Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

The following tables summarize Applied’s cash, cash equivalents and investments:



January 27, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,016	$	—	$	—	$	1,016
Cash equivalents:
Money market funds	1,911		—		—		1,911
Commercial paper, corporate bonds and medium-term notes	265		—		—		265
Total Cash equivalents	2,176		—		—		2,176
Total Cash and Cash equivalents	$	3,192	$	—	$	—	$	3,192
Short-term and long-term investments:
U.S. Treasury and agency securities	$	375	$	—	$	—	$	375
Non-U.S. government securities*	9		—		—		9
Municipal securities	402		1		2		401
Commercial paper, corporate bonds and medium-term notes	628		1		3		626
Asset-backed and mortgage-backed securities	565		—		3		562
Total fixed income securities	1,979		2		8		1,973
Publicly traded equity securities	15		20		4		31
Equity investments in privately-held companies	104		—		—		104
Total equity investments	119		20		4		135
Total short-term and long-term investments	$	2,098	$	22	$	12	$	2,108

Total Cash, Cash equivalents and Investments	$	5,290	$	22	$	12	$	5,300

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* Includes agency debt securities guaranteed by Canada.



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 equity investments	106		25		4		127
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.

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments as of January 27, 2019:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	429	$	428
Due after one through five years	985		983
No single maturity date**	684		697
Total	$	2,098	$	2,108

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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 months ended January 27, 2019 and January 28, 2018, gross realized gains and losses on investments for these periods were not material.

As of January 27, 2019, and October 28, 2018, gross unrealized losses related to Applied’s debt investment portfolio were not material. Applied regularly reviews its debt 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.

Applied determined that the gross unrealized losses on its marketable fixed-income securities as of January 27, 2019 and January 28, 2018 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed-income securities during the three months ended January 27, 2019 or January 28, 2018. Impairment charges on equity investments in privately-held companies during the three months ended January 27, 2019 and January 28, 2018 were not material. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations.

Unrealized gains and losses on investments classified as equity investments are recognized in other income (expense), net in the Consolidated Condensed Statement of Operations. Prior to the adoption of Accounting Standards Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019, these unrealized gains and temporary losses were included within accumulated other comprehensive income (loss), net of any related tax effect.

The components of gain (losses) on equity investments for the three months ended January 27, 2019 were as follows:



	Three Months Ended
	January 27, 2019

	(In millions)
Publicly traded equity securities
Unrealized gain	$	6
Unrealized loss	(2		)
Gain on sales	1
Loss on sales	—
Equity investments in privately-held companies
Unrealized gain	7
Unrealized loss	(1		)
Gain on sales	1
Loss on sales	—
Total gain on equity investments, net	$	12