ITEM 1: BUSINESS
Organized in 1967, Applied Materials, Inc. ("Applied Materials" or the "Company") develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts. The Company's worldwide customers include both companies which manufacture semiconductor devices for use in their own products and companies which manufacture semiconductor devices for sale to others. Applied Materials operates exclusively in the semiconductor wafer fabrication equipment industry. The Company is also a fifty percent stockholder in Applied Komatsu Technology, Inc., which produces thin film transistor manufacturing systems for active-matrix liquid crystal displays.
PRODUCTS Applied Materials' products are sophisticated systems requiring state-of-the-art technology in wafer processing chemistry and physics, particulate management, automation, process control and software. Many of these technologies are complementary and can be applied across all of the Company's products. The Company's products provide enabling technology, productivity and yield enhancements to semiconductor manufacturers. The Company's products are used to fabricate semiconductor devices on a substrate of semiconductor material (usually silicon). Finished devices consist of thin film layers which can form anywhere from one to millions of tiny electronic components that combine to perform desired electrical functions. The fabrication process must control film and feature quality to ensure proper device performance while meeting yield and throughput goals. The Company currently manufactures equipment that addresses three steps in wafer fabrication: deposition, etch and ion implantation.
Single-wafer, multichamber architecture. Recognizing the trend toward more stringent process requirements and larger wafer sizes, Applied Materials developed a single-wafer, multichamber system called the Precision 5000. The Company introduced the Precision 5000 with dielectric Chemical Vapor Deposition (CVD) processes in 1987, etch processes in 1988 and CVD tungsten processes (WCVD) in 1989. The Precision 5000's single-wafer, multichamber architecture which features several processing chambers, each of which is attached to a central handling system, is designed for both serial and integrated processing. The Precision 5000's integrated processing capability makes it possible to perform multiple process steps without the wafer leaving a controlled environment, thus reducing the risk of particulate contamination. The Company leveraged its expertise in single-wafer, multichamber architecture to develop an evolutionary platform called the Endura 5500 PVD (physical vapor deposition) in 1990 featuring a staged, ultra-high vacuum architecture for the rapid sputtering of aluminum and other metal films used to form the circuit interconnections on advanced devices. In October 1991, the Company announced its second-generation Precision 5000 system, the Precision 5000 Mark II, with numerous enhancements to the platform, process chambers and remote support equipment. The Precision 5000 Mark II is used to manufacture advanced devices, such as 16 megabit DRAMs (Dynamic Random Access Memories), on wafers up to 200mm (8-inch) in diameter. In September 1992, the Company announced its latest generation single-wafer, multichamber platform, the Centura, to target the high temperature thin films market as well as future process applications with 0.5 micron and below specifications. The Company has shipped more than 2,000 multichamber platforms and more than 6,000 process chambers. For the fiscal year ended October 30, 1994, sales of the Company's single-wafer, multichamber systems accounted for approximately 86% of systems revenue.
Deposition. A fundamental step in semiconductor fabrication, deposition is the process of layering either electrically insulating (dielectric) or electrically conductive material on the wafer. Applied Materials currently participates in chemical vapor deposition (CVD), physical vapor deposition (PVD), and epitaxial and polysilicon deposition.
CVD. Chemical vapor deposition deposits thin films (insulators, conductors and semiconductors) from gaseous sources. In 1987, the Company introduced the Precision 5000 CVD which performs a broad range of deposition processes utilizing up to four individual chambers on a single system. In 1989, the Company entered the market for metal CVD with a new system for blanket tungsten deposition, the Precision 5000 WCVD. This system is based on the single-wafer, multichamber Precision 5000 CVD system architecture and is designed to reduce operating costs for tungsten deposition and to produce high-quality tungsten films for interconnect applications in advanced semiconductor devices. In 1990, the Company introduced integrated tungsten plug fabrication capability by combining its blanket tungsten CVD deposition and etchback capabilities onto the same system. In 1991, the Company introduced tungsten silicide capabilities and in 1993, titanium nitride (TiN) capabilities to further extend the Precision 5000 platform offerings. The Company released its newest generation of sub-atmospheric process technology on the Precision 5000 Mark II CVD platform in April 1994, addressing 0.35 micron applications. In May 1994, the Company introduced a new multi-platform chamber for blanket tungsten deposition on wafers up to 200mm (8 inch) in diameter.
