Applied Materials to Expand Nanomanufacturing Technology Solutions With Acquisition of Applied Films

Under the terms of the agreement approved by both boards ofdirectors, Applied Materials will pay $28.50 per share in cash foreach outstanding share of Applied Films, which represents a totalpurchase price of approximately $464 million, or approximately $303million net of Applied Films' existing cash and marketable securities.In addition, Applied Materials will assume Applied Films' outstandingstock options and other equity awards.

"The acquisition of Applied Films expands our flat panel businessto offer color filter products, and opens the fast-growing solarmarket for us," said Mike Splinter, president and CEO of AppliedMaterials. "Both companies have a strong history of developing new andinnovative technologies. Together, we expect to speed the developmentand availability of new products for a variety of emergingapplications."

Applied Films' PVD (physical vapor deposition)-based flat paneldisplay products align well with Applied Materials' existing FPD thinfilm deposition capabilities. Applied Materials is a leading supplierof CVD (chemical vapor deposition) and test equipment formanufacturing the display's transistor layer, while Applied Films is arecognized leader in the production of FPD color filter systems andhas developed significant expertise in large area PVD.

"The acquisition is also anticipated to provide growthopportunities for Applied Materials in solar cell as well as flexibleelectronics applications where our combined knowledge and capabilitieswill enable us to bring a new level of expertise to these expandingmarkets," said Mark Pinto, senior vice president and chief technicalofficer of Applied Materials. "In solar cell manufacturing, we expectto help customers deliver higher levels of output at lower productioncost -- a critical step to making alternative forms of clean energymore available and affordable. By combining Applied Films' existingplatforms with Applied Materials' broad process portfolio and globalcustomer relationships, we can also accelerate a number of newapplications for electronics on flexible substrates."

"We are excited by the opportunity to join a global leader thathas provided innovative technology benefiting the electronics industryfor nearly 40 years," commented Thomas T. Edman, president and CEO ofApplied Films. "We look forward to having the substantial expertiseand resources of Applied Materials to drive new applications,innovations and efficiencies for our global customer base -- whileproviding the potential to reach many new customers."

Applied Materials and Applied Films will discuss today'sannouncement on a conference call today beginning at 7:00 a.m. PacificDaylight Time. A live webcast of the conference call will be availableon Applied Materials' web site at www.appliedmaterials.com and areplay will be available after 2:00 p.m. Pacific Daylight Time.

Completion of the transaction is subject to customary closingconditions, including the approval of Applied Films' shareholders andreceipt of regulatory approvals. Applied Films will file a proxystatement in connection with the proposed merger, which will be mailedto its shareholders. The companies expect to close the transactionduring Applied Materials' third fiscal quarter of 2006.

This press release contains forward-looking statements relating toApplied Materials' anticipated acquisition of Applied Films andexpected benefits of the transaction, including growth opportunitiesin existing and emerging markets, technology leadership and improvedproduct capabilities. These statements are subject to known andunknown risks and uncertainties that could cause actual results todiffer materially from those stated or implied, including but notlimited to: the satisfaction of closing conditions; the successfulintegration and performance of the acquired business; sustainabilityof demand in the semiconductor and semiconductor-related industry, andbroadening of demand for emerging applications such as solar cells andflexible electronics, which are subject to many factors, includingglobal economic conditions, business spending, consumer confidence,demand for electronic products and integrated circuits, andgeopolitical uncertainties; Applied Materials' ability to develop,deliver and support a broad range of products and to expand itsmarkets and develop new markets; the ability to obtain and protectintellectual property rights in key technologies; the retention of keyemployees; the ability to realize synergies expected to result fromthe acquisition; successful commercialization of purchasedtechnologies; the effectiveness of internal controls; unknown,underestimated or undisclosed commitments or liabilities; and otherrisks described in Applied Materials' and Applied Films' Forms 10-K,10-Q and 8-K filed with the Securities and Exchange Commission. Allforward-looking statements are based on managements' estimates,projections and assumptions as of the date hereof and AppliedMaterials and Applied Films assume no obligation to update any suchstatement.

Applied Films Corporation is a leading provider of thin filmdeposition equipment to diverse markets such as the flat paneldisplay, architectural glass, solar cell, and the consumer productspackaging and electronics industries. For more information, pleasevisit www.appliedfilms.com.

Applied Materials, Inc. is the global leader in nanomanufacturingtechnology(TM) solutions for the electronics industry with a broadportfolio of innovative equipment, service and software products. AtApplied Materials, we apply nanomanufacturing technology to improvethe way people live. Learn more at www.appliedmaterials.com.

IMPORTANT ADDITIONAL INFORMATION TO BE FILED WITH THE SEC

Applied Films will file a proxy statement in connection with theproposed merger, which will be mailed to its shareholders. AppliedFilms' shareholders and other investors are urged to carefully readthe proxy statement and other relevant materials when they becomeavailable because they will contain important information about thetransaction. Investors and security holders may obtain free copies ofthese documents (when they are available) and other documents filed byApplied Films with the SEC through the web site maintained by the SECat www.sec.gov. In addition, investors and security holders may obtainfree copies of the documents filed with the SEC by Applied Films bygoing to the investor relations page of its web site atwww.appliedfilms.com or by contacting: Applied Films Corporation ChiefFinancial Officer, 9586 I-25 Frontage Road, Suite 200, Longmont,Colorado 80504.

Applied Films and its directors and executive officers may bedeemed to be participants in the solicitation of proxies in respect ofthe transactions contemplated by the agreement with Applied Materials.A description of any interests that Applied Films' directors andofficers have in the transaction will be available in the proxystatement. Information regarding certain of these persons and theirbeneficial ownership of Applied Films common stock as of August 19,2005, is also set forth in the Schedule 14A filed by Applied Films onSeptember 30, 2005, with the SEC. These documents are available freeof charge at the SEC's web site at www.sec.gov or by going to theinvestor relations page of Applied Films' corporate website atwww.appliedfilms.com.