<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11- K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
/X/ Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (Fee required)
For the fiscal year ended DECEMBER 31, 1995
or
/ / Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No fee required)
For the transition period from ___________ to ___________
Commission file number 2-69114
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Applied Materials, Inc. Employee Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
APPLIED MATERIALS, INC.
3050 Bowers Avenue
Santa Clara, California 95054
Page 1 of 15
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
Date: June 25, 1996 By /s/ Dana C. Ditmore
-------------------------
Dana C. Ditmore
Group Vice President, Human Resources
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Table of Contents
<TABLE>
<CAPTION>
Sequentially
Numbered Page
<S> <C>
Report of Independent Accountants 4
Financial Statements
Statements of Net Assets Available for Benefits -
December 31, 1995 and 1994 5
Statement of Changes in Net Assets Available for Benefits with Fund
Information - year ended December 31, 1995 6
Notes to Financial Statements 7-12
Schedule 27a - Schedule of Assets Held for Investment
Purposes - December 31, 1995 13
Schedule 27d - Schedule of Reportable Transactions - year ended
December 31, 1995 14
Consent of Independent Accountants (Exhibit) 15
</TABLE>
3
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Report of Independent Accountants
To the Administrative Committee of the Applied Materials, Inc. Employee Savings
and Retirement Plan:
In our opinion, the financial statements listed in the accompanying table of
contents present fairly, in all material respects, the net assets available for
benefits of the Applied Materials, Inc. Employee Savings and Retirement Plan at
December 31, 1995 and 1994, and the changes in net assets available for benefits
for the year ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Administrative Committee; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
schedules 27a and 27d is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is additional
information required by ERISA. The Fund Information in the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the changes in net assets available for benefits
of each fund. Schedules 27a and 27d and the Fund Information have been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
May 20, 1996
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APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash $ -- $ 1,097,209
Investments, at fair value:
In shares of registered investment companies:
Fidelity Retirement Government Money Market Portfolio 9,530,984 7,758,813
Fidelity Equity-Income Fund 16,591,463 9,860,017
Fidelity Intermediate Bond Fund 4,968,760 3,602,500
Fidelity Magellan Fund 33,072,888 18,726,547
Applied Materials, Inc. Common Stock 181,581,671 84,539,205
Fidelity Institutional Cash Portfolio Money Market 2,281,272 --
Participant notes receivable 6,116,408 3,769,075
------------ ------------
254,143,446 129,353,366
LIABILITIES
Forfeited matching contributions 1,220,049 345,808
------------ ------------
Net assets available for benefits $252,923,397 $129,007,558
============ ============
</TABLE>
See accompanying notes to financial statements
5
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APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT
FUND A FUND B FUND C FUND D FUND E NOTES TOTAL
------ ------ ------ ------ ------ ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment Income:
Interest and dividends $ 466,412 $ 907,077 $ 26,999 $ 277,695 $ 1,887,414 $ - $ 3,565,597
Loan interest - - - - - 354,235 354,235
Net realized and
unrealized appreciation
in fair value of
investments - 2,660,808 74,251,432 244,353 5,816,653 - 82,973,246
---------- ----------- ------------ ---------- ----------- ---------- ------------
466,412 3,567,885 74,278,431 522,048 7,704,067 354,235 86,893,078
Participant contributions 1,835,878 5,133,193 16,442,568 1,750,263 9,835,621 - 34,997,523
Company and AKTA
contributions - - 11,263,222 - - - 11,263,222
---------- ----------- ------------ ---------- ----------- ---------- ------------
Total additions 2,302,290 8,701,078 101,984,221 2,272,311 17,539,688 354,235 133,153,823
Deductions from net assets
attributed to:
Benefits paid to
participants (503,656) (1,050,941) (5,892,019) (313,391) (1,306,491) (171,486) (9,237,984)
---------- ----------- ------------ ---------- ----------- ---------- ------------
Net increase prior to
loans and interfund
transfers 1,798,634 7,650,137 96,092,202 1,958,920 16,233,197 182,749 123,915,839
Net loans issued (174,892) (215,685) (1,355,486) (43,430) (375,091) 2,164,584 -
Interfund transfers (725,812) (703,006) 3,489,813 (549,230) (1,511,765) - -
---------- ----------- ------------ ---------- ----------- ---------- ------------
Net increase 897,930 6,731,446 98,226,529 1,366,260 14,346,341 2,347,333 123,915,839
Net assets available for
benefits:
Beginning of year 7,413,005 9,860,017 85,636,414 3,602,500 18,726,547 3,769,075 129,007,558
---------- ----------- ------------ ---------- ----------- ---------- ------------
End of year $8,310,935 $16,591,463 $183,862,943 $4,968,760 $33,072,888 $6,116,408 $252,923,397
========== =========== ============ ========== =========== ========== ============
</TABLE>
See accompanying notes to financial statements.
