Accounts Receivable, Net

12 Months Ended

Oct. 27, 2013

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied sells its accounts receivable without recourse. Applied, from time to time, also discounts letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. Details of discounted letters of credit, factored accounts receivable and discounted promissory notes for fiscal years ended October 27, 2013, October 28, 2012 and October 30, 2011 were as follows:

	2013		2012		2011
	(In millions)
Discounted letters of credit	$	—	$	—	$	211
Factored accounts receivable and discounted promissory notes	—		93		80
Total	$	—	$	93	$	291

Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented.

Accounts receivable are presented net of allowance for doubtful accounts of $74 million at October 27, 2013 and $87 million at October 28, 2012. Changes in allowance for doubtful accounts were as follows:

	2013			2012		2011
	(In millions)
Beginning balance	$	87		$	73	$	74
Provision	—			14		5
Deductions1	(13		)	—		(6		)
Ending balance	$	74		$	87	$	73

_____________________________

¹ Fiscal 2013 deductions represent releases of allowance for doubtful accounts credited to expense as a result of lower risk exposures in display and solar customers

Applied sells principally to manufacturers within the semiconductor, display and solar industries. While Applied believes that its allowance for doubtful accounts is adequate and represents Applied’s best estimate as of October 27, 2013, Applied continues to closely monitor customer liquidity and other economic conditions, which may result in changes to Applied’s estimates regarding collectability.