Welcome to the Applied Materials Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Michael Sullivan, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Kyle. Today, we'll discuss the results for our fourth quarter and 2015 fiscal year, which ended on October 25. Joining me are Gary Dickerson, our President and CEO; and Bob Halliday, our Chief Financial Officer. Before we begin, let me remind you that today's call contains forward-looking statements, including Applied's current view of its industries, performance, products, share positions, profitability, and business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements and are not guarantees of future performance. Information concerning these risks and uncertainties is contained in Applied's most recent Form 10-Q and 8-K filings with the SEC. All forward-looking statements are based on management's estimates, projections and assumptions as of November 12, 2015, and Applied assumes no obligation to update them. Today's call also includes non-GAAP adjusted financial measures. Reconciliations to GAAP measures are contained in today's earnings press release and in our reconciliation slides, which are available on the Investor's page of our website at appliedmaterials.com. Now, I'd like to turn the call over to Gary Dickerson. Gary E. Dickerson - President, Chief Executive Officer & Director: Thanks, Mike, and good afternoon, everyone. As this is our fiscal year end call, I'd like to start by outlining the progress we are making towards our longer-term strategic and performance goals. I will then provide our market outlook and describe how this translates to opportunities and priorities for our business groups. Later in the call, Bob will give you additional color on our financial results and talk about how we are optimizing the company's performance and shareholder returns. Applied Materials' strategy is built upon our leadership in materials engineering. Our foundational capabilities are the broadest and deepest in the industry. We have…

Thanks, Bob. To help us reach as many of you as we can, please ask just one question and no more than one brief follow-up. Kyle, let's please begin.

Your first question comes from the line of C.J. Muse from Evercore. Your line is open.

Yes, good afternoon. Thank you for taking my questions. I guess, first question on the gross margin, it came in a little better I think, and guided flattish. Would love to hear your thoughts on what the magnitude would look, like in terms of the uplift as we head into more favorable mix, et cetera, in the back half of fiscal and calendar of 2016. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Sure, I'd be happy to do it. Let me give you a little more color on the mix issue because we've talked about a lot. If you go look at the WFE mix for the last several years, for the three-year average from 2012 to 2014, foundry spending was about – almost 44% of the WFE mix. If you go look at DRAM, it was about 14.5% and NAND was about 17.7%. If you go look at this year, foundry was about 34.5%, DRAM was up to 25.1% and NAND was about 23.5%. We think foundry goes up as a percentage of the mix next year and NAND goes up. Now, foundry is our highest percentage of WFE and NAND, which used to trail is approaching at the 3D inflection our share for foundry. So there's two stronger relative spending areas we see next year are foundry and especially NAND around V-NAND, where we say it's over 80% of the NAND spending next year. So if you trail it down, we see gross margin and revenue opportunities for us, share opportunities and gross margin improvement opportunities. Now, we see those more in the second half because we think foundry is heavier in the second half, particularly around the 10-nanometer inflection. We think NAND is strong, but a little stronger in the second half. DRAM could go 50-50 split and logic could be pretty even. So if you look at the quarters in here, and I'm going to get to your specific question, C.J., but to give you context, I thought this would be helpful. We're assuming that our Q2 revenues and gross margins will be similar to Q1 with pickup in the second half. And in the second half, we see a booster for our revenues and our gross margins. And the gross margins, the opportunity for the company to improve are – we could go up quarter-on-quarter, half-on-half, we could go up – there's a lot of mix issues there, but the opportunity is a couple of points, half-on-half.

Very helpful. And I guess as a quick follow-up, you talked about NAND spending being up, led 80% by 3D, could you walk through what your expectations are for Greenfield versus upgrades in calendar 2016? Thank you. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Sure. So we see total V-NAND this year to be 150 ending this year. We see total ending next year to be about 350 to 400. That's a combination of adds and converts. Over 80% of the spend is on NAND. And then in terms total brand new adds, it depends on the customer converts. The total is going to get to 350, 400, we think, by the end of the year.

Okay. Thank you. Gary E. Dickerson - President, Chief Executive Officer & Director: You're welcome.

