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 26, 2015	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	422	$	—	$	—	$	422
Cash equivalents:
Money market funds	2,152		—		—		2,152
Total Cash equivalents	2,152		—		—		2,152
Total Cash and Cash equivalents	$	2,574	$	—	$	—	$	2,574
Short-term and long-term investments:
U.S. Treasury and agency securities	$	82	$	—	$	—	$	82
Non-U.S. government securities*	9		—		—		9
Municipal securities	390		1		—		391
Commercial paper, corporate bonds and medium-term notes	239		—		1		238
Asset-backed and mortgage-backed securities	274		—		1		273
Total fixed income securities	994		1		2		993
Publicly traded equity securities	28		29		—		57
Equity investments in privately-held companies	77		—		—		77
Total short-term and long-term investments	$	1,099	$	30	$	2	$	1,127
Total Cash, Cash equivalents and Investments	$	3,673	$	30	$	2	$	3,701

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



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

	(In millions)
Cash	$	508	$	—	$	—	$	508
Cash equivalents:
Money market funds	2,494		—		—		2,494
Total Cash equivalents	2,494		—		—		2,494
Total Cash and Cash equivalents	$	3,002	$	—	$	—	$	3,002
Short-term and long-term investments:
U.S. Treasury and agency securities	$	62	$	—	$	—	$	62
Non-U.S. government securities	14		—		—		14
Municipal securities	391		2		—		393
Commercial paper, corporate bonds and medium-term notes	223		1		—		224
Asset-backed and mortgage-backed securities	287		1		2		286
Total fixed income securities	977		4		2		979
Publicly traded equity securities	19		31		—		50
Equity investments in privately-held companies	66		—		—		66
Total short-term and long-term investments	$	1,062	$	35	$	2	$	1,095
Total Cash, Cash equivalents and Investments	$	4,064	$	35	$	2	$	4,097

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 26, 2015:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	156	$	156
Due after one through five years	559		559
Due after five years	4		4
No single maturity date**	380		408
	$	1,099	$	1,127

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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 and nine months ended July 26, 2015, gross realized gains and losses on investments were not material. During the three and nine months ended July 27, 2014, gross realized gains on investments were $9 million and $21 million, respectively, and gross realized losses on investments were not material.

At July 26, 2015 and October 26, 2014, 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 July 26, 2015 and July 27, 2014 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three and nine months ended July 26, 2015 or July 27, 2014. Impairment charges on equity investments in privately-held companies during the three and nine months ended July 26, 2015 were $1 million and $9 million, respectively. Impairment charges on equity investments in privately-held companies during the three and nine months ended July 27, 2014 were $7 million and $13 million, respectively. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations.

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.