PVD. Physical vapor deposition sputters metals on wafers during semiconductor fabrication. Unlike CVD, the sources of the deposited materials are solid sources of the films to be deposited. Applied Materials entered the PVD market in April 1990 with the Endura PVD system. The system utilizes a modular, single-wafer, multichamber platform which accommodates ultra-high vacuum (UHV) processes like PVD, and conventional high-vacuum processes like CVD and etch. In July of 1993, the Company introduced the Endura High Productivity (HP) PVD system, an enhanced version of the Endura PVD system. In November 1993, the Centura HP PVD was introduced in order to offer customers a choice of platforms using the Company's PVD technology.
Epitaxial and polysilicon deposition. Epitaxial and polysilicon deposition involve depositing a layer of high-quality, silicon-based compounds on the surface of the silicon wafer. The epitaxial layer forms the base of some types of integrated circuits. In 1989, the Company introduced the Precision 7700 Epi system for advanced silicon deposition. The 7700 system extends the capabilities of radiantly-heated "barrel" technology and incorporates fully-automated wafer handling as well as many features for particulate control. In September 1992, the Company announced the Centura Poly, a single-wafer, multichamber platform targeted at the high-temperature thin film deposition of polysilicon on wafers up to 200mm (8 inch) in diameter. The Centura Epi system, which deposits epitaxial silicon, was announced in March 1993. In December 1993, the Company launched the Polycide Centura which combines chambers for polysilicon and tungsten silicide deposition on the Centura platform.
Etch. Before etch processing begins, a wafer is patterned with photoresist during photolithography. Etching then selectively removes material from areas which are not covered by the photoresist pattern. Applied Materials entered the etch market in 1981 with the introduction of the AME 8100 etch system, which utilized a batch process technology for dry plasma etching. In 1985, the Company introduced the Precision Etch 8300, which featured improved levels of automation and particulate control. The Company continues to sell the Precision Etch 8300 product and has shipped approximately 825 systems. Applied Materials' first single-wafer, multichamber system for the dry etch market was the Precision 5000 Etch, introduced in 1988. In 1990, the Company introduced a metal etch system based on the Precision 5000 architecture which provides single-wafer, aluminum etch capabilities. In July 1993, the Company introduced its next generation etch system, the Omega Centura, designed for critical oxide etch applications requiring sub-0.5 micron design rules. This announcement was followed by the October 1993 introduction of the Precision 5000 Mark II Etch MxP, a new model of the Precision 5000-series etch system with several enhancements including process capability for 0.35 micron applications. In July 1994, Applied Materials introduced the Metal Etch MxP Centura, which combines sub-0.5 micron process technology with improved throughput.
Ion Implantation. During ion implantation, silicon wafers are bombarded by a high-velocity beam of electrically charged ions. These ions penetrate the wafer at selected sites and change the electrical properties of the implanted area. Applied Materials entered the high-current portion of the implant market in 1985 with the Precision Implant 9000 and introduced the Precision Implant 9200 in 1988. In 1989, the Company added enhancements to the 9200 series including a new option for automated selection of implant angles, and new hardware/software options that enable customers to perform remote monitoring and diagnostics. In 1991, the Company announced an enhanced version of its high-current ion implanter and designated it the Precision Implant 9200XJ. In November 1992, the Company introduced a new high-current ion implantation system, the Precision Implant 9500, to address the production of high-density semiconductor devices, such as 16 megabit and 64 megabit memory devices and advanced microprocessors.
CUSTOMER SERVICE AND SUPPORT The customer requirement for high yields of integrated circuits during the manufacturing process requires that semiconductor wafer fabrication equipment operates reliably, with maximum uptime and within very precise tolerances. Applied Materials installs its equipment and provides warranty service worldwide through offices located in the United States, Japan, Europe and the Asia-Pacific region (Korea, Taiwan, China and Singapore). Applied Materials maintains 54 service/sales offices worldwide, with 15 offices in Japan, 9 offices in Europe, 8 offices in the Asia/Pacific region, and the remainder in the United States. The Company offers a variety of service contracts to customers for maintenance of installed equipment and provides a comprehensive training program for all customers.
BACKLOG At October 30, 1994, the Company's backlog totaled $715.2 million, compared to $365.8 million at October 31, 1993. The Company expects to fill the present backlog of orders during fiscal 1995.
