Cash, Cash Equivalents and Investments

9 Months Ended

Jul. 28, 2019

Cash and Cash Equivalents [Abstract]

Summary of Cash, Cash Equivalents and Investments

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



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

	(In millions)
Cash	$	918	$	—	$	—	$	918
Cash equivalents:
Money market funds	2,010		—		—		2,010
Commercial paper, corporate bonds and medium-term notes	86		—		—		86
Total Cash equivalents	2,096		—		—		2,096
Total Cash and Cash equivalents	$	3,014	$	—	$	—	$	3,014
Short-term and long-term investments:
U.S. Treasury and agency securities	$	343	$	2	$	—	$	345
Non-U.S. government securities*	9		—		—		9
Municipal securities	390		4		—		394
Commercial paper, corporate bonds and medium-term notes	676		4		—		680
Asset-backed and mortgage-backed securities	614		3		1		616
Total fixed income securities	2,032		13		1		2,044
Publicly traded equity securities	8		37		3		42
Equity investments in privately-held companies	105		9		3		111
Total equity investments	113		46		6		153
Total short-term and long-term investments	$	2,145	$	59	$	7	$	2,197

Total Cash, Cash equivalents and Investments	$	5,159	$	59	$	7	$	5,211

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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 July 28, 2019:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	467	$	468
Due after one through five years	951		959
No single maturity date**	727		770
Total	$	2,145	$	2,197

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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 nine months ended July 28, 2019 gross realized gains and losses on investments were not material. During the three and nine months ended July 29, 2018, gross realized gains on investments were $13 million and $14 million, respectively, and the gross realized losses on investments for these periods were not material.

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



	July 28, 2019
	Three Months Ended			Nine Months Ended

	(In millions)
Publicly traded equity securities
Unrealized gain	$	10		$	23
Unrealized loss	(1		)	(4		)
Gain on sales	—			2
Equity investments in privately-held companies
Unrealized gain	2			11
Unrealized loss	(3		)	(5		)
Gain on sales	—			4
Total gain on equity investments, net	$	8		$	31