þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-1655526 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3050 Bowers Avenue, | 95052-8039 |
P.O. Box 58039 Santa Clara, California (Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Common Stock, par value $.01 per share | AMAT | The NASDAQ Stock Market LLC |
Large accelerated filer þ | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
Emerging growth company ¨ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Page | ||
PART I. FINANCIAL INFORMATION | ||
Item 1: | ||
Item 2: | ||
Item 3: | ||
Item 4: | ||
PART II. OTHER INFORMATION | ||
Item 1: | ||
Item 1A: | ||
Item 2: | ||
Item 6: | ||
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 3,539 | $ | 4,579 | $ | 7,292 | $ | 8,784 | |||||||
Cost of products sold | 2,009 | 2,523 | 4,097 | 4,788 | |||||||||||
Gross profit | 1,530 | 2,056 | 3,195 | 3,996 | |||||||||||
Operating expenses: | |||||||||||||||
Research, development and engineering | 508 | 509 | 1,024 | 998 | |||||||||||
Marketing and selling | 133 | 130 | 264 | 256 | |||||||||||
General and administrative | 113 | 125 | 223 | 235 | |||||||||||
Total operating expenses | 754 | 764 | 1,511 | 1,489 | |||||||||||
Income from operations | 776 | 1,292 | 1,684 | 2,507 | |||||||||||
Interest expense | 60 | 56 | 120 | 115 | |||||||||||
Interest and other income, net | 43 | 25 | 83 | 52 | |||||||||||
Income before income taxes | 759 | 1,261 | 1,647 | 2,444 | |||||||||||
Provision for income taxes | 93 | 161 | 210 | 1,179 | |||||||||||
Net income | $ | 666 | $ | 1,100 | $ | 1,437 | $ | 1,265 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.71 | $ | 1.07 | $ | 1.51 | $ | 1.21 | |||||||
Diluted | $ | 0.70 | $ | 1.06 | $ | 1.50 | $ | 1.20 | |||||||
Weighted average number of shares: | |||||||||||||||
Basic | 942 | 1,029 | 950 | 1,042 | |||||||||||
Diluted | 948 | 1,040 | 957 | 1,056 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(Unaudited) | |||||||||||||||
Net income | $ | 666 | $ | 1,100 | $ | 1,437 | $ | 1,265 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Change in unrealized gain (losses) on available-for-sale investments | 8 | (7 | ) | 13 | (1 | ) | |||||||||
Change in unrealized net loss on derivative instruments | 9 | 8 | (8 | ) | (11 | ) | |||||||||
Change in defined and postretirement benefit plans | — | — | — | (2 | ) | ||||||||||
Change in cumulative translation adjustments | (1 | ) | — | (1 | ) | — | |||||||||
Other comprehensive income (loss), net of tax | 16 | 1 | 4 | (14 | ) | ||||||||||
Comprehensive income | $ | 682 | $ | 1,101 | $ | 1,441 | $ | 1,251 |
April 28, 2019 | October 28, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,116 | $ | 3,440 | |||
Short-term investments | 507 | 590 | |||||
Accounts receivable, net | 2,264 | 2,323 | |||||
Inventories | 3,677 | 3,721 | |||||
Other current assets | 498 | 530 | |||||
Total current assets | 10,062 | 10,604 | |||||
Long-term investments | 1,609 | 1,568 | |||||
Property, plant and equipment, net | 1,494 | 1,407 | |||||
Goodwill | 3,399 | 3,368 | |||||
Purchased technology and other intangible assets, net | 185 | 213 | |||||
Deferred income taxes and other assets | 2,026 | 473 | |||||
Total assets | $ | 18,775 | $ | 17,633 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 2,212 | $ | 2,721 | |||
Contract liabilities | 1,393 | 1,201 | |||||
Total current liabilities | 3,605 | 3,922 | |||||
Income taxes payable | 1,326 | 1,254 | |||||
Long-term debt | 5,311 | 5,309 | |||||
Other liabilities | 332 | 303 | |||||
Total liabilities | 10,574 | 10,788 | |||||
Stockholders’ equity: | |||||||
Common stock | 9 | 10 | |||||
Additional paid-in capital | 7,396 | 7,274 | |||||
Retained earnings | 23,502 | 20,880 | |||||
Treasury stock | (22,568 | ) | (21,194 | ) | |||
Accumulated other comprehensive loss | (138 | ) | (125 | ) | |||
Total stockholders’ equity | 8,201 | 6,845 | |||||
Total liabilities and stockholders’ equity | $ | 18,775 | $ | 17,633 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||
Three Months Ended April 28, 2019 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Balance as of January 27, 2019 | 949 | $ | 9 | $ | 7,265 | $ | 23,032 | 1,041 | $ | (21,943 | ) | $ | (154 | ) | $ | 8,209 | |||||||||||||
Net income | — | — | — | 666 | — | — | — | 666 | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | 16 | 16 | |||||||||||||||||||||
Dividends declared ($0.21 per common share) | — | — | — | (196 | ) | — | — | — | (196 | ) | |||||||||||||||||||
Share-based compensation | — | — | 65 | — | — | — | — | 65 | |||||||||||||||||||||
Issuance under stock plans | 3 | — | 66 | — | — | — | — | 66 | |||||||||||||||||||||
Common stock repurchases | (16 | ) | — | — | — | 16 | (625 | ) | — | (625 | ) | ||||||||||||||||||
Balance as of April 28, 2019 | 936 | $ | 9 | $ | 7,396 | $ | 23,502 | 1,057 | $ | (22,568 | ) | $ | (138 | ) | $ | 8,201 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||
Six Months Ended April 28, 2019 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Balance as of October 28, 2018 | 967 | $ | 10 | $ | 7,274 | $ | 20,880 | 1,019 | $ | (21,194 | ) | $ | (125 | ) | $ | 6,845 | |||||||||||||
Adoption of new accounting standards (a) | — | — | — | 1,570 | — | — | (17 | ) | 1,553 | ||||||||||||||||||||
Net income | — | — | — | 1,437 | — | — | — | 1,437 | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||
Dividends declared ($0.41 per common share) | — | — | — | (385 | ) | — | — | — | (385 | ) | |||||||||||||||||||
Share-based compensation | — | — | 130 | — | — | — | — | 130 | |||||||||||||||||||||
Issuance under stock plans | 7 | — | (8 | ) | — | — | — | — | (8 | ) | |||||||||||||||||||
Common stock repurchases | (38 | ) | (1 | ) | — | — | 38 | (1,374 | ) | — | (1,375 | ) | |||||||||||||||||
Balance as of April 28, 2019 | 936 | $ | 9 | $ | 7,396 | $ | 23,502 | 1,057 | $ | (22,568 | ) | $ | (138 | ) | $ | 8,201 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||
Three Months Ended April 29, 2018 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Balance as of January 28, 2018 | 1,050 | $ | 11 | $ | 6,980 | $ | 18,599 | 932 | $ | (16,694 | ) | $ | (79 | ) | $ | 8,817 | |||||||||||||
Net income | — | — | — | 1,100 | — | — | — | 1,100 | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||
Dividends declared ($0.20 per common share) | — | — | — | (201 | ) | — | — | — | (201 | ) | |||||||||||||||||||
Share-based compensation | — | — | 64 | — | — | — | — | 64 | |||||||||||||||||||||
Issuance under stock plans | 2 | — | 43 | — | — | — | — | 43 | |||||||||||||||||||||
Common stock repurchases | (44 | ) | (1 | ) | — | — | 44 | (2,499 | ) | — | (2,500 | ) | |||||||||||||||||
Balance as of April 29, 2018 | 1,008 | $ | 10 | $ | 7,087 | $ | 19,498 | 976 | $ | (19,193 | ) | $ | (78 | ) | $ | 7,324 |
Common Stock | Additional Paid-In Capital | Retained Earnings (b) | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||