6
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APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Applied Materials, Inc. Employee Savings
and Retirement Plan (the Plan) are prepared under the accrual method of
accounting.
Investment Valuation
The Plan's investments are stated at fair value, which is the value per
unit as certified by the Plan Trustee for the Fidelity Retirement
Government Money Market Portfolio (Fund A) and the Fidelity Institutional
Cash Portfolio Money Market (included in Fund C), and the closing market
price as of December 31 for Fidelity Equity-Income shares (included in Fund
B); Applied Materials, Inc. Common Stock (included in Fund C); Fidelity
Intermediate Bond Fund shares (included in Fund D); and Fidelity Magellan
Fund shares (included in Fund E). Participant notes are valued at cost,
which approximates fair value.
Payment of Benefits
Benefits are recorded when paid.
2. The Plan - APPLIED MATERIALS, INC. EMPLOYEE SAVINGS AND RETIREMENT PLAN
General
The Plan is a defined contribution plan covering primarily all U.S.
employees of Applied Materials, Inc. (the Company) and Applied Komatsu
Technology America, Inc. (AKTA). Employees of the Company and AKTA are
eligible to participate in the Plan after receipt of their first paycheck.
The Plan provides for retirement benefits to participants, is subject to
the Employee Retirement Income Security Act of 1974 (ERISA) and is intended
to qualify for favorable tax treatment granted to qualified plans that meet
the requirements of sections
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401(a) and (k) of the Internal Revenue Code. As a result of favorable tax
treatment, participant salary deferral contributions, Company and AKTA
matching contributions and any net earnings or gains on contributions
generally will not be taxable to the participant until they are distributed
or withdrawn in accordance with the terms of the plan.
Administrative Committee
The Plan's Administrative Committee has been appointed by the Benefits
Committee of the Company to oversee the Plan and its performance on behalf
of the participants, and consists of certain officers and executives of the
Company.
Plan Administrator
Fidelity Institutional Retirement Services Company has been appointed by
the Administrative Committee to maintain individual participant accounts in
which participant contributions, Company and AKTA matching contributions
and investment income attributable to each participant are recorded. For
purposes of ERISA, the Company is the "plan administrator".
Termination of the Plan
The Company expects to continue the Plan indefinitely and to make
contributions under the Plan. However, there is no contractual commitment
that Company contributions or the Plan will be continued since the
Company's Board of Directors has the right to alter or terminate the Plan
at any time and for any reason subject to the provisions of ERISA. In the
event of Plan termination, participants will become 100 percent vested in
their accounts.
Expenses of the Plan
Expenses incurred in the administration of the Plan, including legal and
trustee fees, are paid by the Company, and therefore are not reflected in
the financial statements of the Plan. Brokerage commissions and other
charges incurred in connection with investment transactions are paid out of
fund assets.
3. Contributions
General guidelines with respect to participant and Company and AKTA
matching contributions are included below. Participants, the Company and
AKTA are subject to certain Internal Revenue Code rules and regulations
which may further limit the contributions allowable.
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Participant Contributions
Each participant may elect to defer from 1% to 12% of compensation (defined
as base pay plus overtime), and may change their contribution percentage as
often as they desire. Salary deferral contributions are invested at the
direction of the participant and share in the earnings and gains or losses
of each investment fund selected. Participants are always 100% vested in
salary deferral accounts.