Your next question comes from the line of James Covello from Goldman Sachs. Your line is open. James Vincent Covello - Goldman Sachs & Co.: Good afternoon, guys. Thanks so much for taking the question. I guess first question is really a longer-term question about China as a new entrant into the memory industry. I mean, it's something we've seen over the years be so important to the semicap industry, whether it was Japan, Inc., or Korea, Inc., or Taiwan, Inc., and now it seems like China, Inc., is determined to become a player in the memory industry, in particular the DRAM industry, I guess, to start. So I guess, how big of an opportunity do you think it could be, how soon do you think it could impact your P&L? Obviously, I would think that the commentary you made about 2016 would include any early opportunities you see from China, but more really over the next couple of years. Gary E. Dickerson - President, Chief Executive Officer & Director: Yeah, thanks for the question. Clearly, a lot of activity in China, as you've said, we have a very strong position in China. Applied just celebrated 30 years in China. We've got a great team and great capability there, very strong customer relationships and very strong share positions with Chinese companies and the multinational companies that are in China. There are a number of projects that people are talking about. There's certainly going to be some incremental wafer fab equipment spending in 2016. I don't know that we want to give a specific number right now. But I would say there are a lot of projects that are in the pipeline. And that could be from a strategic investment standpoint additive for wafer fab equipment. And our share there, Bob…

Your next question comes from the line of Romit Shah from Nomura. Your line is open.

Yes, thank you. Intel has publicly said that this year's CapEx is an anomaly and that they'll spend more next year. So I'm just trying to reconcile that with your outlook for logic being flat in 2016. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Yeah, we think, overall, Logic is up somewhat. It's on the up, a little bit up, frankly. And that we don't have classified in Logic Intel's initiative in memory, right? So, that's in their memory bucket. And then the third issue is there's some other cats and dogs or smaller opportunities down below the Intel level, so it's not all Intel. So some of those aren't growing as much as Intel.

Okay. Then another clarification I had, Bob, was just on the 14-week quarter, just so we can model April properly, is there much of an impact to revenues in either January or what you would perceive in the April period? Robert J. Halliday - Chief Financial Officer & Senior Vice President: No, it's really more of an OpEx management issue and we're kind of mitigating that with two weeks of shutdown to offset the full extra week of OpEx expense.

Okay, and if I could just one for Gary. Gary, as you mentioned, fiscal 2015 was a good year. You grew your revenues. You had record profits and you guys made a lot of progress lowering the share count, OpEx, and the tax rate. The share price, though, is down about 30% over the last 12 months. And I realize that the merger accounts for a lot of the weakness. But just wondering from this standpoint, what the management thinks they can do to improve shareholder value from here. Gary E. Dickerson - President, Chief Executive Officer & Director: Yeah, as I said before, if you look at our business, break it down into different pieces, foundry is down a significant amount relative to the mix, and if you look at our position in transistor and interconnect when foundry ramps, that is a real strength and really a unique strength for Applied Materials, epi, PVD, implant, CMP, RTP, all of those areas are very strong leadership positions for Applied. The incremental profitability, as that CapEx increases, there's a lot of drop-through to the bottom line. So the mix this year of memory versus foundry, is different than what we've seen over the last few years. So when foundry comes back, we're in a better position than any company, really, relative to the incremental profitability. The other thing on the foundry is that, at 10-nanometer different than 16-nanometer, there are big changes in terms of the device architecture. Interconnect is growing a significant amount, and our share and number of steps will grow as those devices ramp. So that's one that's a big driver for us when the mix comes back. We've talked about the products that we've introduced, the really tremendous momentum we have in Etch, the CVD, ALD, these areas that are growing for us at a very high rate. And I still think we're in the early innings relative to the pull that we have from customers. You're going to continue to see growth in those areas as we go forward. And as Bob talked about, our memory position has increased significantly. So as the customers are ramping those 3D NAND technologies, that puts us in a good position. We're growing the service business and we believe it's sustainable growth in service. And as our customers move to new technologies and displays, that's another area where they're adding steps, depositions, materials engineering steps that give us a great opportunity. So you put all those things together, again we're winning in inflection and we really have a great opportunity to grow in all of our different business segments as customers transition to these new technologies.

