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 28, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,489	$	—	$	—	$	1,489
Cash equivalents:
Money market funds	1,599		—		—		1,599
Commercial paper, corporate bonds and medium-term notes	352		—		—		352
Total Cash equivalents	1,951		—		—		1,951
Total Cash and Cash equivalents	$	3,440	$	—	$	—	$	3,440
Short-term and long-term investments:
U.S. Treasury and agency securities	$	335	$	—	$	2	$	333
Non-U.S. government securities*	10		—		—		10
Municipal securities	399		—		4		395
Commercial paper, corporate bonds and medium-term notes	705		—		3		702
Asset-backed and mortgage-backed securities	595		—		4		591
Total fixed income securities	2,044		—		13		2,031
Publicly traded equity securities	17		25		4		38
Equity investments in privately-held companies	89		—		—		89
Total short-term and long-term investments	$	2,150	$	25	$	17	$	2,158
Total Cash, Cash equivalents and Investments	$	5,590	$	25	$	17	$	5,598

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* Includes agency debt securities guaranteed by Canada.



October 29, 2017	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,346	$	—	$	—	$	1,346
Cash equivalents:
Money market funds	2,658		—		—		2,658
U.S. Treasury and agency securities	15		—		—		15
Non-U.S. government securities	55		—		—		55
Municipal securities	341		—		—		341
Commercial paper, corporate bonds and medium-term notes	595		—		—		595
Total Cash equivalents	3,664		—		—		3,664
Total Cash and Cash equivalents	$	5,010	$	—	$	—	$	5,010
Short-term and long-term investments:
U.S. Treasury and agency securities	$	667	$	—	$	1	$	666
Non-U.S. government securities*	161		—		—		161
Municipal securities	1,007		—		—		1,007
Commercial paper, corporate bonds and medium-term notes	1,024		1		1		1,024
Asset-backed and mortgage-backed securities	379		—		1		378
Total fixed income securities	3,238		1		3		3,236
Publicly traded equity securities	22		78		1		99
Equity investments in privately-held companies	74		—		—		74
Total short-term and long-term investments	$	3,334	$	79	$	4	$	3,409
Total Cash, Cash equivalents and Investments	$	8,344	$	79	$	4	$	8,419

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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 28, 2018:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	503	$	502
Due after one through five years	946		938
No single maturity date**	701		718
Total	$	2,150	$	2,158

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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:



	2018		2017		2016

	(In millions)
Gross realized gains	$	29	$	14	$	10
Gross realized losses	$	3	$	1	$	2

At October 28, 2018, 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 fixed income securities at October 28, 2018, October 29, 2017 and October 30, 2016 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed income securities for fiscal 2018, 2017 or 2016. During fiscal 2018, 2017 and 2016, Applied determined that certain of its equity investments were other-than-temporarily impaired and, accordingly, recognized impairment charges of $5 million, $10 million and $8 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.