MANUFACTURING, RAW MATERIALS AND SUPPLIES The Company's manufacturing activities consist primarily of assembling various commercial and proprietary components into finished systems, principally in the United States, with additional operations in England and Japan. Production requires some raw materials and a wide variety of mechanical and electrical components, which are manufactured to the Company's specifications. Multiple commercial sources are available for most components. The Company has consolidated the number of sources for several key purchased items for purposes of improving its position with its suppliers, resulting in higher levels of on-time delivery, lower inventory levels and better pricing to the Company. There have been no significant delays in receiving components from sole source suppliers; however, the unavailability of any of these sources could disrupt scheduled deliveries to customers.
MARKETING AND SALES Because of the highly technical nature of its products, the Company markets its products worldwide through a direct sales force, with sales, service and spare parts offices in the United States, Japan, Europe and the Asia-Pacific region. For the fiscal year ended October 30, 1994, sales to customers in the United States, Japan, Europe and Asia-Pacific accounted for approximately 37%, 27%, 18% and 18%, respectively, of the Company's net sales. For the fiscal year ended October 31, 1993, sales to customers in the United States, Japan, Europe and Asia-Pacific accounted for approximately 38%, 25%, 20% and 17%, respectively, of the Company's net sales. The Company's business is not considered to be seasonal in nature, but it is subject to the capital equipment expenditure patterns of major semiconductor manufacturers which are based on many factors including anticipated market demand for integrated circuits, the development of new technologies and global economic conditions.
RESEARCH AND DEVELOPMENT The market served by the Company is characterized by rapid technological change. The Company's research and development efforts are global in nature. Engineering organizations are located in the United States, England, Israel and Japan, with process support and customer demonstration laboratories in the United States, England and Japan. In 1991, the Company announced the opening of an expanded technology center in Narita, Japan. In 1994, the Company announced plans to build and operate technology centers in South Korea and Taiwan. The Company also operates a technology center in Israel which is being used to develop controller configuration and software tools for its semiconductor processing systems. Applied Materials' research and development activities are primarily directed toward the development of new wafer processing systems and new process applications for existing products. Applied Materials works closely with its global customers to design its systems to meet its customers' planned technical and production requirements.
COMPETITION The global semiconductor equipment industry is highly competitive and is characterized by rapid technological advancements and demanding worldwide service requirements. Each of the Company's products competes in markets defined by the particular wafer fabrication process it performs. There are several companies that compete with Applied Materials in each of these markets. Competition is based on many factors, primarily technological advancements, productivity and cost-effectiveness, customer support, contamination control, and overall product quality. Management believes that the Company's competitive advantage in each of its served markets is based on the ability of its products and services to address customer requirements as they relate to these competitive factors.
Applied Materials is a principal supplier in each of its served markets. The Company faces strong competition throughout the world from other semiconductor equipment manufacturers as well as semiconductor manufacturers who design and produce fabrication equipment for their own internal uses and, in some cases, for resale. Management believes that the Company is a strong competitor with respect to its products, services and resources. However, new products, pricing pressures, and other competitive actions from both new and existing competitors could adversely affect the Company's market position.
JOINT VENTURE In September 1991, the Company announced its plans to develop thin film transistor (TFT) manufacturing systems for Active-Matrix Liquid Crystal Displays (AMLCDs). The AMLCD market currently includes screens for laptop, notebook and palmtop computers and instrument displays, and the Company believes that this market in the future may include high-resolution workstations and high definition television (HDTV). In September 1993, a joint venture company was formed with Applied Materials, Inc. and Komatsu Ltd. of Japan sharing a 50-50 ownership of the joint venture. The joint venture, Applied Komatsu Technology, Inc. (AKT), is accounted for using the equity method. The Company's management believes that systems developed by AKT have the potential to lower the manufacturing costs of AMLCDs. The Company has granted to AKT an exclusive license to use the Company's intellectual property to develop, make, and sell products for the manufacture of flat panel displays, in exchange for royalties in respect thereof. AKT anticipates accelerating its investment in product technologies for both PVD and Etch in addition to expanding the substrate size of its CVD product in fiscal 1995 and 1996.
