Applied Materials Inc. (AMAT)

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee statement of financial position, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments
Analyst Adjustments for Operating Leases
Adjusted Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)
Adjusted Interest Coverage
Estimation of Depreciation Expense, Operating Leased Assets
Estimation of Interest Expense, Operating Lease Obligations
Present Value of Operating Lease Payments, at Beginning of Year

Applied Materials Inc., future operating lease payments

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Total undiscounted future operating lease payments (USD $ in millions)
	Discount rate¹

	Total present value of future operating lease payments (USD $ in millions)

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ Weighted-average interest rate for Applied Materials Inc.'s debt

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2018		2018
2019		2019
2020		2020
2021		2021
2022		2022
2023 and thereafter		2023
		2024
Total:

Based on: 10-K (filing date: 2017-12-15).

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2017		2017
2018		2018
2019		2019
2020		2020
2021		2021
2022 and thereafter		2022
		2023
		2024
Total:

Based on: 10-K (filing date: 2016-12-15).

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2016		2016
2017		2017
2018		2018
2019		2019
2020		2020
2021 and thereafter		2021
		2022
Total:

Based on: 10-K (filing date: 2015-12-09).

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2015		2015
2016		2016
2017		2017
2018		2018
2019		2019
2020 and thereafter		2020
		2021
Total:

Based on: 10-K (filing date: 2014-12-17).

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2014		2014
2015		2015
2016		2016
2017		2017
2018		2018
2019 and thereafter		2019
		2020
Total:

Based on: 10-K (filing date: 2013-12-04).

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at
2013		2013
2014		2014
2015		2015
2016		2016
2017		2017
2018		2018
Total:

Based on: 10-K (filing date: 2012-12-05).

Applied Materials Inc., adjustments to financial data

USD $ in millions

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Adjustment to Total Assets
	Total assets (as reported)
	Add: Operating leased assets¹
	Total assets (adjusted)
	Adjustment to Total Debt
	Total debt (as reported)
	Add: Operating lease obligations²
	Total debt (adjusted)
	Adjustment to Earnings before Interest and Tax (EBIT)
	EBIT³ (as reported)
	Add-back: Rent expense
	Less: Depreciation expense, operating leased assets⁴
	EBIT (adjusted)
	Adjustment to Interest Expense
	Interest expense (as reported)
	Add: Interest expense, operating lease obligations⁵
	Interest expense (adjusted)

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

^{1, 2} Equal to total present value of future operating lease payments. See Details »

³ See Details »

⁴ See Details »

⁵ See Details »

Applied Materials Inc., adjusted ratios

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Total Asset Turnover¹
	Reported total asset turnover
	Adjusted total asset turnover
	Debt to Equity²
	Reported debt to equity
	Adjusted debt to equity
	Return on Assets³ (ROA)
	Reported ROA
	Adjusted ROA
	Interest Coverage⁴
	Reported interest coverage
	Adjusted interest coverage

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ See Details »

² See Details »

³ See Details »

⁴ See Details »

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Applied Materials Inc.'s adjusted total asset turnover improved from 2015 to 2016 and from 2016 to 2017.
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders' equity.	Applied Materials Inc.'s adjusted debt-to-equity improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Applied Materials Inc.'s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.
Adjusted interest coverage	A solvency ratio calculated as adjusted EBIT divided by adjusted interest payments.	Applied Materials Inc.'s adjusted interest coverage deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	As Reported
	Net sales (USD $ in millions)
	Total assets (USD $ in millions)

	Total asset turnover¹
	Adjusted for Operating Leases
	Net sales (USD $ in millions)
	Adjusted total assets (USD $ in millions)

	Adjusted total asset turnover²

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

2017 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
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² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
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Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Applied Materials Inc.'s adjusted total asset turnover improved from 2015 to 2016 and from 2016 to 2017.

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	As Reported
	Total debt (USD $ in millions)
	Stockholders’ equity (USD $ in millions)

	Debt to equity¹
	Adjusted for Operating Leases
	Adjusted total debt (USD $ in millions)
	Stockholders’ equity (USD $ in millions)

	Adjusted debt to equity²

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

2017 Calculations

¹ Debt to equity = Total debt ÷ Stockholders’ equity
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² Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders' equity.	Applied Materials Inc.'s adjusted debt-to-equity improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	As Reported
	Net income (USD $ in millions)
	Total assets (USD $ in millions)

	ROA¹
	Adjusted for Operating Leases
	Net income (USD $ in millions)
	Adjusted total assets (USD $ in millions)

	Adjusted ROA²

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

2017 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × hidden ÷ hidden = hidden

² Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Applied Materials Inc.'s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	As Reported
	Earnings before interest and tax¹ (EBIT) (USD $ in millions)
	Interest expense (USD $ in millions)

	Interest coverage²
	Adjusted for Operating Leases
	Adjusted EBIT (USD $ in millions)
	Adjusted interest expense (USD $ in millions)

	Adjusted interest coverage³

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ See Details »

2017 Calculations

² Interest coverage = EBIT ÷ Interest expense
= hidden ÷ hidden = hidden

³ Adjusted interest coverage = Adjusted EBIT ÷ Adjusted interest expense
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted interest coverage ratio	A solvency ratio calculated as adjusted EBIT divided by adjusted interest payments.	Applied Materials Inc.'s adjusted interest coverage ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

USD $ in millions

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Rent expense
	Less: Estimated interest expense, operating lease obligations¹
	Estimated depreciation expense, operating leased assets

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ See Details »

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Operating leased assets, at beginning of year¹ (USD $ in millions)
	Discount rate²

	Estimated interest expense, operating lease obligations³ (USD $ in millions)

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ See Details »

² Weighted-average interest rate for Applied Materials Inc.'s debt

2017 Calculations

³ Estimated interest expense, operating lease obligations = Operating leased assets, at beginning of year × Discount rate
= hidden × hidden = hidden

		Oct 29, 2017	Oct 30, 2016	Oct 25, 2015	Oct 26, 2014	Oct 27, 2013	Oct 28, 2012
	Total present value of future operating lease payments¹ (USD $ in millions)
	Rent expense (USD $ in millions)
	Discount rate²

	Total present value of operating lease payments, at beginning of year³ (USD $ in millions)

Based on: 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17), 10-K (filing date: 2013-12-04), 10-K (filing date: 2012-12-05).

¹ Equal to total present value of future operating lease payments. See Details »

² Weighted-average interest rate for Applied Materials Inc.'s debt

2017 Calculations

³ Total present value of operating lease payments, at beginning of year = (Total present value of future operating lease payments + Rent expense) ÷ (1 + Discount rate)
= ( hidden + hidden ) ÷ (1 + hidden ) = hidden

	Applied Materials Inc.	Other companies (not purchased previously)
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Discounted Cash Flow (DCF) Valuation
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Long-term Trends
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Common-Size Financial Statements
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Relative Valuation
Discounted Cash Flow (DCF) Valuation
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Long-term Trends
Analysis
Financial Reporting Quality

Applied Materials Inc. (AMAT)

Analysis of Operating Leases

Present Value of Future Operating Lease Payments

2017 Calculations

2016 Calculations

2015 Calculations

2014 Calculations

2013 Calculations

2012 Calculations

Analyst Adjustments for Operating Leases

Adjusted Ratios for Operating Leases (Summary)

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)

Adjusted Interest Coverage

Estimation of Depreciation Expense, Operating Leased Assets

Estimation of Interest Expense, Operating Lease Obligations

Present Value of Operating Lease Payments, at Beginning of Year