Six Months Ended April 29, 2018 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Balance as of October 29, 2017 | 1,060 | $ | 11 | $ | 7,056 | $ | 18,539 | 917 | $ | (15,912 | ) | $ | (64 | ) | $ | 9,630 | |||||||||||||
Net income | — | — | — | 1,265 | — | — | — | 1,265 | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | (14 | ) | (14 | ) | |||||||||||||||||||
Dividends declared ($0.30 per common share) | — | — | — | (306 | ) | — | — | — | (306 | ) | |||||||||||||||||||
Share-based compensation | — | — | 129 | — | — | — | — | 129 | |||||||||||||||||||||
Issuance under stock plans | 7 | — | (98 | ) | — | — | — | — | (98 | ) | |||||||||||||||||||
Common stock repurchases | (59 | ) | (1 | ) | — | — | 59 | (3,281 | ) | — | (3,282 | ) | |||||||||||||||||
Balance as of April 29, 2018 | 1,008 | $ | 10 | $ | 7,087 | $ | 19,498 | 976 | $ | (19,193 | ) | $ | (78 | ) | $ | 7,324 |
Six Months Ended | |||||||
April 28, 2019 | April 29, 2018 | ||||||
(Unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 1,437 | $ | 1,265 | |||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 182 | 227 | |||||
Share-based compensation | 130 | 129 | |||||
Deferred income taxes | 49 | 72 | |||||
Other | (9 | ) | 11 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 60 | (326 | ) | ||||
Inventories | 44 | (540 | ) | ||||
Other current and non-current assets | (9 | ) | (34 | ) | |||
Accounts payable and accrued expenses | (409 | ) | 103 | ||||
Contract liabilities | 192 | 282 | |||||
Income taxes payable | (53 | ) | 860 | ||||
Other liabilities | 20 | 28 | |||||
Cash provided by operating activities | 1,634 | 2,077 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (251 | ) | (324 | ) | |||
Cash paid for acquisitions, net of cash acquired | (23 | ) | (5 | ) | |||
Proceeds from sales and maturities of investments | 906 | 2,432 | |||||
Purchases of investments | (827 | ) | (729 | ) | |||
Cash provided by (used in) investing activities | (195 | ) | 1,374 | ||||
Cash flows from financing activities: | |||||||
Proceeds from common stock issuances | 73 | 56 | |||||
Common stock repurchases | (1,375 | ) | (3,282 | ) | |||
Tax withholding payments for vested equity awards | (80 | ) | (154 | ) | |||
Payments of dividends to stockholders | (381 | ) | (211 | ) | |||
Cash used in financing activities | (1,763 | ) | (3,591 | ) | |||
Decrease in cash and cash equivalents | (324 | ) | (140 | ) | |||
Cash and cash equivalents — beginning of period | 3,440 | 5,010 | |||||
Cash and cash equivalents — end of period | $ | 3,116 | $ | 4,870 | |||
Supplemental cash flow information: | |||||||
Cash payments for income taxes | $ | 232 | $ | 217 | |||
Cash refunds from income taxes | $ | 18 | $ | 41 | |||
Cash payments for interest | $ | 110 | $ | 110 |
April 29, 2018 | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
As Previously Reported | Revenue Recognition Adjustment | Retirement Benefit Adjustment | As Adjusted | As Previously Reported | Revenue Recognition Adjustment | Retirement Benefit Adjustment | As Restated | ||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||||
Net sales | $ | 4,567 | $ | 12 | $ | — | $ | 4,579 | $ | 8,771 | $ | 13 | $ | — | $ | 8,784 | |||||||||
Cost of products sold | $ | 2,477 | $ | 46 | $ | — | $ | 2,523 | $ | 4,761 | $ | 26 | $ | 1 | $ | 4,788 | |||||||||
Gross profit | $ | 2,090 | $ | (34 | ) | $ | — | $ | 2,056 | $ | 4,010 | $ | (13 | ) | $ | (1 | ) | $ | 3,996 | ||||||
Research, development and engineering | $ | 509 | $ | — | $ | — | $ | 509 | $ | 997 | $ | — | $ | 1 | $ | 998 | |||||||||
General and administrative | $ | 124 | $ | — | $ | 1 | $ | 125 | $ | 234 | $ | — | $ | 1 | 235 | ||||||||||
Interest and other income, net | $ | 24 | $ | — | $ | 1 | $ | 25 | $ | 49 | $ | — | $ | 3 | 52 | ||||||||||
Income before income taxes | $ | 1,295 | $ | (34 | ) | $ | — | $ | 1,261 | $ | 2,457 | $ | (13 | ) | $ | — | $ | 2,444 | |||||||
Provision for income taxes | $ | 166 | $ | (5 | ) | $ | — | $ | 161 | $ | 1,193 | $ | (14 | ) | $ | — | $ | 1,179 | |||||||
Net income | $ | 1,129 | $ | (29 | ) | $ | — | $ | 1,100 | $ | 1,264 | $ | 1 | $ | — | $ | 1,265 | ||||||||
Earnings per share: basic | $ | 1.10 | $ | (0.03 | ) | $ | — | $ | 1.07 | $ | 1.21 | $ | — | $ | — | $ | 1.21 | ||||||||
Earnings per share: diluted | $ | 1.09 | $ | (0.03 | ) | $ | — | $ | 1.06 | $ | 1.20 | $ | — | $ | — | $ | 1.20 |
October 28, 2018 | |||||||||
As Previously Reported | Adjustment | As Adjusted | |||||||
(In millions) | |||||||||
Accounts receivable, net | $ | 2,565 | $ | (242 | ) | $ | 2,323 | ||
Inventories | $ | 3,722 | $ | (1 | ) | $ | 3,721 | ||
Other current assets | $ | 430 | $ | 100 | $ | 530 | |||
Deferred income taxes and other assets | $ | 470 | $ | 3 | $ | 473 | |||
Customer deposits and deferred revenue | $ | 1,347 | $ | (1,347 | ) | $ | — | ||
Contract liabilities | $ | — | $ | 1,201 | $ | 1,201 | |||
Retained earnings | $ | 20,874 | $ | 6 | $ | 20,880 |
April 29, 2018 | |||||||||
Six Months Ended | |||||||||
As Previously Reported | Adjustment | As Adjusted | |||||||
(In millions) | |||||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 1,264 | $ | 1 | $ | 1,265 | |||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||||||
Deferred income taxes | $ | 86 | $ | (14 | ) | $ | 72 | ||
Changes in operating assets and liabilities: | |||||||||
Inventories | $ | (564 | ) | $ | 24 | $ | (540 | ) | |
Accounts payable and accrued expenses | $ | 100 | $ | 3 | $ | 103 | |||
Contract liabilities | $ | 296 | $ | (14 | ) | $ | 282 |
Note 2 | Earnings Per Share |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 666 | $ | 1,100 | $ | 1,437 | $ | 1,265 | |||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding | 942 | 1,029 | 950 | 1,042 | |||||||||||
Effect of weighted dilutive stock options, restricted stock units and employee stock purchase plan shares | 6 | 11 | 7 | 14 | |||||||||||
Denominator for diluted earnings per share | 948 | 1,040 | 957 | 1,056 | |||||||||||
Basic earnings per share | $ | 0.71 | $ | 1.07 | $ | 1.51 | $ | 1.21 | |||||||
Diluted earnings per share | $ | 0.70 | $ | 1.06 | $ | 1.50 | $ | 1.20 | |||||||
Potentially weighted dilutive securities | 3 | — | 3 | — |
Note 3 | Cash, Cash Equivalents and Investments |
April 28, 2019 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
(In millions) | |||||||||||||||
Cash | $ | 1,185 | $ | — | $ | — | $ | 1,185 | |||||||
Cash equivalents: | |||||||||||||||
Money market funds | 1,671 | — | — | 1,671 | |||||||||||
Municipal securities | 1 | — | — | 1 | |||||||||||
Commercial paper, corporate bonds and medium-term notes | 253 | — | — | 253 | |||||||||||
Asset-backed and mortgage-backed securities | 6 | — | — | 6 | |||||||||||
Total Cash equivalents | 1,931 | — | — | 1,931 | |||||||||||
Total Cash and Cash equivalents | $ | 3,116 | $ | — | $ | — | $ | 3,116 | |||||||
Short-term and long-term investments: | |||||||||||||||
U.S. Treasury and agency securities | $ | 367 | $ | 1 | $ | — | $ | 368 | |||||||
