8-KRegulation FD

APPLIED MATERIALS INC /DE 8-K Report, Regulation FD Disclosure (Sep 7, 2004)

Filed September 7, 2004For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) has disclosed an update regarding an arbitration with Varian Semiconductor Equipment Associates, Inc. (VSEA). An arbitration panel found that Applied Materials did not prove the invalidity of certain patent claims asserted by VSEA under a 1992 patent license agreement. This ruling pertains to the second phase of the arbitration, with a deadline of October 1, 2004, for parties to determine if a hearing on the amount of royalty payments is necessary. Applied Materials currently estimates that the back royalty payments owed will not exceed $30 million. Additionally, the company will be required to make unit-based royalty payments on future sales of specific products. Management anticipates that these future royalty payments will not have a material adverse effect on the company's financial condition or results of operations. Investors should monitor any further developments or financial impact from this ongoing legal matter.

Key Highlights

  • 1Arbitration panel ruled against Applied Materials (AMAT) in proving patent claim invalidity against Varian Semiconductor Equipment Associates (VSEA).
  • 2The ruling stems from a patent license agreement dated January 1, 1992.
  • 3Applied Materials estimates back royalty payments will not exceed $30 million.
  • 4Future unit-based royalty payments are also required on certain product sales.
  • 5Management believes future royalty payments will not have a material adverse effect on financial condition or results of operations.
  • 6Parties have until October 1, 2004, to decide if a hearing on royalty payment amounts is needed.
  • 7This disclosure is made under Regulation FD.

Frequently Asked Questions

An arbitration panel found that Applied Materials did not prove the invalidity of certain patent claims asserted by VSEA under their 1992 patent license agreement. This means Applied Materials is likely to owe royalties.

Applied Materials estimates that the back royalty payments will not exceed $30 million. Furthermore, the company expects that future unit-based royalty payments on certain products will not have a material adverse effect on its financial condition or results of operations.

The parties involved have until October 1, 2004, to notify the arbitration panel whether a hearing is necessary to determine the exact amount of royalty payments owed.

For additional details regarding this arbitration, investors are directed to the 'Legal Proceedings' section of Applied Materials' most recent SEC reports on Forms 10-Q and 10-K.