Thanks, Gary.

Your next question comes from the line of Timothy Arcuri from Cowen and Company. Your line is open. Timothy M. Arcuri - Cowen & Co. LLC: Thanks a lot. I guess first question really is for Gary. So Gary, given the merger that we saw announced, there was a lot of bold moves to sort of shake things up in the industry, I guess, most of what you've done so far is to consolidate markets that you're already in. But if you look sort of to those markets, there's not a whole lot you can do that would really move the needle. So I guess I wanted to ask you about your willingness to sort of look outside of your traditional front end wafer fab equipment markets, maybe into the back end, maybe into some non-semi stuff. Sort of how do you think about the strategic way where you can grow the earnings to $2 or more? It seems like you might have to look outside of your traditional front end WFE markets. Thanks. Gary E. Dickerson - President, Chief Executive Officer & Director: Yeah, Tim, many thanks for the questions. So, again, if you look at our businesses, if you get to a mix of foundry and memory that's more similar to what we've seen in the past. As I said before, our transistor and interconnect business is very, very, very strong. And we see growth in terms of the number of steps, as our customers are transitioning to these next-generation devices. If you look at Etch and deposition, we've grown maybe $1 billion over the last two years or three years. We still think there's a lot of opportunity to continue to grow there going forward. A significant opportunity. One of the things I talked about this last…

Your next question comes from the line of Krish Sankar from Bank of America Merrill Lynch. Your line is open.

Yeah, hi, thanks for taking my question. I have two of them. One is for Gary or Bob. You guys highlighted how the last four years was great for foundry spending and now it's moderated this year. If you look at the last four years, it's like smartphone growth is very strong. I'm just kind of curious what makes you think that this year is not the new norm for foundry spending? And along the path, do you think there's going to be any reuse for 10-nanometer foundries? And then I have a follow-up. Gary E. Dickerson - President, Chief Executive Officer & Director: I'll start, you can finish? So if you go look at 2015 a couple of things happened. The biggest thing was if you go look at this, you got to look at the node and the previous node and the next node when you consider spending and reuse. So if you go look, I don't think anyone thought that 20-nanometer was a super device. A lot of customers, and you guys know this, looked forward to the introduction of FinFETs and the FinFET device at 16-nanometer/14-nanometer was a more powerful device for them in terms of processor and power. Right? So not too many customers did 20-nanometer tape-outs. You know that, right? What we're seeing is that 16-nanometer/14-nanometer, by the time they're done, is going to be a big node for tape-outs. So what you had is a fair amount of the equipment at 20-nanometer can move to 16-nanometer/14-nanometer. So it is the height of the opportunity for reuse because there weren't a lot of tape-outs at 20-nanometer. Now, when you go to 10-nanometer – now, the one thing that helped you at 20-nanometer for the one particular customer that went big with 20-nanometer. They buy…

Got it. Got it. And then just as a follow-up, I'm kind of curious, and I understand the thought process on the M&A side, I'm just curious more on the organic development side. If I look at your some of the products there that investing or trying to gain traction, for example, offset a dielectric Etch there, there's not been a whole lot of traction. And also the E-Beam products where it looks like Hermes has already won that battle and it might be a niche market. I'm kind of curious, what are the thought process in the organic product developments? Are you guys looking to hit singles from this or do you expect this to be a big home run, driving like $500 million or $1 billion revenue stream? Gary E. Dickerson - President, Chief Executive Officer & Director: Well, I would say in Etch with Sym3, we went from something like 10 chambers to close to 500 chambers, 450 chambers in five quarters. We've never seen a ramp like that at Applied Materials and you very rarely see that kind of adoption anywhere in the industry. And I was traveling actually most of the last six weeks with pretty much all of our major customers. The pull is really phenomenal. I talked about the 49 application wins in Etch and CVD. We have tremendous, tremendous pull from customers and we're winning critical applications also. This is not just non-critical applications. Some of the most critical applications, the design of our technology is outperforming the competition. So we look at that – the Etch business, $6 billion market, it's a great opportunity for us. Relative to your question on dielectric Etch, again, you have a $6 billion market, we certainly have gained share, but our position going forward on…

Got it. Thanks, guys.