PATENTS AND LICENSES Management believes that the Company's competitive position is primarily dependent upon skills in engineering, production, and marketing rather than its patent position. However, protection of the Company's technology assets by obtaining and enforcing patents is increasingly important. Consequently, the Company has an active program to file applications in both the United States and in other countries on inventions which the Company considers significant. The Company has a number of patents in the United States and other countries and additional applications are pending relating to new developments in its equipment and processes. In addition to patents, the Company also possesses other proprietary intellectual property, including trademarks, know-how, trade secrets and copyrights.
The Company enters into patent and technology licensing agreements with others when management determines that it is in the Company's interest to do so. The Company pays reasonable royalties under existing patent license agreements for the use, in several of its products, of certain patents which are licensed to the Company for the life of the patents.
The Company has made its technology, including patents, available to AKT through a license arrangement which permits AKT to use the Company's technology to develop, manufacture and sell equipment for the flat panel display industry.
In the normal course of business, the Company from time to time receives and makes inquiries with regard to possible patent infringement. In dealing with such inquiries, it may become necessary or useful in the future for the Company to obtain and grant licenses or other rights. However, there can be no assurance that such license rights will be available to the Company on commercially reasonable terms. While there can be no assurance about the outcome of such inquiries, the Company believes it is unlikely that their resolution will have a material adverse effect on its financial position.
ENVIRONMENTAL MATTERS Although one of the Company's locations has been designated as a Superfund site by the U.S. Environmental Protection Agency, neither compliance with Federal, State and local provisions regulating discharge of materials into the environment, nor remedial agreements or other actions relating to the environment, has had or is expected to have a material effect on the Company's capital expenditures, earnings or competitive position.
EMPLOYEES At October 30, 1994, the Company employed 6,497 persons. None of these employees was represented by a union. Management considers its relations with its employees to be good.
The following portions of the Company's 1994 Annual Report are incorporated herein by reference: "Management's Discussion and Analysis of Financial Condition and Results of Operations," pages 27 through 30, and the Consolidated Financial Statements and accompanying notes thereto, pages 31 through 45.
ITEM 2:
ITEM 2: PROPERTIES
Certain information concerning the Company's principal properties at October 30, 1994 is set forth below:
The Company also leases office space for 54 service and sales offices throughout the world: 15 offices are located in Japan, 22 offices are in the United States, 9 offices are in Europe, and 8 offices are located in the Asia-Pacific region.
The Company owns 173 acres of land in Austin, Texas. This site can accommodate approximately 1.5 million square feet of building space to help satisfy the Company's current and future needs. In fiscal 1993, the Company began volume production at a 154,000 square-foot manufacturing facility. The Company expects a second facility to be completed in the first quarter of fiscal 1995.
Management considers the above facilities suitable and adequate to meet the Company's requirements.
* Subject to loans totaling $50 million secured by property and equipment having an approximate net book value of $84 million at October 30, 1994.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
On February 6, 1991, the Company filed a lawsuit against Advanced Semiconductor Materials America, Inc., Epsilon Technology, Inc. (doing business as ASM Epitaxy) and Advanced Semiconductor Materials International N.V. (the defendants, together, hereafter referred to as "ASM") in the United States District Court for the Northern District of California. The Company alleges that ASM has been and is currently infringing certain of the Company's patents which relate to epitaxial reactors by making and selling, among other products, the ASM Epsilon I epitaxial reactor. The Company seeks an injunction against further infringement of these patents, damages for ASM's infringement, trebling of damages for willful infringement, and reasonable attorneys' fees and costs. In October, 1992, the Company filed an additional suit against the same defendants, alleging infringement of an additional patent by the same ASM Epsilon I epitaxial reactor.
The defendants (except ASM International N.V.) have made counterclaims against the Company for declaratory judgment of invalidity, unenforceability and noninfringement of the patents in suit. The defendants also claim that the Company monopolizes and is attempting to monopolize the market for epitaxial reactor systems. The defendants seek dismissal, payment by the Company of the defendants' costs and attorneys' fees, injunctions against the Company, damages according to proof and trebling of damages.
Trial of the first lawsuit against ASM concluded in August 1993 and in April 1994, the court issued its decision. The court found that ASM infringed three of the Company's patents, one of the patents asserted against ASM was found not infringed and one was found invalid. Subsequently, the court issued an injunction against ASM's sale and use of Epsilon I epitaxial reactors in the United States, but granted a stay of the injunction pending an appeal of the court's decision. The stay order requires ASM to pay a fee, as a security for the Company's interests, for each Epsilon I sold by ASM in the United States after the date of the injunction. Proceedings to resolve the issues of damages, willful infringement, and ASM's counterclaims, which have been bifurcated for separate trial, will be stayed pending the appeal of the trial court's infringement and validity decision. Both ASM and the Company are appealing that decision. The second of the Company's lawsuits against ASM is currently set for trial in February, 1995.
