Cash, Cash Equivalents and Investments

9 Months Ended

Jul. 31, 2011

Cash, Cash Equivalents and Investments [Abstract]

Cash, Cash Equivalents and Investments

Note 3   Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

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

			Gross		Gross
			Unrealized		Unrealized		Estimated
July 31, 2011	Cost		Gains		Losses		Fair Value
	(In millions)
Cash	$	918	$	—	$	—	$	918
Cash equivalents:
Money market funds		3,895		—		—		3,895
U.S. commercial paper, corporate bonds and medium-term notes		190		—		—		190
Obligations of states and political subdivisions		15		—		—		15
Total Cash equivalents		4,100		—		—		4,100
Total Cash and Cash equivalents	$	5,018	$	—	$	—	$	5,018
Short-term and long-term investments:
U.S. Treasury and agency securities	$	483	$	3	$	—	$	486
Obligations of states and political subdivisions		452		3		—		455
U.S. commercial paper, corporate bonds and medium-term notes		390		5		—		395
Other debt securities*		363		3		1		365
Total fixed income securities		1,688		14		1		1,701
Publicly traded equity securities		8		21		—		29
Equity investments in privately-held companies		61		—		—		61
Total short-term and long-term investments	$	1,757	$	35	$	1	$	1,791
Total Cash, Cash equivalents and Investments	$	6,775	$	35	$	1	$	6,809

			Gross		Gross
			Unrealized		Unrealized		Estimated
October 31, 2010	Cost		Gains		Losses		Fair Value
	(In millions)
Cash	$	701	$	—	$	—	$	701
Cash equivalents:
Money market funds		1,139		—		—		1,139
Obligations of states and political subdivisions		18		—		—		18
Total Cash equivalents		1,157		—		—		1,157
Total Cash and Cash equivalents	$	1,858	$	—	$	—	$	1,858
Short-term and long-term investments:
U.S. Treasury and agency securities	$	665	$	8	$	—	$	673
Obligations of states and political subdivisions		500		5		—		505
U.S. commercial paper, corporate bonds and medium-term notes		502		7		—		509
Other debt securities*		261		3		1		263
Total fixed income securities		1,928		23		1		1,950
Publicly traded equity securities		9		16		—		25
Equity investments in privately-held companies		59		—		—		59
Total short-term and long-term investments	$	1,996	$	39	$	1	$	2,034
Total Cash, Cash equivalents and Investments	$	3,854	$	39	$	1	$	3,892

* Other debt securities consist primarily of investment grade asset-backed and mortgage-backed securities.

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 31, 2011:

			Estimated
	Cost		Fair Value
	(In millions)
Due in one year or less	$	704	$	707
Due after one through five years		618		626
Due after five years		3		3
No single maturity date		432		455
	$	1,757	$	1,791

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

Gross realized gains and losses on sales of investments during the three and nine months ended July 31, 2011 and August 1, 2010 were as follows:

	Three Months Ended				Nine Months Ended
	July 31,		August 1,		July 31,		August 1,
	2011		2010		2011		2010
	(In millions)
Gross realized gains	$	1	$	1	$	14	$	3
Gross realized losses	$	1	$	1	$	2	$	1

At July 31, 2011, Applied had a gross unrealized loss of $1 million related to its investment portfolio due to a decrease in the fair value of certain fixed income securities. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was 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. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied has determined that the gross unrealized losses on its marketable securities at July 31, 2011 are temporary in nature and therefore it did not recognize any impairment of its marketable securities for the three and nine months ended July 31, 2011. Applied determined that the gross unrealized losses on its marketable securities at August 1, 2010, were temporary in nature and therefore it did not recognize any impairment of its marketable securities for the three and nine months ended August 1, 2010.

The following table provides the fair market value of Applied’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired as of July 31, 2011.

	In Loss Position for
	Less Than 12 Months				Total
			Gross				Gross
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
	(In millions)
Other debt securities	$	71	$	1	$	71	$	1

Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income, net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income to results of operations.