Your next question comes from the line of Farhan Ahmad from Credit Suisse. Your line is open. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Thanks for taking my question. Gary, you mentioned that the foundry is stronger in the second half. I was wondering if you can provide us some comments on the linearity of next year for your overall silicon business. Is it stronger in the first half or second half, and how does it compare to the second half calendar this year? Robert J. Halliday - Chief Financial Officer & Senior Vice President: So if you go look, Farhan, this is Bob. So in 2015, WFE for the industry, we think for the total WFE was probably like 48%-52% something like that. I personally think next year WFE is all of that and maybe a little more back-end loaded because in 2015 you had foundry back-end loaded more and you get that again next year. But I think the memory is not – it's pretty good memory year by the next year but not as strong in the front end as it was this year, okay? So I think 48%-52%, it's that or more than that next year in terms of back-end load. That's for the industry. Now for Applied Materials, we always tend to be back-end loaded just because the way we run quarters and December calendar year-end. So this year, I think, we were like 57% in the second calendar half, 43%-57%. I don't want to give an exact number, but I don't know why it would be any different than that. Because I think the industry is somewhere where we're strong, foundry and V-NAND is more second half, so I think you're talking those type of numbers. Farhan Ahmad - Credit Suisse Securities…

Your next question comes from the line of Harlan Sur from JPMorgan. Your line is open.

Thanks for taking my question. On the Lam-KLA deal, one of the revenue synergy opportunities that they talked about as a rationale for the deal, and they put the synergies at about $600 million within five years, is on the integration rights. And the integration in situ or standalone of the process tools and the process control tools. Obviously, the Applied team has got somewhat similar capabilities on both sides. How do you see the opportunity for more process control integration with your process tools? And if they're right, then should you be looking at a similar opportunity? It would be great to get your thoughts here. Gary E. Dickerson - President, Chief Executive Officer & Director: All right, yeah. Thanks for the question. So on, just, I want to clarify, you're talking about integrated process control, is that the question?

Yes, integrated process control, whether it's in situ or standalone. Gary E. Dickerson - President, Chief Executive Officer & Director: Okay. Great. Yeah. Thanks. So if you look at integrated process control, the adoption has been very limited over time. There are a few examples, CMP is one. Another one that has some adoption is ASML's YieldStar product. It's not a new concept. We have a very good understanding of these opportunities, but we really can't comment on our strategy and either company's long-term road map. But I would say that we have a very, very good understanding of this particular area.

Okay. And then on the AGS revenues, up 15% in fiscal year 2015. Solid performance, the team has been focusing on its services and monetizing its manufacturing IP and knowhow. Within the framework for a flat WFE spending year next year, do you expect your AGS business to outgrow the industry and outgrow your overall SSG business in fiscal year 2016 as well? Robert J. Halliday - Chief Financial Officer & Senior Vice President: We think AGS has a very good opportunity to grow their revenue line next year, and I think they're in very good shape to hit the model we put up for 2018. In terms of whether they outgrow the semi business or not, and a lot of variables in terms of WFE spending. But I think they're going to have a strong year. They had a really great year this year.

Yep. Okay. Thank you.

Your next question comes from the line of Stephen Chin from UBS. Your line is open.

Okay. Thanks. Hi, Gary, Bob. Just a follow-up question about DRAM WFE in 2016 being down significantly. Do you think DRAM as a percentage of WFE goes back to 14% of total WFE, compared to 25%? Is that kind of the way to think about your definition of being down significantly? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I don't want to give a hard number. We think it's down, but not down that far.

Okay. Thanks for sharing that. And then just a follow-up question on market share. It sounds like you're Etch and deposition market share did quite well this year. Now that Lam and KLA are combining, is this typically a time that Applied will take even more market share in Etch, deposition, and maybe even in inspection as those companies look to integrate? Gary E. Dickerson - President, Chief Executive Officer & Director: Yeah, what I would say in Etch, deposition and inspection, we have, as I said earlier, incredible pull from customers in Etch and deposition. Especially as they're moving to new device technologies. There's a lot of new materials that are going to be implemented where we have a very strong position. I talked about the number of applications wins earlier. So we already have very strong pull from customers, with the enabling technologies, the new platforms that we have implemented in those areas. Also very, very strong pull from customers on inspection. Deeper technologies engagements than we've ever had before, as our customers are moving to these new device structures. And really a great opportunity, really great opportunity. Strong pull from customers.