On January 19, 1993, ASM served a lawsuit on the Company which alleges that the Company infringes two patents of ASM. The lawsuit was originally filed by ASM in the United States District Court for the District of Arizona in Phoenix, Arizona, but has been transferred by the court to the Northern District of California in San Jose, California. One of the patents relates to the Company's CVD product lines and the second patent to the Company's epitaxial product line. The lawsuit seeks to enjoin the Company from infringing the patents and seeks monetary damages of an unspecified amount and costs. After substantial discovery, ASM filed a voluntary stay of the proceedings with respect to one of the patents in suit. Trial of its claims on the other patent is currently set for May 1995. The Company believes it has meritorious defenses against ASM's claims.
On September 6, 1994, General Signal Corporation filed a lawsuit against the Company in the United States District Court, District of Delaware. General Signal alleges that the Company infringes five of General Signal's United States Patents by making, using, selling or offering for sale multichamber wafer fabrication equipment, including for example, the Precision 5000 series machines. General Signal seeks an injunction, multiple damages and costs, including reasonable attorneys' fees and interest, and other relief as the court may deem just and proper.
The suit is in the early stages of discovery and no date has been set for trial. The Company believes that it has meritorious defenses against General Signal's claims.
The Company is a defendant in other litigation arising in the normal course of business. The Company believes that it is unlikely that the outcome of these lawsuits will have an adverse material effect on the Company's financial position or results of operations.
Also see "Environmental Matters" and "Patents and Licenses" under "Item 1: BUSINESS" above.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS IN FOURTH QUARTER OF FISCAL 1994
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table and notes thereto identify and set forth information about the Company's seven executive officers:
(1) Mr. Morgan, age 56, has been Chief Executive Officer since 1977 and Chairman of the Board of Directors since 1987. Mr. Morgan also served as President of the Company from 1976 to 1987.
(2) Mr. Bagley, age 55, was appointed Vice Chairman of the Board of Directors in December 1993. Mr. Bagley has been Chief Operating Officer of the Company since 1987 and served as President of the Company from 1987 to 1993. Prior to that, Mr. Bagley served as Senior Vice President of the Company since 1981.
(3) Dr. Maydan, age 59, was appointed President of the Company in December 1993. Dr. Maydan served as Executive Vice President from 1990 to 1993. Prior to that, Dr. Maydan had been Group Vice President since February 1989. Dr. Maydan joined Applied Materials in 1980 as a Director of Technology.
(4) Mr. Taylor, age 54, has been Chief Financial Officer of the Company since 1984 and Senior Vice President since 1991. Prior to that, Mr. Taylor had been Vice President of Finance since 1984.
(5) Mr. Iwasaki, age 48, has been Chairman of Applied Materials Japan, Inc. since 1991. Prior to that, Mr. Iwasaki had been President of Applied Materials Japan, Inc. since 1981. Mr. Iwasaki became President of Applied Komatsu Technology, Inc. (a 50-50 joint venture corporation with Komatsu, Ltd.) in 1993.
(6) Dr. Somekh, age 48, was appointed Senior Vice President of the Company in December 1993. Dr. Somekh served as Group Vice President from 1990 to 1993. Prior to that, Dr. Somekh had been a divisional Vice President. Dr. Somekh joined Applied Materials in 1980 as a Project Manager.
(7) Dr. Wang, age 48, was appointed Senior Vice President of the Company in December 1993. Dr. Wang served as Group Vice President from 1990 to 1993. Prior to that, Dr. Wang had been a divisional Vice President. Dr. Wang joined Applied Materials in 1980 as a Manager, Process Engineering and Applications.
PART II
ITEM 5:
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
"Stock Price History" on page 47 of the Applied Materials' 1994 Annual Report is incorporated herein by reference.
The Company's common stock is traded over-the-counter. As of November 1, 1994 there were approximately 1,175 record holders of the common stock.
To date, the Company has paid no cash dividends to its stockholders. The Company has no plans to pay cash dividends in the near future.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
"Selected Consolidated Financial Data" on page 26 of the Applied Materials 1994 Annual Report is incorporated herein by reference.
