Accounts Receivable, Net

12 Months Ended

Oct. 25, 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 or discount promissory notes during fiscal 2015 or 2013. Applied factored accounts receivable of $45 million and discounted $29 million of letters of credit issued by customers during fiscal 2014. 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 $49 million and $58 million at October 25, 2015 and October 26, 2014, respectively. Changes in allowance for doubtful accounts for each fiscal year were as follows:

	2015			2014			2013
	(In millions)
Beginning balance	$	58		$	74		$	87
Provision	—			—			—
Deductions1	(9		)	(16		)	(13		)
Ending balance	$	49		$	58		$	74

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¹ Fiscal 2015, 2014 and 2013 deductions represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied's customers.

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 October 25, 2015, it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates regarding collectability.