Non-U.S. government securities* | 9 | — | — | 9 | |||||||||||
Municipal securities | 410 | 2 | 1 | 411 | |||||||||||
Commercial paper, corporate bonds and medium-term notes | 588 | 3 | 1 | 590 | |||||||||||
Asset-backed and mortgage-backed securities | 601 | 1 | 1 | 601 | |||||||||||
Total fixed income securities | 1,975 | 7 | 3 | 1,979 | |||||||||||
Publicly traded equity securities | 10 | 27 | 3 | 34 | |||||||||||
Equity investments in privately-held companies | 97 | 9 | 3 | 103 | |||||||||||
Total equity investments | 107 | 36 | 6 | 137 | |||||||||||
Total short-term and long-term investments | $ | 2,082 | $ | 43 | $ | 9 | $ | 2,116 | |||||||
Total Cash, Cash equivalents and Investments | $ | 5,198 | $ | 43 | $ | 9 | $ | 5,232 |
October 28, 2018 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
(In millions) | |||||||||||||||
Cash | $ | 1,489 | $ | — | $ | — | $ | 1,489 | |||||||
Cash equivalents: | |||||||||||||||
Money market funds | 1,599 | — | — | 1,599 | |||||||||||
Commercial paper, corporate bonds and medium-term notes | 352 | — | — | 352 | |||||||||||
Total Cash equivalents | 1,951 | — | — | 1,951 | |||||||||||
Total Cash and Cash equivalents | $ | 3,440 | $ | — | $ | — | $ | 3,440 | |||||||
Short-term and long-term investments: | |||||||||||||||
U.S. Treasury and agency securities | $ | 335 | $ | — | $ | 2 | $ | 333 | |||||||
Non-U.S. government securities* | 10 | — | — | 10 | |||||||||||
Municipal securities | 399 | — | 4 | 395 | |||||||||||
Commercial paper, corporate bonds and medium-term notes | 705 | — | 3 | 702 | |||||||||||
Asset-backed and mortgage-backed securities | 595 | — | 4 | 591 | |||||||||||
Total fixed income securities | 2,044 | — | 13 | 2,031 | |||||||||||
Publicly traded equity securities | 17 | 25 | 4 | 38 | |||||||||||
Equity investments in privately-held companies | 89 | — | — | 89 | |||||||||||
Total equity investments | 106 | 25 | 4 | 127 | |||||||||||
Total short-term and long-term investments | $ | 2,150 | $ | 25 | $ | 17 | $ | 2,158 | |||||||
Total Cash, Cash equivalents and Investments | $ | 5,590 | $ | 25 | $ | 17 | $ | 5,598 |
Cost | Estimated Fair Value | ||||||
(In millions) | |||||||
Due in one year or less | $ | 414 | $ | 414 | |||
Due after one through five years | 960 | 964 | |||||
No single maturity date** | 708 | 738 | |||||
Total | $ | 2,082 | $ | 2,116 |
April 28, 2019 | |||||||
Three Months Ended | Six Months Ended | ||||||
(In millions) | |||||||
Publicly traded equity securities | |||||||
Unrealized gain | $ | 7 | $ | 13 | |||
Unrealized loss | (1 | ) | $ | (3 | ) | ||
Gain on sales | 1 | $ | 2 | ||||
Equity investments in privately-held companies | |||||||
Unrealized gain | 2 | 9 | |||||
Unrealized loss | (2 | ) | (3 | ) | |||
Gain on sales | 3 | 4 | |||||
Total gain on equity investments, net | $ | 10 | $ | 22 |
Note 4 | Fair Value Measurements |
• | Level 1 — Quoted prices in active markets for identical assets or liabilities; |
• | Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and |
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
April 28, 2019 | October 28, 2018 | ||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Available-for-sale debt security investments | |||||||||||||||||||||||
Money market funds | $ | 1,671 | $ | — | $ | 1,671 | $ | 1,599 | $ | — | $ | 1,599 | |||||||||||
U.S. Treasury and agency securities | 336 | 32 | 368 | 297 | 36 | 333 | |||||||||||||||||
Non-U.S. government securities | — | 9 | 9 | — | 10 | 10 | |||||||||||||||||
Municipal securities | — | 412 | 412 | — | 395 | 395 | |||||||||||||||||
Commercial paper, corporate bonds and medium-term notes | — | 843 | 843 | — | 1,054 | 1,054 | |||||||||||||||||
Asset-backed and mortgage-backed securities | — | 607 | 607 | — | 591 | 591 | |||||||||||||||||
Total available-for-sale debt security investments | $ | 2,007 | $ | 1,903 | $ | 3,910 | $ | 1,896 | $ | 2,086 | $ | 3,982 | |||||||||||
Equity investments with readily determinable values | |||||||||||||||||||||||
Publicly traded equity securities | $ | 34 | $ | — | $ | 34 | $ | 38 | $ | — | $ | 38 | |||||||||||
Total equity investments with readily determinable values | $ | 34 | $ | — | $ | 34 | $ | 38 | $ | — | $ | 38 | |||||||||||
Total | $ | 2,041 | $ | 1,903 | $ | 3,944 | $ | 1,934 | $ | 2,086 | $ | 4,020 |
Note 5 | Derivative Instruments and Hedging Activities |
Three Months Ended | |||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | ||||||||||||||||||||||||
Effective Portion | Ineffective Portion and Amount Excluded from Effectiveness Testing | Effective Portion | Ineffective Portion and Amount Excluded from Effectiveness Testing | ||||||||||||||||||||||
Location of Gain or (Loss) | Gain or (Loss) | Gain or (Loss) Reclassified from AOCI into Income | Gain or (Loss) Recognized in Income | Gain or (Loss) | Gain or (Loss) Reclassified from AOCI into Income | Gain or (Loss) Recognized in Income | |||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | |||||||||||||||||||||||||
Foreign exchange contracts | AOCI | $ | 11 | $ | — | $ | — | $ | 2 | $ | — | $ | — | ||||||||||||
Foreign exchange contracts | Cost of products sold | — | (2 | ) | 4 | — | (12 | ) | 4 | ||||||||||||||||
Foreign exchange contracts | General and administrative | — | 2 | (2 | ) | — | 5 | (1 | ) | ||||||||||||||||
Interest rate contracts | Interest expense | — | (2 | ) | — | — | (1 | ) | — | ||||||||||||||||
Total | $ | 11 | $ | (2 | ) | $ | 2 | $ | 2 | $ | (8 | ) | $ | 3 |
Six Months Ended | |||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | ||||||||||||||||||||||||
Effective Portion | Ineffective Portion and Amount Excluded from Effectiveness Testing | Effective Portion | Ineffective Portion and Amount Excluded from Effectiveness Testing | ||||||||||||||||||||||
Location of Gain or (Loss) | Gain or (Loss) | Gain or (Loss) Reclassified from AOCI into Income | Gain or (Loss) Recognized in Income | Gain or (Loss) | Gain or (Loss) Reclassified from AOCI into Income | Gain or (Loss) Recognized in Income | |||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | |||||||||||||||||||||||||
Foreign exchange contracts | AOCI | $ | (5 | ) | $ | — | $ | — | $ | (16 | ) | $ | — | $ | — | ||||||||||
Foreign exchange contracts | Cost of products sold | — | 10 | 9 | — | (4 | ) | 6 | |||||||||||||||||
Foreign exchange contracts | General and administrative | — | (3 | ) | (3 | ) | — | 4 | (3 | ) | |||||||||||||||
Interest rate contracts | Interest expense | — | (2 | ) | — | — | (2 | ) | — | ||||||||||||||||
Total | $ | (5 | ) | $ | 5 | $ | 6 | $ | (16 | ) | $ | (2 | ) | $ | 3 |
Amount of Gain or (Loss) Recognized in Income | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
Location of Gain or (Loss) Recognized in Income | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | |||||||||||||
(In millions) | |||||||||||||||||
Derivatives Not Designated as Hedging Instruments | |||||||||||||||||
Foreign exchange contracts | General and administrative | $ | 6 | $ | (2 | ) | $ | (4 | ) | $ | (10 | ) | |||||
Total | $ | 6 | $ | (2 | ) | $ | (4 | ) | $ | (10 | ) |
Note 6 | Accounts Receivable, Net |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Contract assets | $ | 111 | $ | 99 | |||
Contract liabilities | $ | 1,393 | $ | 1,201 |
Note 8 | Balance Sheet Detail |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Inventories | |||||||
Customer service spares | $ | 1,195 | $ | 989 | |||
Raw materials | 918 | 1,020 | |||||
Work-in-process | 549 | 505 | |||||
Finished goods | 1,015 | 1,207 | |||||
$ | 3,677 | $ | 3,721 |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Other Current Assets | |||||||
Prepaid income taxes and income taxes receivable | $ | 65 | $ | 40 | |||
Prepaid expenses and other | 433 | 490 | |||||
$ | 498 | $ | 530 |
Useful Life | April 28, 2019 | October 28, 2018 | |||||||
(In years) | (In millions) | ||||||||
Property, Plant and Equipment, Net | |||||||||
Land and improvements | $ | 245 | $ | 245 | |||||
Buildings and improvements | 3-30 | 1,585 | 1,448 | ||||||
Demonstration and manufacturing equipment | 3-5 | 1,404 | 1,282 | ||||||
Furniture, fixtures and other equipment | 3-5 | 661 | 634 | ||||||
Construction in progress | 133 | 203 | |||||||
Gross property, plant and equipment | 4,028 | 3,812 | |||||||
Accumulated depreciation | (2,534 | ) | (2,405 | ) | |||||
$ | 1,494 | $ | 1,407 |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Deferred Income Taxes and Other Assets | |||||||
Non-current deferred income taxes and income taxes receivable | $ | 1,843 | $ | 319 | |||
Other assets | 183 | 154 | |||||
$ | 2,026 | $ | 473 |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Accounts Payable and Accrued Expenses | |||||||
Accounts payable | $ | 903 | $ | 996 | |||
Compensation and employee benefits | 451 | 639 | |||||
Warranty | 195 | 208 | |||||
Dividends payable | 197 | 193 | |||||
Income taxes payable | 12 | 136 | |||||
Other accrued taxes | 61 | 112 | |||||
Interest payable | 38 | 38 | |||||
Other | 355 | 399 | |||||
$ | 2,212 | $ | 2,721 |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Other Liabilities | |||||||
Defined and postretirement benefit plans | $ | 175 | $ | 177 | |||
Other | 157 | 126 | |||||
$ | 332 | $ | 303 |
Note 9 | Goodwill, Purchased Technology and Other Intangible Assets |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Semiconductor Systems | $ | 2,182 | $ | 2,151 | |||
Applied Global Services | 1,018 | 1,018 | |||||
Display and Adjacent Markets | 199 | 199 | |||||
Carrying amount | $ | 3,399 | $ | 3,368 |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Purchased technology, net | $ | 90 | $ | 109 | |||
Intangible assets - finite-lived, net | 95 | 104 | |||||
Total | $ | 185 | $ | 213 |
April 28, 2019 | October 28, 2018 | ||||||||||||||||||||||
Purchased Technology | Other Intangible Assets | Total | Purchased Technology | Other Intangible Assets | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Gross carrying amount: | |||||||||||||||||||||||
Semiconductor Systems | $ | 1,449 | $ | 252 | $ | 1,701 | $ | 1,449 | $ | 252 | $ | 1,701 | |||||||||||
Applied Global Services | 33 | 44 | 77 | 33 | 44 | 77 | |||||||||||||||||
Display and Adjacent Markets | 163 | 38 | 201 | 163 | 38 | 201 | |||||||||||||||||
Corporate and Other | — | 9 | 9 | — | 9 | 9 | |||||||||||||||||
Gross carrying amount | $ | 1,645 | $ | 343 | $ | 1,988 | $ | 1,645 | $ | 343 | $ | 1,988 | |||||||||||
Accumulated amortization: | |||||||||||||||||||||||
Semiconductor Systems | $ | (1,387 | ) | $ | (159 | ) | $ | (1,546 | ) | $ | (1,375 | ) | $ | (150 | ) | $ | (1,525 | ) | |||||
Applied Global Services | (30 | ) | (44 | ) | (74 | ) | (29 | ) | (44 | ) | (73 | ) | |||||||||||
Display and Adjacent Markets | (138 | ) | (36 | ) | (174 | ) | (132 | ) | (36 | ) | (168 | ) | |||||||||||
Corporate and Other | — | (9 | ) | (9 | ) | — | (9 | ) | (9 | ) | |||||||||||||
Accumulated amortization | $ | (1,555 | ) | $ | (248 | ) | $ | (1,803 | ) | $ | (1,536 | ) | $ | (239 | ) | $ | (1,775 | ) | |||||
Carrying amount | $ | 90 | $ | 95 | $ | 185 | $ | 109 | $ | 104 | $ | 213 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Semiconductor Systems | $ | 10 | $ | 45 | $ | 21 | $ | 91 | |||||||
Applied Global Services | 1 | 1 | 1 | 1 | |||||||||||
Display and Adjacent Markets | 3 | 3 | 6 | 7 | |||||||||||
Total | $ | 14 | $ | 49 | $ | 28 | $ | 99 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Cost of products sold | $ | 10 | $ | 45 | $ | 19 | $ | 90 | |||||||
Marketing and selling | 4 | 4 | 9 | 9 | |||||||||||
Total | $ | 14 | $ | 49 | $ | 28 | $ | 99 |
Amortization Expense | |||
(In millions) | |||
2019 (remaining 6 months) | $ | 29 | |
2020 | 52 | ||
2021 | 39 | ||
2022 | 24 | ||
2023 | 11 | ||
Thereafter | 30 | ||
Total | $ | 185 |
Note 10 | Borrowing Facilities and Debt |
Principal Amount | |||||||||||
April 28, 2019 | October 28, 2018 | Effective Interest Rate | Interest Pay Dates | ||||||||
(In millions) | |||||||||||
Long-term debt: | |||||||||||
2.625% Senior Notes Due 2020 | $ | 600 | $ | 600 | 2.640% | April 1, October 1 | |||||
4.300% Senior Notes Due 2021 | 750 | 750 | 4.326% | June 15, December 15 | |||||||
3.900% Senior Notes Due 2025 | 700 | 700 | 3.944% | April 1, October 1 | |||||||
3.300% Senior Notes Due 2027 | 1,200 | 1,200 | 3.342% | April 1, October 1 | |||||||
5.100% Senior Notes Due 2035 | 500 | 500 | 5.127% | April 1, October 1 | |||||||
5.850% Senior Notes Due 2041 | 600 | 600 | 5.879% | June 15, December 15 | |||||||
4.350% Senior Notes Due 2047 | 1,000 | 1,000 | 4.361% | April 1, October 1 | |||||||
5,350 | 5,350 | ||||||||||
Total unamortized discount | (10 | ) | (11 | ) | |||||||
Total unamortized debt issuance costs | (29 | ) | (30 | ) | |||||||
Total long-term debt | $ | 5,311 | $ | 5,309 |
Note 11 | Stockholders’ Equity, Comprehensive Income and Share-Based Compensation |
Unrealized Gain on Investments, Net | Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | Defined and Postretirement Benefit Plans | Cumulative Translation Adjustments | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Balance as of October 28, 2018 | $ | 7 | $ | (9 | ) | $ | (137 | ) | $ | 14 | $ | (125 | ) | ||||||
Adoption of new accounting standards (a) | (17 | ) | — | — | — | (17 | ) | ||||||||||||
Other comprehensive income (loss) before reclassifications | 13 | (4 | ) | — | (1 | ) | 8 | ||||||||||||
Amounts reclassified out of AOCI | — | (4 | ) | — | — | (4 | ) | ||||||||||||
Other comprehensive income (loss), net of tax | 13 | (8 | ) | — | (1 | ) | 4 | ||||||||||||
Balance as of April 28, 2019 | $ | 3 | $ | (17 | ) | $ | (137 | ) | $ | 13 | $ | (138 | ) |
Unrealized Gain (Loss) on Investments, Net | Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | Defined and Postretirement Benefit Plans | Cumulative Translation Adjustments | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Balance as of October 29, 2017 | $ | 53 | $ | (11 | ) | $ | (120 | ) | $ | 14 | $ | (64 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (3 | ) | (13 | ) | — | — | (16 | ) | |||||||||||