ITEM 7:
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis" on pages 27 through 30 of the Applied Materials 1994 Annual Report is incorporated herein by reference.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of Price Waterhouse LLP, independent accountants, dated November 23, 1994 and appearing in pages 31 through 47 of Applied Materials 1994 Annual Report are incorporated by reference in this Form 10-K Annual Report. With the exception of the aforementioned information and the information incorporated by reference in items 1, 5, 6, and 7, Applied Materials 1994 Annual Report is not deemed to be filed as part of this report.
ITEM 9:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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 the Company's Proxy Statement to be filed with the Commission in connection with the 1995 Annual Meeting of Stockholders ("the Proxy Statement").
ITEM 10:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information concerning directors of the Company appears in the Company's Proxy Statement, under Item 1 "Election of Directors." This portion of the Proxy Statement is incorporated herein by reference.
(b) For information with respect to Executive Officers, see Part I of this Form 10-K.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
Information concerning executive compensation appears in the Company's Proxy Statement, under the caption "Executive Compensation," and is incorporated herein by reference.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning the security ownership of certain beneficial owners and management appears in the Company's Proxy Statement, under Item 1 "Election of Directors," and is incorporated herein by reference.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions appears in the Company's Proxy Statement, under Item 1 "Election of Directors," and is incorporated herein by reference.
PART IV
ITEM 14:
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Form 10-K:
(1) Consolidated Financial Statements. The following consolidated financial statements of Applied Materials, Inc. and subsidiaries, and the related notes and the report of Price Waterhouse LLP, independent accountants, dated November 23, 1994, included in the Applied Materials 1994 Annual Report, are incorporated herein by reference:
Schedules not listed above have been omitted because they are not required or the information required to be set forth therein is included in the Consolidated Financial Statements or Notes to Consolidated Financial Statements.
(3) Exhibits - See Exhibit Index on page 29 of this report. The following exhibits listed in the exhibit index are filed with this Report.
Executive Compensation Plans and Arrangements
(b) Report on Form 8-K was filed on August 17, 1994.
(c) Exhibits: The exhibits listed in Item (a)(3) above are submitted as a separate section of this report.
(d) The individual financial statements of the registrant have been omitted since the registrant is primarily an operating company and all subsidiaries are included in the consolidated financial statements.
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/James C. Morgan ------------------------- James C. Morgan Chairman of the Board and Chief Executive Officer
Dated: December 21, 1994
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.
A majority of the members of the Board of Directors.
Report of Independent Accountants on Financial Statement Schedules
To the Board of Directors of Applied Materials, Inc.
Our audits of the consolidated financial statements referred to in our report dated November 23, 1994 appearing on page 47 of the 1994 Annual Report of Applied Materials, Inc., (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP - - ------------------------ Price Waterhouse LLP San Jose, California November 23, 1994
SCHEDULE I MARKETABLE SECURITIES-OTHER INVESTMENTS (In thousands)
October 30, 1994
(1) No individual issuer or group of issuers, as defined in Rule 12-02 of Regulation S-X, exceeds 2% of total assets. (2) Carried at cost which approximates fair market value.
SCHEDULE II AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES (In thousands)
(a) Interest-free promissory note of $200 due fiscal 1995, secured by a subordinated residential deed of trust.
(b) Bearing interest at 7.16% per annum. Interest only payable annually and principal due January 31, 2004, secured by non-voting preferred stock of Applied Komatsu Technology, Inc., a 50% investee of Applied Materials, Inc.
SCHEDULE V PROPERTY, PLANT AND EQUIPMENT (In thousands)
* Includes transfers between accounts. **Includes foreign currency translation adjustments.
SCHEDULE VI ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (In thousands)
** Includes foreign currency translation adjustments.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS ALLOWANCE FOR DOUBTFUL ACCOUNTS (In thousands)
SCHEDULE IX
SHORT-TERM BORROWINGS BANK BORROWINGS (In thousands)
* An average amount outstanding for each week was calculated, and an average of the averages was calculated for the year.
** Total annual interest expense related to short-term borrowings was divided by the average amount of borrowings outstanding during the year.
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION (In thousands)
* Maintenance and repairs expense was less than 1% of revenue for the year ended October 30, 1994.
INDEX TO EXHIBITS
These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K: