Cash, Cash Equivalents and Investments

Summary of Cash, Cash Equivalents and Investments

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



July 31, 2016	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,084	$	—	$	—	$	1,084
Cash equivalents:
Money market funds	1,380		—		—		1,380
U.S. Treasury and agency securities	40		—		—		40
Municipal securities	167		—		—		167
Commercial paper, corporate bonds and medium-term notes	157		—		—		157
Total Cash equivalents	1,744		—		—		1,744
Total Cash and Cash equivalents	$	2,828	$	—	$	—	$	2,828
Short-term and long-term investments:
U.S. Treasury and agency securities	$	253	$	—	$	—	$	253
Non-U.S. government securities*	20		—		—		20
Municipal securities	409		3		—		412
Commercial paper, corporate bonds and medium-term notes	306		1		—		307
Asset-backed and mortgage-backed securities	264		1		1		264
Total fixed income securities	1,252		5		1		1,256
Publicly traded equity securities	33		48		4		77
Equity investments in privately-held companies	65		—		—		65
Total short-term and long-term investments	$	1,350	$	53	$	5	$	1,398
Total Cash, Cash equivalents and Investments	$	4,178	$	53	$	5	$	4,226

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* Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany.



October 25, 2015	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,010	$	—	$	—	$	1,010
Cash equivalents:
Money market funds	3,272		—		—		3,272
Non-U.S. government securities	60		—		—		60
Municipal securities	73		—		—		73
Commercial paper, corporate bonds and medium-term notes	382		—		—		382
Total Cash equivalents	3,787		—		—		3,787
Total Cash and Cash equivalents	$	4,797	$	—	$	—	$	4,797
Short-term and long-term investments:
U.S. Treasury and agency securities	$	84	$	—	$	—	$	84
Non-U.S. government securities	9		—		—		9
Municipal securities	384		2		—		386
Commercial paper, corporate bonds and medium-term notes	250		—		—		250
Asset-backed and mortgage-backed securities	262		—		—		262
Total fixed income securities	989		2		—		991
Publicly traded equity securities	28		17		—		45
Equity investments in privately-held companies	78		—		—		78
Total short-term and long-term investments	$	1,095	$	19	$	—	$	1,114
Total Cash, Cash equivalents and Investments	$	5,892	$	19	$	—	$	5,911

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at July 31, 2016:



	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	422	$	422
Due after one through five years	566		570
No single maturity date**	362		406
	$	1,350	$	1,398

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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, 2016 and July 26, 2015, gross realized gains and losses on investments were not material.

At July 31, 2016 and October 25, 2015, gross unrealized losses related to Applied's investment portfolio were not material. 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 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. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at July 31, 2016 and July 26, 2015 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three and nine months ended July 31, 2016 or July 26, 2015. Impairment charges on equity investments in privately-held companies during the three and nine months ended July 31, 2016 and July 26, 2015 were not material. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations.

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