Accounts Receivable, Net

9 Months Ended

Jul. 26, 2020

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 sold $326 million and $690 million of account receivables during the three and nine months ended July 26, 2020, respectively. Applied sold $143 million and $1.3 billion of accounts receivable during the three and nine months July 28, 2019, respectively. Applied did not discount letters of credit issued by customers or discount promissory notes during the three and nine months ended July 26, 2020. Applied discounted letters of credit issued by customers of $40 million during the three months and nine months ended July 28, 2019. Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operations and were not material for all periods presented.

Accounts receivable are presented net of allowance for doubtful accounts of $30 million as of July 26, 2020 and October 27, 2019. Applied sells its products principally to manufacturers within the semiconductor and display industries. While Applied believes that its allowance for doubtful accounts is adequate and represents its best estimate as of July 26, 2020, it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates.