)	1,121		600
	$	316		$	2,378	$	1,387

Components of the provision for income taxes

The components of the provision for income taxes for fiscal 2012, 2011 and 2010 were as follows:

	2012			2011			2010
	(In millions)
Current:
U.S.	$	74		$	290		$	463
Foreign	75			206			134
State	8			5			34
	157			501			631
Deferred:
U.S.	52			(95		)	(160		)
Foreign	(4		)	(23		)	4
State	2			69			(26		)
	50			(49		)	(182		)
	$	207		$	452		$	449

Effective income tax rate continuing operations tax rate reconciliation

A reconciliation between the statutory U.S. federal income tax rate of 35 percent  and Applied’s actual effective income tax rate for fiscal 2012, 2011 and 2010 is presented below:

	2012		2011		2010
Tax provision at U.S. statutory rate	35.0	%	35.0	%	35.0	%
Favorable resolutions from audits of prior years’ income tax filings	(6.0	)	(6.9	)	—
Effect of foreign operations taxed at various rates	(8.5	)	(8.1	)	(3.0	)
State income taxes, net of federal benefit	2.0		1.6		0.9
Research and other tax credits	(1.0	)	(1.2	)	(0.3	)
Production benefit	(8.0	)	(0.8	)	(1.2	)
Goodwill impairment	47.0		—		—
Share-based compensation	4.0		0.4		0.6
Other	1.0		(1.0	)	0.4
	65.5	%	19.0	%	32.4	%

Components of deferred income tax assets and liabilities

The components of deferred income tax assets and liabilities are as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Deferred tax assets:
Inventory reserves and basis difference	$	119		$	214
Installation and warranty reserves	27			31
Foreign tax credits on undistributed foreign earnings	—			112
Accrued liabilities	224			250
Restructuring reserves	23			4
Deferred revenue	36			53
Capital loss carryforward	—			4
Tax credits and net operating losses	111			39
Deferred compensation	41			21
Share-based compensation	51			49
Intangibles	12			10
Gross deferred tax assets	644			787
Valuation allowance	(46		)	(13		)
Total deferred tax assets	598			774
Deferred tax liabilities:
Depreciation	(71		)	(61		)
Purchased technology	(190		)	(86		)
Undistributed foreign earnings	(93		)	—
Other	(25		)	(44		)
Total gross deferred tax liabilities	(379		)	(191		)
Net deferred tax assets	$	219		$	583

Breakdown between current and non-current net deferred tax assets and liabilities

The following table presents the breakdown between current and non-current net deferred tax assets and liabilities:

	October 28, 2012			October 30, 2011
	(In millions)
Current deferred tax asset	$	369		$	580
Non-current deferred tax asset	51			78
Current deferred tax liability	(1		)	(1		)
Non-current deferred tax liability	(200		)	(74		)
	$	219		$	583

A reconciliation of gross unrecognized tax benefits

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	2012			2011
	(In millions)
Beginning balance of gross unrecognized tax benefits	$	59		$	328
Uncertainties arising from the acquisition of Varian	76			—
Settlements with tax authorities	(16		)	(314		)
Increases in tax positions for current years	46			45
Increases in tax positions for prior years	53			—
Decreases in tax positions for prior years	(37		)	—
Ending balance of gross unrecognized tax benefits	$	181		$	59

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Stockholders' Equity, Comprehensive Income and Share-Based Compensation

12 Months Ended

Oct. 28, 2012

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, were as follows:

	October 28, 2012			October 30, 2011
	(In millions)
Unrealized gain (loss) on investments, net	$	16		$	17
Unrealized gain (loss) on derivative instruments qualifying as cash flow hedges	1			—
Pension liability	(90		)	(25		)
Cumulative translation adjustments	12			14
	$	(61	)	$	6

The increase in accumulated other comprehensive income (loss) associated with pension liability amounted to $65 million, net of income tax effect of $23 million, and was primarily a result of lower discount rates used to determine the benefit obligation, taking into account prevailing interest rates.

Stock Repurchase Program

On March 5, 2012, Applied's Board of Directors approved a new 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. Applied's stock repurchase program authorized on March 8, 2010 was terminated concurrent with the start of the new repurchase program. At October 28, 2012, $1.8 billion remains available for future stock repurchases under the new repurchase program.

The following table summarizes Applied’s stock repurchases:

	2012		2011		2010
	(In millions, except per share amounts)
Shares of common stock repurchased	126		36		29
Cost of stock repurchased	$	1,416	$	468	$	350
Average price paid per share	$	11.22	$	12.88	$	12.15

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

During fiscal 2012, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.09 per share each and one quarterly cash dividend in the amount of $0.08 per share. During fiscal 2011, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.08 per share each and one quarterly cash dividend in the amount of $0.07 per share. During fiscal 2010, Applied’s Board of Directors declared three quarterly cash dividends in the amount of $0.07 per share each and one quarterly cash dividend in the amount of $0.06. Dividends declared during fiscal 2012, 2011 and 2010 amounted to $438 million, $408 million and $361 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 adopted stock plans that permit grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the Employee Stock Incentive 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. 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 fiscal 2012, 2011, and 2010, 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:

	2012		2011		2010
	(In millions)
Share-based compensation	$	182	$	146	$	126
Tax benefit recognized	$	52	$	42	$	38

The effect of share-based compensation on the results of operations for fiscal 2012, 2011, and 2010 was as follows:

	2012		2011		2010
	(In millions)
Cost of products sold	$	54	$	48	$	32
Research, development, and engineering	54		46		43
Selling, general and administrative	74		52		51
Total	$	182	$	146	$	126

