2 GAAP basis tax benefit related to share-based compensation is being recognized ratably over the fiscal year on a non-GAAP basis.
3 Charges to income tax provision related to a one-time transition tax and a decrease in U.S. deferred tax assets as a result of the recent U.S. tax legislation.
4 Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
| Three Months Ended | |||||||
| (In millions, except per share amounts) | January 27, | January 28, | |||||
| 2019 | 2018 | ||||||
| Non-GAAP Adjusted Earnings Per Diluted Share | |||||||
| Reported earnings per diluted share - GAAP basis | $ | 0.80 | $ | 0.15 | |||
| Certain items associated with acquisitions | 0.01 | 0.04 | |||||
| Loss (gain) on strategic investments, net | (0.01 | ) | — | ||||
| Income tax effect of share-based compensation | — | (0.04 | ) | ||||
| Income tax effect of changes in applicable U.S. tax laws | (0.02 | ) | 0.94 | ||||
| Income tax effects related to amortization of intra-entity intangible asset transfers | (0.03 | ) | — | ||||
| Resolution of prior years’ income tax filings and other tax items | 0.06 | (0.01 | ) | ||||
| Non-GAAP adjusted earnings per diluted share | $ | 0.81 | $ | 1.08 | |||
| Weighted average number of diluted shares | 965 | 1,071 | |||||
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
| Three Months Ended | |||||||
| (In millions, except percentages) | January 27, | January 28, | |||||
| 2019 | 2018 | ||||||
| Semiconductor Systems Non-GAAP Adjusted Operating Income | |||||||
| Reported operating income - GAAP basis | $ | 631 | $ | 1,024 | |||
| Certain items associated with acquisitions1 | 11 | 46 | |||||
| Non-GAAP adjusted operating income | $ | 642 | $ | 1,070 | |||
| Non-GAAP adjusted operating margin | 28.3 | % | 37.5 | % | |||
| AGS Non-GAAP Adjusted Operating Income | |||||||
| Reported operating income - GAAP basis | $ | 285 | $ | 255 | |||
| Acquisition integration costs | — | 1 | |||||
| Non-GAAP adjusted operating income | $ | 285 | $ | 256 | |||
| Non-GAAP adjusted operating margin | 29.6 | % | 29.1 | % | |||
| Display and Adjacent Markets Non-GAAP Adjusted Operating Income | |||||||
| Reported operating income - GAAP basis | $ | 115 | $ | 90 | |||
| Certain items associated with acquisitions1 | 3 | 3 | |||||
| Non-GAAP adjusted operating income | $ | 118 | $ | 93 | |||
| Non-GAAP adjusted operating margin | 23.3 | % | 21.0 | % | |||
