Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

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



April 28, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,185	$	—	$	—	$	1,185
Cash equivalents:
Money market funds	1,671		—		—		1,671
Municipal securities	1		—		—		1
Commercial paper, corporate bonds and medium-term notes	253		—		—		253
Asset-backed and mortgage-backed securities	6		—		—		6
Total Cash equivalents	1,931		—		—		1,931
Total Cash and Cash equivalents	$	3,116	$	—	$	—	$	3,116
Short-term and long-term investments:
U.S. Treasury and agency securities	$	367	$	1	$	—	$	368
Non-U.S. government securities*	9		—		—		9
Municipal securities	410		2		1		411
Commercial paper, corporate bonds and medium-term notes	588		3		1		590
Asset-backed and mortgage-backed securities	601		1		1		601
Total fixed income securities	1,975		7		3		1,979
Publicly traded equity securities	10		27		3		34
Equity investments in privately-held companies	97		9		3		103
Total equity investments	107		36		6		137
Total short-term and long-term investments	$	2,082	$	43	$	9	$	2,116

Total Cash, Cash equivalents and Investments	$	5,198	$	43	$	9	$	5,232

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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 April 28, 2019:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	414	$	414
Due after one through five years	960		964
No single maturity date**	708		738
Total	$	2,082	$	2,116

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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 and six months ended April 28, 2019 and April 29, 2018, gross realized gains and losses on investments for these periods were not material.

As of April 28, 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 April 28, 2019 and April 29, 2018 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed-income securities during the three and six months ended April 28, 2019 or April 29, 2018. Impairment charges on equity investments in privately-held companies during the three and six months ended April 28, 2019 and April 29, 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 and six months ended April 28, 2019 were as follows:



	April 28, 2019
	Three Months Ended			Six Months Ended

	(In millions)
Publicly traded equity securities
Unrealized gain	$	7		$	13
Unrealized loss	(1		)	$	(3	)
Gain on sales	1			$	2
Equity investments in privately-held companies
Unrealized gain	2			9
Unrealized loss	(2		)	(3		)
Gain on sales	3			4
Total gain on equity investments, net	$	10		$	22