Cash, Cash Equivalents and Investments

9 Months Ended

Jul. 31, 2022

Cash and Cash Equivalents [Abstract]

Summary of Cash, Cash Equivalents and Investments

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


July 31, 2022	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,284	$	—	$	—	$	1,284
Cash equivalents:
Money market funds	1,381		—		—		1,381


Municipal securities	11		—		—		11
Commercial paper, corporate bonds and medium-term notes	280		—		—		280

Total Cash equivalents	1,672		—		—		1,672
Total Cash and Cash equivalents	$	2,956	$	—	$	—	$	2,956
Short-term and long-term investments:
Bank certificate of deposit	$	6	$	—	$	—	$	6
U.S. Treasury and agency securities	399		—		7		392
Non-U.S. government securities*	8		—		—		8
Municipal securities	368		1		8		361
Commercial paper, corporate bonds and medium-term notes	671		—		14		657
Asset-backed and mortgage-backed securities	442		—		13		429
Total fixed income securities	1,894		1		42		1,853
Publicly traded equity securities	87		65		16		136
Equity investments in privately-held companies	583		83		16		650
Total equity investments	670		148		32		786
Total short-term and long-term investments	$	2,564	$	149	$	74	$	2,639

Total Cash, Cash equivalents and Investments	$	5,520	$	149	$	74	$	5,595

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* Includes Canadian provincial government debt.


October 31, 2021	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,407	$	—	$	—	$	1,407
Cash equivalents:
Money market funds	3,556		—		—		3,556


Municipal securities	22		—		—		22
Commercial paper, corporate bonds and medium-term notes	10		—		—		10
Total Cash equivalents	3,588		—		—		3,588
Total Cash and Cash equivalents	$	4,995	$	—	$	—	$	4,995
Short-term and long-term investments:
U.S. Treasury and agency securities	$	314	$	—	$	—	$	314
Non-U.S. government securities*	5		—		—		5
Municipal securities	367		3		1		369
Commercial paper, corporate bonds and medium-term notes	587		2		2		587
Asset-backed and mortgage-backed securities	555		3		1		557
Total fixed income securities	1,828		8		4		1,832
Publicly traded equity securities	22		39		3		58
Equity investments in privately-held companies	561		82		14		629
Total equity investments	583		121		17		687
Total short-term and long-term investments	$	2,411	$	129	$	21	$	2,519

Total Cash, Cash equivalents and Investments	$	7,406	$	129	$	21	$	7,514

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*Includes Canadian provincial government debt.

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments as of July 31, 2022:


	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	571	$	568
Due after one through five years	880		854
Due after five years	2		2
No single maturity date**	1,111		1,215
Total	$	2,564	$	2,639

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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 31, 2022 and August 1, 2021 gross realized gains and losses on investments were not material.

As of July 31, 2022, and October 31, 2021, 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 from credit losses or other factors. Factors considered in determining whether an unrealized loss is considered to be a credit loss include: the significance of the decline in value compared to 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. Credit losses related to available-for-sale debt securities are recorded as an allowance for credit losses through interest and other income, net. Any additional changes in fair value that are not related to credit losses are recognized in accumulated other comprehensive income.

During the three and nine months ended July 31, 2022 and August 1, 2021, Applied did not recognize significant credit losses and the ending allowance for credit losses was not material on its debt investment portfolio. Impairment charges on equity investments in privately-held companies during the three and nine months ended July 31, 2022 and August 1, 2021 were not material. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations.

The components of gain (loss) on equity investments for the three and nine months ended July 31, 2022 and August 1, 2021 were as follows:


	Three Months Ended				Nine Months Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021

	(In millions)
Publicly traded equity securities
Unrealized gain	$	3	$	1	$	21	$	12
Unrealized loss	(23)		(4)		(33)		(6)
Realized gain on sales	3		—		5		—

Equity investments in privately-held companies
Unrealized gain	7		19		32		50
Unrealized loss	(5)		(3)		(5)		(11)
Realized gain on sales	—		6		2		9
Realized loss on sales or impairment	(2)		—		(6)		(7)
Total gain (loss) on equity investments, net	$	(17)	$	19	$	16	$	47