The maximum annual salary deferral contribution was $9,240 for 1995 and
will be $9,500 for 1996. This limitation applies in the aggregate for all
elective deferrals to all plans made by the participant during the year.
Accordingly, new participants who have made contributions to 401(k) plans
with their prior employer must aggregate all contributions for purposes of
the limit.
Company and AKTA Contributions
Participants in the Plan become eligible for Company and AKTA matching
contributions immediately upon joining the Plan. All matching contributions
are made to the Applied Materials, Inc. Common Stock Fund (Fund C), and
cannot be transferred to other investment funds until a participant is 100%
vested and age 50, or 100% vested and has completed 10 years of service.
The Company and AKTA match 100% of participant contributions, up to the
first 3% of compensation contributed, and 50% of every dollar between 4%
and 6% of compensation contributed. The Company's and AKTA's contributions
are made biweekly, and may be in the form of cash, shares of Applied
Materials, Inc. Common Stock or any combination thereof. The trustee will
use cash contributions to purchase shares of Applied Materials Common Stock
on the open market (at the then prevailing market price), directly from the
Company, or from other persons in private transactions. The Company and
AKTA can change the matching contribution rate or make additional
discretionary matching contributions, subject to the limits of the Plan and
the Internal Revenue Code. No additional matching contributions were made
during 1995.
Participants become fully vested in the portion of Company or AKTA matching
contributions allocated to their accounts if employed by the Company or
AKTA upon a) normal retirement (age 65 or older), b) permanent disability,
c) death, or d) after a designated time period per the applicable vesting
schedule. The Plan provides for vesting of Company or AKTA matching
contributions as follows:
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<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than three years 0%
Three but less than four years 20%
Four but less than five years 40%
Five but less than six years 60%
Six but less than seven years 80%
Seven or more years 100%
</TABLE>
If a participant leaves the Company or AKTA prior to retirement, the
portion of his or her matching account which is not vested will be
forfeited. Forfeitures can be used to offset the Company's or AKTA's
required matching contribution, as applicable. Forfeitures in 1995 and 1994
were $834,087 and $345,808, respectively, and were temporarily invested in
Fund A.
The Plan contains a rehire provision whereby if a participant leaves the
Company or AKTA and at a later date is rehired before being separated for
five consecutive years, the forfeited portion of his or her account will be
restored as of the date of the rehire.
4. Investments
The Plan permits participants to direct and/or redirect their prospective
salary deferrals and/or their existing salary deferral account balances
into one of the available investment funds or to allocate them among the
funds. All of the funds, except the Company Stock Fund, are managed by
Fidelity Investments.
Certain information with respect to the five investment funds available
during 1995 is as follows:
Fund A: "Fidelity Retirement Government Money Market Portfolio" (RGMMP)
- seeks to preserve capital and liquidity while producing
reasonable interest income. Investments are in units of the
Fidelity RGMMP. RGMMP's assets are invested in obligations
issued or guaranteed as to principal and interest by the U.S.
government, its agencies or instrumentalities. The rate of
return fluctuates daily as short-term interest rates change.
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Fund B: "Fidelity Equity-Income Fund" - seeks reasonable income by
investing in income-producing equity investments. At least 65%
of the fund's portfolio is invested in income-producing common
and preferred stocks, and the remainder tends to be invested in
various types of domestic and foreign instruments, including
bonds. The Equity-Income Fund invests in securities of varying
quality, but the fund does not expect to purchase securities of
companies without proven earnings or credit. The fund
diversifies investments among a variety of industries to help
reduce overall investment risk.
Fund C: "Company Stock Fund" - allows participants to acquire and hold
shares of Company Common Stock. The fund will purchase shares of
Common Stock from the Company, in the open market or in private
transactions. No brokerage commissions are charged on shares of
Common Stock purchased from the Company or from any other person
in a private transaction.
Fund D: "Fidelity Intermediate Bond Fund" - seeks a high level of
current income by investing in corporate debt obligations, U.S.
government obligations and obligations of U.S. banks, including
certificates of deposit and banker's acceptances. The average
portfolio maturity ranges from three to ten years.