Amounts reclassified out of AOCI | 2 | 2 | (2 | ) | — | 2 | |||||||||||||
Other comprehensive income (loss), net of tax | (1 | ) | (11 | ) | (2 | ) | — | (14 | ) | ||||||||||
Balance as of April 29, 2018 | $ | 52 | $ | (22 | ) | $ | (122 | ) | $ | 14 | $ | (78 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(in millions, except per share amount) | |||||||||||||||
Shares of common stock repurchased | 16 | 44 | 38 | 59 | |||||||||||
Cost of stock repurchased | $ | 625 | $ | 2,500 | $ | 1,375 | $ | 3,282 | |||||||
Average price paid per share | $ | 39.91 | $ | 56.35 | $ | 36.48 | $ | 55.62 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Cost of products sold | $ | 22 | $ | 21 | $ | 44 | $ | 43 | |||||||
Research, development and engineering | 25 | 24 | 49 | 48 | |||||||||||
Marketing and selling | 7 | 8 | 15 | 16 | |||||||||||
General and administrative | 11 | 11 | 22 | 22 | |||||||||||
Total share-based compensation | $ | 65 | $ | 64 | $ | 130 | $ | 129 |
Shares | Weighted Average Grant Date Fair Value | |||||
(In millions, except per share amounts) | ||||||
Outstanding as of October 28, 2018 | 18 | $ | 32.64 | |||
Granted | 7 | $ | 35.42 | |||
Vested | (7 | ) | $ | 28.09 | ||
Canceled | — | $ | 33.52 | |||
Outstanding as of April 28, 2019 | 18 | $ | 35.47 |
Three and Six Months Ended | |||
April 28, 2019 | April 29, 2018 | ||
ESPP: | |||
Dividend yield | 2.18% | 1.40% | |
Expected volatility | 37.1% | 35.5% | |
Risk-free interest rate | 2.51% | 1.83% | |
Expected life (in years) | 0.5 | 0.5 | |
Weighted average estimated fair value | $9.78 | $14.26 |
Note 13 | Warranty, Guarantees and Contingencies |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Beginning balance | $ | 200 | $ | 210 | $ | 208 | $ | 206 | |||||||
Warranties issued | 34 | 56 | 73 | 101 | |||||||||||
Change in reserves related to preexisting warranty | 5 | (3 | ) | 6 | (1 | ) | |||||||||
Consumption of reserves | (44 | ) | (36 | ) | (92 | ) | (79 | ) | |||||||
Ending balance | $ | 195 | $ | 227 | $ | 195 | $ | 227 |
Note 14 | Industry Segment Operations |
Three Months Ended | Six Months Ended | ||||||||||||||
Net Sales | Operating Income (Loss) | Net Sales | Operating Income (Loss) | ||||||||||||
(In millions) | |||||||||||||||
April 28, 2019: | |||||||||||||||
Semiconductor Systems | $ | 2,184 | $ | 579 | $ | 4,452 | $ | 1,210 | |||||||
Applied Global Services | 984 | 283 | 1,946 | 568 | |||||||||||
Display and Adjacent Markets | 348 | 42 | 855 | 157 | |||||||||||
Corporate and Other | 23 | (128 | ) | 39 | (251 | ) | |||||||||
Total | $ | 3,539 | $ | 776 | $ | 7,292 | $ | 1,684 | |||||||
April 29, 2018: | |||||||||||||||
Semiconductor Systems | $ | 2,901 | $ | 992 | $ | 5,753 | $ | 2,016 | |||||||
Applied Global Services | 945 | 279 | 1,826 | 534 | |||||||||||
Display and Adjacent Markets | 719 | 210 | 1,162 | 300 | |||||||||||
Corporate and Other | 14 | (189 | ) | 43 | (343 | ) | |||||||||
Total | $ | 4,579 | $ | 1,292 | $ | 8,784 | $ | 2,507 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||
China | $ | 993 | 28 | % | $ | 1,300 | 28 | % | $ | 1,961 | 27 | % | $ | 2,264 | 26 | % | |||||||||||
Korea | 441 | 13 | % | 1,232 | 27 | % | 1,013 | 14 | % | 2,435 | 28 | % | |||||||||||||||
Taiwan | 794 | 22 | % | 666 | 15 | % | 1,450 | 20 | % | 1,407 | 16 | % | |||||||||||||||
Japan | 520 | 15 | % | 502 | 11 | % | 1,171 | 16 | % | 984 | 11 | % | |||||||||||||||
Southeast Asia | 119 | 3 | % | 242 | 5 | % | 279 | 4 | % | 435 | 5 | % | |||||||||||||||
Asia Pacific | 2,867 | 81 | % | 3,942 | 86 | % | 5,874 | 81 | % | 7,525 | 86 | % | |||||||||||||||
United States | 457 | 13 | % | 345 | 8 | % | 907 | 12 | % | 715 | 8 | % | |||||||||||||||
Europe | 215 | 6 | % | 292 | 6 | % | 511 | 7 | % | 544 | 6 | % | |||||||||||||||
Total | $ | 3,539 | 100 | % | $ | 4,579 | 100 | % | $ | 7,292 | 100 | % | $ | 8,784 | 100 | % |
Three Months Ended | Six Months Ended | ||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||
Foundry, logic and other | 58 | % | 30 | % | 51 | % | 33 | % | |||
Dynamic random-access memory (DRAM) | 18 | % | 32 | % | 19 | % | 29 | % | |||
Flash memory | 24 | % | 38 | % | 30 | % | 38 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
(In millions) | |||||||||||||||
Unallocated net sales | $ | 23 | $ | 14 | $ | 39 | $ | 43 | |||||||
Unallocated cost of products sold and expenses | (86 | ) | (139 | ) | (160 | ) | (257 | ) | |||||||
Share-based compensation | (65 | ) | (64 | ) | (130 | ) | (129 | ) | |||||||
Total | $ | (128 | ) | $ | (189 | ) | $ | (251 | ) | $ | (343 | ) |
Percentage of Net Sales | ||
Taiwan Semiconductor Manufacturing Company Limited | 15 | % |
Intel Corporation | 12 | % |
Toshiba | 11 | % |
SK Hynix Inc. | 11 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions, except per share amounts and percentages) | |||||||||||||||||||||||
Net sales | $ | 3,539 | $ | 4,579 | $ | (1,040 | ) | $ | 7,292 | $ | 8,784 | $ | (1,492 | ) | |||||||||
Gross margin | 43.2 | % | 44.9 | % | (1.7) points | 43.8 | % | 45.5 | % | (1.7) points | |||||||||||||
Operating income | $ | 776 | $ | 1,292 | $ | (516 | ) | $ | 1,684 | $ | 2,507 | $ | (823 | ) | |||||||||
Operating margin | 21.9 | % | 28.2 | % | (6.3) points | 23.1 | % | 28.5 | % | (5.4) points | |||||||||||||
Net income | $ | 666 | $ | 1,100 | $ | (434 | ) | $ | 1,437 | $ | 1,265 | $ | 172 | ||||||||||
Earnings per diluted share | $ | 0.70 | $ | 1.06 | $ | (0.36 | ) | $ | 1.50 | $ | 1.20 | $ | 0.30 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||||||
Semiconductor Systems | $ | 2,184 | 62 | % | $ | 2,901 | 63 | % | (25 | )% | $ | 4,452 | 61 | % | $ | 5,753 | 65 | % | (23 | )% | |||||||||||||
Applied Global Services | 984 | 28 | % | 945 | 21 | % | 4 | % | 1,946 | 27 | % | 1,826 | 21 | % | 7 | % | |||||||||||||||||
Display and Adjacent Markets | 348 | 10 | % | 719 | 16 | % | (52 | )% | 855 | 12 | % | 1,162 | 13 | % | (26 | )% | |||||||||||||||||
Corporate and Other | 23 | — | % | 14 | — | % | 64 | % | 39 | — | % | 43 | 1 | % | (9 | )% | |||||||||||||||||
Total | $ | 3,539 | 100 | % | $ | 4,579 | 100 | % | (23 | )% | $ | 7,292 | 100 | % | $ | 8,784 | 100 | % | (17 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||||||
China | $ | 993 | 28 | % | $ | 1,300 | 28 | % | (24 | )% | $ | 1,961 | 27 | % | $ | 2,264 | 26 | % | (13 | )% | |||||||||||||
Korea | 441 | 13 | % | 1,232 | 27 | % | (64 | )% | 1,013 | 14 | % | 2,435 | 28 | % | (58 | )% | |||||||||||||||||
Taiwan | 794 | 22 | % | 666 | 15 | % | 19 | % | 1,450 | 20 | % | 1,407 | 16 | % | 3 | % | |||||||||||||||||
Japan | 520 | 15 | % | 502 | 11 | % | 4 | % | 1,171 | 16 | % | 984 | 11 | % | 19 | % | |||||||||||||||||
Southeast Asia | 119 | 3 | % | 242 | 5 | % | (51 | )% | 279 | 4 | % | 435 | 5 | % | (36 | )% | |||||||||||||||||