Okay. Thanks, Gary.

Your next question comes from the line of Atif Malik from Citigroup. Your line is open.

Hi. Thanks for taking my question. Two quick ones. Bob, I'm assuming flat WFE next year, AGS sales up. How should we think about OpEx dollars in terms of absolute dollars into next year? Robert J. Halliday - Chief Financial Officer & Senior Vice President: For the whole company?

Yeah. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Yeah, we'll be year – fiscal year – fiscal, yeah, we'd like to be down a little bit, or flat to down a little bit.

Okay. And then as a follow-up, I believe there was a $13 million small negative adjustment in the backlog, can you talk about what – where that was? Was it in silicon? And which end market? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Well, we had a backlog adjustment earlier in the year in foundry, as you remember, and then I think we had some FX. Hold on. I'm looking it up. $13 million was – yeah, there's a cancellation. There's a bunch of small ones, really. There's no big pattern. Currency adjust was $27 million. That's buried in there too. So those $27 million was foreign exchange, $24 million in SSG, $3 million in solar. So a lot of it was foreign exchange movement too.

Okay. And one last one. On the services side, is it possible to provide some kind of percentage for 200 millimeter refurbished equipment? Is it more like 10%, 20% of your services sales or higher? Robert J. Halliday - Chief Financial Officer & Senior Vice President: I'm sorry. I missed – I didn't hear the whole question.

The 200 millimeter refurbished equipment sales as a percentage of overall services sales? Robert J. Halliday - Chief Financial Officer & Senior Vice President: Yeah, we don't break that out. What we've said is that it was strong year for 200 millimeter tool sales, up a fair amount from last year. And we think it'll be pretty strong next year too. There's couple of big demand drivers there. One is, you don't quite realize it, but your average cellphone's got a lot of sensors in there, so a lot of those sensors are made of 200 millimeter devices. The second is, the whole automobile and sensors business is growing quite a bit. So both of those look like they'll be pretty good next year too.

Okay. Thanks.

Thanks. And I think, Kyle, we have time for just about one more question, please.

Your last question comes from the line of Weston Twigg from Pacific Crest. Your line is open.

Hi. Thanks for taking my question. I wanted to ask about your comments on inspection, where you said you're seeing very strong customer pull. Was that more related to just the new UVision platform or were you referring to E-Beam inspection? And if it was E-Beam related, I'm wondering if you can give us an idea of how much of a revenue contribution that could be in 2016? Gary E. Dickerson - President, Chief Executive Officer & Director: Yeah, so in UVision we have a good position in foundry and logic. Also we had a recent multiple tool order in memory for the UVision 7, so we're making progress there in that part of the business. On the E-Beam area, again, as I said before, we have really very strong electron optics. We've got a strong position in E-Beam review and putting all that together, we think it's a great opportunity for us. We're not ready to quantify the exact number in terms of the potential there, but it is a fast growing part of the market and with the technology and the team we have, we think that it's a good opportunity going forward.

Okay, that that helps. And then as a follow-up, I was wondering, on the last call you said you were ramping down some businesses and you plan to cut anything really sustainably below 20% OP margin and I was just wondering if there were any significant cuts this quarter that you could talk about. Robert J. Halliday - Chief Financial Officer & Senior Vice President: Well, it's hard to talk about those in advance. We consistently screen all the businesses. The one that consistently we're ramping down is the solar business, frankly, because the market is bad. Right? But other than that we don't have much we would talk about right now.

Okay. Thanks a lot.

All right. Thank you, Wes. And we'd like to thank, everyone, for joining us this afternoon. A replay of this call will be available on our website beginning at 5:00 p.m. Pacific time today. Thank you for your continued interest in Applied Materials.

This concludes today's conference call. You may now disconnect.