Borrowing Facilities and Long-Term Debt

9 Months Ended

Jul. 31, 2011

Borrowing Facilities and Long-Term Debt [Abstract]

Borrowing Facilities and Long Term-Debt

Note 10   Borrowing Facilities and Long-Term Debt

Applied has credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a four-year revolving credit agreement with a group of banks that is scheduled to expire in May 2015. This agreement provides for borrowings in United States dollars at interest rates keyed to one of the two rates selected by Applied for each advance and includes financial and other covenants with which Applied was in compliance at July 31, 2011. Remaining credit facilities in the amount of approximately $103 million are with Japanese banks. Applied’s ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen. No amounts were outstanding under any of these facilities at both July 31, 2011 and October 31, 2010.

Long-term debt outstanding as of July 31, 2011 was as follows:

	Principal			Stated			Effective			Interest	Interest
Due Date	Amount			Interest Rate			Interest Rate			Pay Date	Pay Date
	(In millions)
June 15, 2016	$	400			2.650	%		2.666	%	June 15	December 15
October 15, 2017		200			7.125	%		7.190	%	April 15	October 15
June 15, 2021		750			4.300	%		4.326	%	June 15	December 15
June 15, 2041		600			5.850	%		5.879	%	June 15	December 15
Other debt		1
		1,951
Total unamortized discount		(4	)
Current portion		—
Total long-term debt	$	1,947

Long-term debt outstanding as of October 31, 2010 was as follows:

	Principal			Stated			Effective			Interest		Interest
Due Date	Amount			Interest Rate			Interest Rate			Pay Date		Pay Date
	(In millions)
October 15, 2017	$	200			7.125	%		7.190	%		April 15		October 15
Other debt		5
		205
Total unamortized discount		—
Current portion		(1	)
Total long-term debt	$	204

In June 2011, Applied issued senior unsecured notes due 2016, 2021, and 2041 in the aggregate principal amount of $1.75 billion (collectively, the Notes) pursuant to the terms of an indenture and first supplemental indenture (collectively, the Indenture). The Indenture contains certain covenants with which Applied was in compliance at July 31, 2011. The Notes were sold in a public offering pursuant to a registration statement on Form S-3 and related preliminary prospectus supplement filed with the Securities and Exchange Commission (SEC) on June 1, 2011, and a related final prospectus supplement filed with the SEC on June 2, 2011. Applied intends to use the net proceeds of the Notes to fund a portion of the consideration payable in, and certain costs associated with, Applied’s proposed merger with Varian. In the event that the Merger Agreement is terminated or Applied does not consummate the merger on or before May 31, 2012, Applied will be required to redeem the Notes at a redemption price equal to 101% of the aggregate principal amount of the Notes plus any accrued and unpaid interest.