Fund E: "Fidelity Magellan Fund" - seeks long-term capital appreciation
by investing in common stocks, and securities convertible into
common stock, issued by companies operating in the U.S. and/or
abroad as well as foreign companies. Investments are made in
large corporations as well as smaller, less well-known
companies. The fund diversifies investments among a variety of
industries and sectors within the market to reduce overall
investment risk.
Presently, Funds A, B, D and E are invested in Fidelity mutual fund and
money market shares bearing the name of the respective Funds (collectively
the "Fidelity Funds"). The Fidelity Funds are open-end, diversified
investment companies ("mutual funds"), the shares of which are publicly
held. In addition, Fund C maintains a money market account to provide
liquidity for benefit payments, loans and transfers to other investment
funds.
None of the investment funds described above carries a guarantee of
principal or rate of return.
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5. Loans to Plan Participants
Participants may borrow up to 50% of their vested account balance, subject
to minimum and maximum loan amounts of $1,000 and $50,000, respectively,
although certain participants have lower maximum permitted loan amounts, as
required by law. Loans are secured by the balance in the participant's
account and bear a fixed rate of interest based on prime plus 1% at the
time of the borrowing. Interest rates on loans outstanding at December 31,
1995 range from 7% to 10%. Loan repayments are made by payroll deductions
in equal installments over the life of the loan, which can be a minimum of
one year and a maximum of five years. Loans are payable in full upon the
participant's termination of employment from the Company or AKTA, or the
occurrence of certain other events.
6. Federal Income Tax Status of the Plan
The Company amended and restated the Plan as of March 31, 1995 to
incorporate current requirements of the Internal Revenue Code (IRC) and
reflect certain enhancements to the Plan, and has applied for a
determination letter from the IRS that the Plan continues to constitute a
qualified plan, and that the trust continues to be tax-exempt. The Company
has made all amendments to the Plan necessary or appropriate to ensure that
the Company will receive a favorable determination letter covering the Plan
and, therefore, expects to receive a favorable determination letter in due
course. The Company believes that the Plan is being operated in compliance
with the applicable requirements of the IRC. Accordingly, no provision for
federal or state income taxes has been made in the financial statements of
the Plan.
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APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
SCHEDULE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Shares or Approximate
Principal Historical Market
Amount Cost Value
--------- ------------ ------------
<S> <C> <C> <C>
Fund A:
Fidelity Retirement Government
Money Market Portfolio 9,530,984 $ 9,530,984 $ 9,530,984
Fund B:
Fidelity Equity-Income Fund 437,423 14,180,210 16,591,463
Fund C:
Applied Materials, Inc. Common Stock 4,611,598 70,128,491 181,581,671
Fund D:
Fidelity Intermediate Bond Fund 477,306 4,930,683 4,968,760
Fund E:
Fidelity Magellan Fund 384,657 28,398,784 33,072,888
Fidelity Institutional Cash Portfolio Money Market 2,281,272 2,281,272 2,281,272
Participant notes with interest rates
which range from 7% to 10% 6,116,408
------------
Investments total $254,143,446
============
</TABLE>
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APPLIED MATERIALS, INC.
EMPLOYEE SAVINGS AND RETIREMENT PLAN
SCHEDULE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Purchase Price and Sales Price and Historical
Current Value of Asset Current Value of Asset Cost of Net
Issuer On Transaction Date On Transaction Date Assets Sold Gain/(Loss)
- ------------------------------ ---------------------- ---------------------- ----------- ----------
<S> <C> <C> <C> <C>
Fidelity Retirement Government
Money Market Portfolio $ 6,852,340 $ $ $
Fidelity Retirement Government
Money Market Portfolio 5,080,169 5,080,169 --
Fidelity Equity-Income Fund 8,144,220
Fidelity Equity-Income Fund 4,073,583 3,696,903 376,680
Applied Materials, Inc. Common Stock 246,419,668
Applied Materials, Inc. Common Stock 221,347,361 211,174,770 10,172,591
Fidelity Magellan Fund 15,414,317
Fidelity Magellan Fund 6,884,628 5,846,454 1,038,174
</TABLE>
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EXHIBIT
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-52072) of Applied Materials, Inc. of our report
dated May 20, 1996 which appears on page 4 of this Form 11-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
June 25, 1996
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