Asia Pacific | 2,867 | 81 | % | 3,942 | 86 | % | (27 | )% | 5,874 | 81 | % | 7,525 | 86 | % | (22 | )% | |||||||||||||||||
United States | 457 | 13 | % | 345 | 8 | % | 32 | % | 907 | 12 | % | 715 | 8 | % | 27 | % | |||||||||||||||||
Europe | 215 | 6 | % | 292 | 6 | % | (26 | )% | 511 | 7 | % | 544 | 6 | % | (6 | )% | |||||||||||||||||
Total | $ | 3,539 | 100 | % | $ | 4,579 | 100 | % | (23 | )% | $ | 7,292 | 100 | % | $ | 8,784 | 100 | % | (17 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||
Gross margin | 43.2 | % | 44.9 | % | (1.7) points | 43.8 | % | 45.5 | % | (1.7) points |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Research, development and engineering | $ | 508 | $ | 509 | $ | (1 | ) | $ | 1,024 | $ | 998 | $ | 26 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Marketing and selling | $ | 133 | $ | 130 | $ | 3 | $ | 264 | $ | 256 | $ | 8 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
General and administrative | $ | 113 | $ | 125 | $ | (12 | ) | $ | 223 | $ | 235 | $ | (12 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Interest expense | $ | 60 | $ | 56 | $ | 4 | $ | 120 | $ | 115 | $ | 5 | |||||||||||
Interest and other income, net | $ | 43 | $ | 25 | $ | 18 | $ | 83 | $ | 52 | $ | 31 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||
Provision for income taxes | $ | 93 | $ | 161 | $ | (68 | ) | $ | 210 | $ | 1,179 | $ | (969 | ) | |||||||||
Effective tax rate | 12.3 | % | 12.8 | % | (0.5) points | 12.8 | % | 48.2 | % | (35.4) points |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||
(In millions, except percentages and ratios) | |||||||||||||||||||||||||||||
Net sales | $ | 2,184 | $ | 2,901 | $ | (717 | ) | (25 | )% | $ | 4,452 | $ | 5,753 | $ | (1,301 | ) | (23 | )% | |||||||||||
Operating income | $ | 579 | $ | 992 | $ | (413 | ) | (42 | )% | $ | 1,210 | $ | 2,016 | $ | (806 | ) | (40 | )% | |||||||||||
Operating margin | 26.5 | % | 34.2 | % | (7.7) points | 27.2 | % | 35.0 | % | (7.8) points |
Three Months Ended | Six Months Ended | ||||||||||
April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||
Foundry, logic and other | 58 | % | 30 | % | 51 | % | 33 | % | |||
Dynamic random-access memory (DRAM) | 18 | % | 32 | % | 19 | % | 29 | % | |||
Flash memory | 24 | % | 38 | % | 30 | % | 38 | % | |||
100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||
Korea | $ | 319 | 15% | $ | 1,038 | 36% | (69 | )% | $ | 753 | 17% | $ | 2,078 | 36% | (64 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||
(In millions, except percentages and ratios) | |||||||||||||||||||||||||||||
Net sales | $ | 984 | $ | 945 | $ | 39 | 4 | % | $ | 1,946 | $ | 1,826 | $ | 120 | 7 | % | |||||||||||||
Operating income | $ | 283 | $ | 279 | $ | 4 | 1 | % | $ | 568 | $ | 534 | $ | 34 | 6 | % | |||||||||||||
Operating margin | 28.8 | % | 29.5 | % | (0.7) points | 29.2 | % | 29.2 | % | —% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||||
(In millions, except percentages and ratios) | |||||||||||||||||||||||||||||
Net sales | $ | 348 | $ | 719 | $ | (371 | ) | (52 | )% | $ | 855 | $ | 1,162 | $ | (307 | ) | (26 | )% | |||||||||||
Operating income | $ | 42 | $ | 210 | $ | (168 | ) | (80 | )% | $ | 157 | $ | 300 | $ | (143 | ) | (48 | )% | |||||||||||
Operating margin | 12.1 | % | 29.2 | % | (17.1) points | 18.4 | % | 25.8 | % | (7.4) points |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
April 28, 2019 | April 29, 2018 | Change | April 28, 2019 | April 29, 2018 | Change | ||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||
China | $ | 328 | 94% | $ | 600 | 84% | (45)% | $ | 805 | 94% | $ | 912 | 78% | (12)% |
April 28, 2019 | October 28, 2018 | ||||||
(In millions) | |||||||
Cash and cash equivalents | $ | 3,116 | $ | 3,440 | |||
Short-term investments | 507 | 590 | |||||
Long-term investments | 1,609 | 1,568 | |||||
Total cash, cash-equivalents and investments | $ | 5,232 | $ | 5,598 |
Six Months Ended | |||||||
April 28, 2019 | April 29, 2018 | ||||||
(In millions) | |||||||
Cash provided by operating activities | $ | 1,634 | $ | 2,077 | |||
Cash provided by (used in) investing activities | $ | (195 | ) | $ | 1,374 | ||
Cash used in financing activities | $ | (1,763 | ) | $ | (3,591 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions, except percentages) | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
Non-GAAP Adjusted Gross Profit | ||||||||||||||||
Reported gross profit - GAAP basis | $ | 1,530 | $ | 2,056 | $ | 3,195 | $ | 3,996 | ||||||||
Certain items associated with acquisitions1 | 9 | 44 | 19 | 89 | ||||||||||||
Non-GAAP adjusted gross profit | $ | 1,539 | $ | 2,100 | $ | 3,214 | $ | 4,085 | ||||||||
Non-GAAP adjusted gross margin | 43.5 | % | 45.9 | % | 44.1 | % | 46.5 | % | ||||||||
Non-GAAP Adjusted Operating Income | ||||||||||||||||
Reported operating income - GAAP basis | $ | 776 | $ | 1,292 | $ | 1,684 | $ | 2,507 | ||||||||
Certain items associated with acquisitions1 | 14 | 49 | 28 | 98 | ||||||||||||
Acquisition integration and deal costs | 4 | 1 | 7 | 2 | ||||||||||||
Non-GAAP adjusted operating income | $ | 794 | $ | 1,342 | $ | 1,719 | $ | 2,607 | ||||||||
Non-GAAP adjusted operating margin | 22.4 | % | 29.3 | % | 23.6 | % | 29.7 | % | ||||||||
Non-GAAP Adjusted Net Income | ||||||||||||||||
Reported net income - GAAP basis | $ | 666 | $ | 1,100 | $ | 1,437 | $ | 1,265 | ||||||||
Certain items associated with acquisitions1 | 14 | 49 | 28 | 98 | ||||||||||||
Acquisition integration and deal costs | 4 | 1 | 7 | 2 | ||||||||||||
Impairment (gain on sale) of strategic investments, net | — | 5 | — | 4 | ||||||||||||
Loss (gain) on strategic investments, net | (11 | ) | — | (23 | ) | — | ||||||||||
Income tax effect of share-based compensation2 | 1 | 13 | (4 | ) | (26 | ) | ||||||||||
Income tax effect of changes in applicable U.S. tax laws3 | — | 71 | (24 | ) | 1,077 | |||||||||||
Income tax effects related to amortization of intra-entity intangible asset transfers | (31 | ) | — | (59 | ) | — | ||||||||||
Resolution of prior years’ income tax filings and other tax items | 17 | 10 | 76 | (3 | ) | |||||||||||
Income tax effect of non-GAAP adjustments4 | — | (5 | ) | 1 | (8 | ) | ||||||||||
Non-GAAP adjusted net income | $ | 660 | $ | 1,244 | $ | 1,439 | $ | 2,409 |
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
2 | GAAP basis tax benefit related to share-based compensation is being recognized ratably over the fiscal year on a non-GAAP basis. |
3 | Charges to income tax provision related to a one-time transition tax and a decrease in U.S. deferred tax assets as a result of the recent U.S. tax legislation. |
4 | Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes. |
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions, except per share amounts) | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
Non-GAAP Adjusted Earnings Per Diluted Share | ||||||||||||||||
Reported earnings per diluted share - GAAP basis | $ | 0.70 | $ | 1.06 | $ | 1.50 | $ | 1.20 | ||||||||
