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:



October 25, 2015	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,010	$	—	$	—	$	1,010
Cash equivalents:
Money market funds	3,272		—		—		3,272
Non-U.S. government securities*	60		—		—		60
Municipal securities	73		—		—		73
Commercial paper, corporate bonds and medium-term notes	382		—		—		382
Total Cash equivalents	3,787		—		—		3,787
Total Cash and Cash equivalents	$	4,797	$	—	$	—	$	4,797
Short-term and long-term investments:
U.S. Treasury and agency securities	$	84	$	—	$	—	$	84
Non-U.S. government securities*	9		—		—		9
Municipal securities	384		2		—		386
Commercial paper, corporate bonds and medium-term notes	250		—		—		250
Asset-backed and mortgage-backed securities	262		—		—		262
Total fixed income securities	989		2		—		991
Publicly traded equity securities	28		17		—		45
Equity investments in privately-held companies	78		—		—		78
Total short-term and long-term investments	$	1,095	$	19	$	—	$	1,114
Total Cash, Cash equivalents and Investments	$	5,892	$	19	$	—	$	5,911

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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

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

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at October 25, 2015:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	155	$	156
Due after one through five years	572		573
No single maturity date**	368		385
	$	1,095	$	1,114

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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 for each fiscal year were as follows:



	2015		2014		2013

	(In millions)
Gross realized gains	$	9	$	27	$	7
Gross realized losses	$	3	$	2	$	2

At October 25, 2015, 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 October 25, 2015, October 26, 2014 and October 27, 2013 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for fiscal 2015, 2014 or 2013. During fiscal 2015, 2014 and 2013, Applied determined that certain of its equity investments in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $9 million, $15 million and $6 million, respectively. These impairment charges are included in interest and other income, net in the Consolidated 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.