Accounts Receivable, Net

9 Months Ended

Jul. 26, 2015

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.

Applied did not factor any accounts receivable during the three and nine months ended July 26, 2015 or the three months ended July 27, 2014. Applied factored accounts receivable of $45 million during the nine months ended July 27, 2014. Applied did not discount letters of credit during the three and nine months ended July 26, 2015 or three months ended July 27, 2014. Applied discounted $29 million of letters of credit issued by customers during the nine months ended July 27, 2014. Applied did not discount promissory notes during the three and nine months ended July 26, 2015 and July 27, 2014. Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operations and were not material for all periods presented.

Accounts receivable are presented net of allowance for doubtful accounts of $57 million at July 26, 2015 and $58 million at October 26, 2014. Applied sells its products principally to manufacturers within the semiconductor, display and solar industries. While Applied believes that its allowance for doubtful accounts is adequate and represents its best estimate as of July 26, 2015, it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates regarding collectability.