Certain items associated with acquisitions | 0.01 | 0.04 | 0.03 | 0.09 | ||||||||||||
Loss (gain) on strategic investments, net | — | — | (0.02 | ) | — | |||||||||||
Income tax effect of share-based compensation | — | 0.01 | (0.01 | ) | (0.03 | ) | ||||||||||
Income tax effect of changes in applicable U.S. tax laws | — | 0.07 | (0.02 | ) | 1.02 | |||||||||||
Income tax effects related to amortization of intra-entity intangible asset transfers | (0.03 | ) | — | (0.06 | ) | — | ||||||||||
Resolution of prior years’ income tax filings and other tax items | 0.02 | 0.01 | 0.08 | — | ||||||||||||
Non-GAAP adjusted earnings per diluted share | $ | 0.70 | $ | 1.19 | $ | 1.50 | $ | 2.28 | ||||||||
Weighted average number of diluted shares | 948 | 1,040 | 957 | 1,056 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions, except percentages) | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | ||||||||||||
Semiconductor Systems Non-GAAP Adjusted Operating Income | ||||||||||||||||
Reported operating income - GAAP basis | $ | 579 | $ | 992 | $ | 1,210 | $ | 2,016 | ||||||||
Certain items associated with acquisitions1 | 10 | 46 | 21 | 92 | ||||||||||||
Non-GAAP adjusted operating income | $ | 589 | $ | 1,038 | $ | 1,231 | $ | 2,108 | ||||||||
Non-GAAP adjusted operating margin | 27.0 | % | 35.8 | % | 27.7 | % | 36.6 | % | ||||||||
AGS Non-GAAP Adjusted Operating Income | ||||||||||||||||
Reported operating income - GAAP basis | $ | 283 | $ | 279 | $ | 568 | $ | 534 | ||||||||
Acquisition integration costs | — | — | — | 1 | ||||||||||||
Non-GAAP adjusted operating income | $ | 283 | $ | 279 | $ | 568 | $ | 535 | ||||||||
Non-GAAP adjusted operating margin | 28.8 | % | 29.5 | % | 29.2 | % | 29.3 | % | ||||||||
Display and Adjacent Markets Non-GAAP Adjusted Operating Income | ||||||||||||||||
Reported operating income - GAAP basis | $ | 42 | $ | 210 | $ | 157 | $ | 300 | ||||||||
Certain items associated with acquisitions1 | 4 | 3 | 7 | 6 | ||||||||||||
Acquisition integration costs | — | 1 | — | 1 | ||||||||||||
Non-GAAP adjusted operating income | $ | 46 | $ | 214 | $ | 164 | $ | 307 | ||||||||
Non-GAAP adjusted operating margin | 13.2 | % | 29.8 | % | 19.2 | % | 26.4 | % |
1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
Item 3: | Quantitative and Qualitative Disclosures About Market Risk |
Item 1A: | Risk Factors |
• | uncertain global economic and political business conditions and demands; |
• | political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; |
• | global trade issues and changes in and uncertainties with respect to trade policies, including the ability to obtain required import and export licenses, trade sanctions, tariffs, and international trade disputes; |
• | customer- or government-supported efforts to influence Applied to conduct more of its operations and sourcing in a particular country, such as Korea and China; |
• | variations among, and changes in, local, regional, national or international laws and regulations, including contract, intellectual property, cybersecurity, data privacy, labor, tax, and import/export laws, and the interpretation and application of such laws and regulations; |
• | ineffective or inadequate legal protection of intellectual property rights in certain countries; |
• | positions taken by governmental agencies regarding possible national commercial and/or security issues posed by international business operations; |
• | fluctuating raw material, commodity, energy and shipping costs; |
• | delays or restrictions in shipping materials or finished products between countries; |
• | geographically diverse operations and projects, and our ability to maintain appropriate business processes, procedures and internal controls, and comply with environmental, health and safety, anti-corruption and other regulatory requirements; |
• | supply chain interruptions, and service interruptions from utilities, transportation, data hosting or telecommunications providers, or other events beyond our control; |
• | a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, and differing employment practices and labor issues; |
• | variations in the ability to develop relationships with local customers, suppliers and governments; |
• | fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against the Japanese yen, euro, Taiwanese dollar, Israeli shekel, Chinese yuan or Singapore dollar; |
• | the need to provide sufficient levels of technical support in different locations around the world; |
• | performance of third party providers of outsourced functions, including certain engineering, software development, manufacturing, information technology and other activities; |
• | political instability, natural disasters, pandemics, social unrest, terrorism or acts of war in locations where Applied has operations, suppliers or sales, or that may influence the value chain of the industries that Applied serves; |
• | challenges in hiring and integration of an increasing number of workers in new countries; |
• | the increasing need for a mobile workforce to work in or travel to different regions; and |
• | uncertainties with respect to economic growth rates in various countries, including for the manufacture and sale of semiconductors and displays in the developing economies of certain countries. |
• | the nature, timing and degree of visibility of changes in end demand for electronic products, including those related to fluctuations in consumer buying patterns tied to seasonality or the introduction of new products, and the effects of these changes on customers’ businesses and on demand for Applied’s products; |
• | increasing capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital; |
• | trade, regulatory or tax policies impacting the timing of customers’ investment in new or expanded fabrication plants; |
• | differences in growth rates among the semiconductor, display and other industries in which Applied operates; |
• | the increasing importance of establishing, improving and maintaining strong relationships with customers; |
• | the increasing cost and complexity for customers to move from product design to volume manufacturing, which may slow the adoption rate of new manufacturing technology; |
• | the need for customers to continually reduce the total cost of manufacturing system ownership; |
• | the heightened importance to customers of system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability; |
• | manufacturers’ ability to reconfigure and re-use fabrication systems which can reduce demand for new equipment; |
• | the increasing importance of, and difficulties in, developing products with sufficient differentiation to influence customers’ purchasing decisions; |
• | requirements for shorter cycle times for the development, manufacture and installation of manufacturing equipment; |
