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:



January 26, 2014	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	872	$	—	$	—	$	872
Cash equivalents:
Money market funds	1,267		—		—		1,267
Municipal securities	5		—		—		5
Total Cash equivalents	1,272		—		—		1,272
Total Cash and Cash equivalents	$	2,144	$	—	$	—	$	2,144
Short-term and long-term investments:
U.S. Treasury and agency securities	$	74	$	—	$	—	$	74
Non-U.S. government securities*	14		—		—		14
Municipal securities	380		2		—		382
Commercial paper, corporate bonds and medium-term notes	148		1		—		149
Asset-backed and mortgage-backed securities	234		1		2		233
Total fixed income securities	850		4		2		852
Publicly traded equity securities	22		28		—		50
Equity investments in privately-held companies	76		—		—		76
Total short-term and long-term investments	$	948	$	32	$	2	$	978
Total Cash, Cash equivalents and Investments	$	3,092	$	32	$	2	$	3,122

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



October 27, 2013	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	611	$	—	$	—	$	611
Cash equivalents:
Money market funds	1,095		—		—		1,095
Municipal securities	5		—		—		5
Total Cash equivalents	1,100		—		—		1,100
Total Cash and Cash equivalents	$	1,711	$	—	$	—	$	1,711
Short-term and long-term investments:
U.S. Treasury and agency securities	$	170	$	—	$	—	$	170
Non-U.S. government securities	11		—		—		11
Municipal securities	379		2		—		381
Commercial paper, corporate bonds and medium-term notes	218		2		1		219
Asset-backed and mortgage-backed securities	268		2		2		268
Total fixed income securities	1,046		6		3		1,049
Publicly traded equity securities	27		33		—		60
Equity investments in privately-held companies	76		—		—		76
Total short-term and long-term investments	$	1,149	$	39	$	3	$	1,185
Total Cash, Cash equivalents and Investments	$	2,860	$	39	$	3	$	2,896

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at January 26, 2014:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	127	$	128
Due after one through five years	489		491
No single maturity date**	332		359
	$	948	$	978

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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

During the three months ended January 26, 2014, gross realized gains on investments were $12 million and gross realized losses on investments were not material. During the three months ended January 27, 2013, gross realized gains and losses on investments were not material.

At January 26, 2014 and October 27, 2013, gross unrealized losses related to Applied's investment portfolio were not material. 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 is 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 January 26, 2014 and January 27, 2013 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three months ended January 26, 2014 or January 27, 2013. Applied recognized $3 million of impairment charges on its equity investments in privately-held companies during the three months ended January 26, 2014, and did not record any impairment charges on its equity investments in privately-held companies during the three months ended January 27, 2013.

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.