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 October 28, 2012, Applied had $259 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of stock options, restricted stock units, restricted stock, performance units, performance shares and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.5 years. On March 6, 2012, Applied's stockholders approved the amended and restated Employee Stock Incentive Plan, which included an increase of 125 million shares of Applied common stock available for issuance under the plan and other amendments to the plan. Also, upon approval of the amended and restated plan, the 2000 Global Equity Incentive Plan, which had approximately 76 million shares available for issuance, became unavailable for any future grants. At October 28, 2012, there were 195 million shares available for grants of stock options, restricted stock units, restricted stock, performance units, performance shares and other share-based awards under the Employee Stock Incentive Plan, and an additional 47 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’s employee stock options have characteristics significantly different from those of publicly traded options. There were no stock options granted during fiscal 2012, 2011 and 2010. As part of the Varian acquisition, stock options to purchase 5 million shares of Applied common stock were assumed during fiscal 2012. The weighted average assumptions used in the model for the stock options assumed are outlined below:

	2012
Stock Options:
Dividend yield	2.6	%
Expected volatility	38.7	%
Risk-free interest rate	0.52	%
Expected life (in years)	3.3

Information with respect to stock options is as follows:

	2012		2011		2010
	(In millions)
Aggregate intrinsic value of outstanding stock options	$	43	$	58	$	73
Total intrinsic value of stock options exercised	$	21	$	23	$	15
Total fair value of stock options vested	$	41	$	17	$	21
Cash received from stock option exercises	$	33	$	41	$	78
Actual tax benefit realized from options exercised	$	7	$	11	$	4

Stock option activity for fiscal 2012, 2011 and 2010 was as follows:

	2012				2011				2010
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding, beginning of year	30		$	13.05	51		$	15.04	73		$	14.72
Assumed in Varian acquisition	5		$	4.85	—		$	—	—		$	—
Exercised	(4	)	$	7.30	(5	)	$	9.21	(7	)	$	10.88
Canceled and forfeited	(10	)	$	16.76	(16	)	$	20.28	(15	)	$	15.64
Outstanding, end of year	21		$	10.53	30		$	13.05	51		$	15.04
Exercisable, end of year	20		$	10.71	24		$	14.23	37		$	17.39

The following table summarizes information with respect to options outstanding and exercisable at October 28, 2012:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In millions)			(In years)	(In millions)		(In millions)			(In millions)
$3.09 — $9.99	15	$	7.68	1.80	$	43	14	$	7.80	$	40
$10.00 — $19.99	6	$	17.11	0.57	—		6	$	17.11	—
	21	$	10.53	1.43	$	43	20	$	10.71	$	40
Options exercisable and expected to become exercisable	21	$	10.53	1.43	$	43

Option prices at the lower end of the range were principally attributable to stock options assumed in connection with the Varian acquisition in fiscal year 2012.

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 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 units, restricted stock, performance shares and performance units granted to certain executive officers and other key employees 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 the 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 remain 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 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. An award that has become eligible for time-based vesting based on achievement of the performance goals will vest over approximately four years from the date of grant, provided that the grantee remains employed by Applied through each scheduled vesting date. Performance-based awards that do not become eligible for time-based vesting in a particular year may become eligible for time-based vesting 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 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 2012 awards, additional shares become eligible for time-based vesting depending on certain levels of achievement of Applied's 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.

The Committee approved the grant of 3 million performance-based restricted stock units and 1 million performance-based shares of restricted stock under this program in fiscal 2012. In each of fiscal 2011 and 2010, the Committee approved the grant of 2 million performance-based restricted stock units and 0.1 million performance-based shares of restricted stock. With respect to the performance-based awards granted in fiscal 2012, as of October 28, 2012, no awards had beenearned. With respect to the performance-based awards granted in fiscal 2011, as of October 28, 2012, 100 percent of the awards had beenearned, subject to additional time-based vesting requirements. With respect to the performance-based awards granted in fiscal 2010, as of October 28, 2012, 82 percent of the awards had been earned, subject to additional time-based vesting requirements. The remaining 18 percent of the awards may still be earned, depending on performance in fiscal 2013.

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during fiscal 2012 are presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2009	12		$	16.16	2.4 Years	$	157
Granted	13		$	12.36
Vested	(5	)	$	17.13
Canceled	(2	)	$	15.41
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 31, 2010	18		$	13.33	2.8 Years	$	227
Granted	17		$	12.62
Vested	(5	)	$	14.64
Canceled	(2	)	$	13.11
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2011	28		$	12.64	2.8 Years	$	345
Granted	19		$	10.61
Vested	(9	)	$	12.87
Canceled	(2	)	$	12.26
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 Years	$	376
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	34		$	11.81	2.3 Years	$	357

At October 28, 2012, 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.

The actual tax benefit realized for the tax deductions from vested restricted stock units totaled $27 million in fiscal 2012 and $22 million in each of fiscal 2011 and 2010.

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 $2.73 per share for the year ended October 28, 2012, $3.03 per share for the year ended October 30, 2011 and $2.76 per share for the year ended October 31, 2010. The number of shares issued under the ESPP during fiscal 2012, 2011 and 2010 was 7 million, 6 million and 5 million, respectively. At October 28, 2012, there were 47 million available for future issuance under the ESPP. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model for fiscal 2012, 2011 and 2010 are outlined in the following table:

	2012		2011		2010
ESPP:
Dividend yield	3.01	%	2.53	%	2.44	%
Expected volatility	29.6	%	31.1	%	33.3	%
Risk-free interest rate	0.13	%	0.09	%	0.19	%
Expected life (in years)	0.5		0.5		0.5

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Industry Segment Operations (Details Textuals)	12 Months Ended
	Oct. 28, 2012 Segment
Industry Segment Operations (Textuals) [Abstract]
Number of reportable segments	4