Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarize Applied’s cash, cash equivalents and investments by security type:



July 29, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Cash	$	734	$	—	$	—	$	734
Cash equivalents:
Money market funds	758		—		—		758
Municipal securities	19		—		—		19
Commercial paper, corporate bonds and medium-term notes	18		—		—		18
Total Cash equivalents	795		—		—		795
Total Cash and Cash equivalents	$	1,529	$	—	$	—	$	1,529
Short-term and long-term investments:
U.S. Treasury and agency securities	$	399	$	1	$	—	$	400
Non-U.S. government securities*	55		—		—		55
Municipal securities	386		2		—		388
Commercial paper, corporate bonds and medium-term notes	413		3		—		416
Asset-backed and mortgage-backed securities	305		4		1		308
Total fixed income securities	1,558		10		1		1,567
Publicly traded equity securities	45		21		12		54
Equity investments in privately-held companies	72		—		—		72
Total short-term and long-term investments	$	1,675	$	31	$	13	$	1,693
Total Cash, Cash equivalents and Investments	$	3,204	$	31	$	13	$	3,222

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*	Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Canada, Germany and Australia.



October 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Cash	$	297	$	—	$	—	$	297
Cash equivalents:
Money market funds	5,663		—		—		5,663
Total Cash equivalents	5,663		—		—		5,663
Total Cash and Cash equivalents	$	5,960	$	—	$	—	$	5,960
Short-term and long-term investments:
U.S. Treasury and agency securities	$	184	$	1	$	—	$	185
Non-U.S. government securities	40		—		—		40
Municipal securities	371		2		—		373
Commercial paper, corporate bonds and medium-term notes	216		3		1		218
Asset-backed and mortgage-backed securities	307		3		1		309
Total fixed income securities	1,118		9		2		1,125
Publicly traded equity securities	8		19		—		27
Equity investments in privately-held companies	62		—		—		62
Total short-term and long-term investments	$	1,188	$	28	$	2	$	1,214
Total Cash, Cash equivalents and Investments	$	7,148	$	28	$	2	$	7,174

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 29, 2012:



	Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	600	$	600
Due after one through five years	652		658
Due after five years	1		1
No single maturity date**	422		434
	$	1,675	$	1,693

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**	Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

Gains and Losses on Investments

Gross realized gains and losses on sales of investments during the three and nine months ended July 29, 2012 and July 31, 2011 were as follows:



	Three Months Ended				Nine Months Ended
	July 29, 2012		July 31, 2011		July 29, 2012		July 31, 2011
	(In millions)
Gross realized gains	$	1	$	1	$	2	$	14
Gross realized losses	$	1	$	1	$	2	$	2

At July 29, 2012, Applied had a gross unrealized loss of $1 million due to a decrease in the fair value of certain fixed income securities. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at July 29, 2012 and July 31, 2011 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for the three and nine months ended July 29, 2012 and July 31, 2011. During the nine months ended July 29, 2012, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $3 million. Applied did not recognize any impairment on its equity investments in privately-held companies for the three months ended July 29, 2012 or for three and nine months ended July 31, 2011.

The following table provides the fair market value of Applied’s investments with unrealized losses that were not deemed to be other-than-temporarily impaired as of July 29, 2012.



	In Loss Position for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Asset-backed and mortgage-backed securities	$	42	$	1	$	42	$	1
Publicly traded equity securities	14		12		14		12
Total	$	56	$	13	$	56	$	13

The following table provides the fair market value of Applied’s investments with unrealized losses that were not deemed to be other-than-temporarily impaired as of October 30, 2011.



	In Loss Position for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Commercial paper, corporate bonds and medium-term notes	$	32	$	1	$	32	$	1
Asset-backed and mortgage-backed securities	77		1		77		1
Total	$	109	$	2	$	109	$	2

Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations.