1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

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		%

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