• | price and performance trends for semiconductor devices and displays, and the corresponding effect on demand for such products; |
• | the increasing importance of the availability of spare parts to maximize the time that customers’ systems are available for production; |
• | the increasing role for and complexity of software in Applied products; and |
• | the increasing focus on reducing energy usage and improving the environmental impact and sustainability associated with manufacturing operations. |
• | the increasing frequency and complexity of technology transitions and inflections, and Applied’s ability to timely and effectively anticipate and adapt to these changes; |
• | the increasing cost of research and development due to many factors, including shrinking geometries, the use of new materials, new and more complex device structures, more applications and process steps, increasing chip design costs, and the increasing cost and complexity of integrated manufacturing processes; |
• | the need to reduce product development time, despite the increasing difficulty of technical challenges; |
• | the growing number of types and varieties of semiconductors and number of applications across multiple substrate sizes; |
• | the increasing cost and complexity for semiconductor manufacturers to move more technically advanced capability and smaller geometries to volume manufacturing, and the resulting impact on the rates of technology transition and investment in capital equipment; |
• | challenges in generating organic growth given semiconductor manufacturers’ levels of capital expenditures and the allocation of capital investment to market segments that Applied does not serve, such as lithography, or segments where Applied’s products have lower relative market presence; |
• | the importance of increasing market positions in segments with growing demand; |
• | semiconductor manufacturer’s ability to reconfigure and re-use equipment, and the resulting effect on their need to purchase new equipment and services; |
• | shorter cycle times between order placements by customers and product shipment require greater reliance on forecasting of customer investment, which may lead to inventory write-offs and manufacturing inefficiencies that decrease gross margin; |
• | competitive factors that make it difficult to enhance position, including challenges in securing development-tool-of-record (DTOR) and production-tool-of-record (PTOR) positions with customers; |
• | consolidation in the semiconductor industry, including among semiconductor manufacturers and among manufacturing equipment suppliers; |
• | shifts in sourcing strategies by computer and electronics companies that impact the equipment requirements of Applied’s foundry customers; |
• | the concentration of new wafer starts in Korea and Taiwan, where Applied’s service penetration and service-revenue-per-wafer-start have been lower than in other regions; |
• | investment in semiconductor manufacturing capabilities in China, which may be affected by changes in economic conditions and governmental policies in China; and |
• | the increasing fragmentation of semiconductor markets, leading certain markets to become too small to support the cost of a new fabrication plant, while others require less technologically advanced products. |
• | the importance of new types of display technologies, such as organic light-emitting diode (OLED), low temperature polysilicon (LTPS) and metal oxide transistor backplanes, flexible displays, and new touch panel films; |
• | the increasing cost of research and development, and complexity of technology transitions and inflections, and Applied’s ability to timely and effectively anticipate and adapt to these changes; |
• | the timing and extent of an expansion of manufacturing facilities in China, which may be affected by changes in economic conditions and governmental policies in China; |
• | the importance of increasing market positions in products and technologies with growing demand; |
• | the rate of transition to larger substrate sizes for TVs and to new display technologies for TVs and mobile applications, and the resulting effect on capital intensity in the industry and on Applied’s product differentiation, gross margin and return on investment; and |
• | the variability in demand for display manufacturing equipment, concentration of display manufacturer customers and their ability to successfully commercialize new products and technologies, and uncertainty with respect to future display technology end-use applications and growth drivers. |
• | identify and address technology inflections, market changes, new applications, customer requirements and end-use demand; |
• | develop new products and disruptive technologies, improve and develop new applications for existing products, and adapt products for use by customers in different applications and markets with varying technical requirements; |
• | differentiate its products from those of competitors, meet customers’ performance specifications, appropriately price products, and achieve market acceptance; |
• | maintain operating flexibility to enable responses to changing markets, applications, customers and customer requirements; |
• | enhance its worldwide operations across its businesses to reduce cycle time, enable continuous quality improvement, reduce costs, and enhance design for manufacturability and serviceability; |
• | focus on product development and sales and marketing strategies that address customers’ high value problems and strengthen customer relationships; |
• | effectively allocate resources between its existing products and markets, the development of new products, and expanding into new and adjacent markets; |
• | improve the productivity of capital invested in R&D activities; |
• | accurately forecast demand, work with suppliers and meet production schedules for its products; |
• | improve its manufacturing processes and achieve cost efficiencies across product offerings; |
• | adapt to changes in value offered by companies in different parts of the supply chain; |
• | qualify products for evaluation and volume manufacturing with its customers; and |
• | implement changes in its design engineering methodology to reduce material costs and cycle time, increase commonality of platforms and types of parts used in different systems, and improve product life cycle management. |
• | diversion of management’s attention and disruption of ongoing businesses; |
• | contractual restrictions on the conduct of Applied’s business during the pendency of a proposed transaction; |
• | inability to complete proposed transactions due to the failure to obtain regulatory or other approvals, litigation or other disputes, and any ensuing obligation to pay a termination fee; |
• | the failure to realize expected returns from acquired businesses; |
• | requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of Applied’s existing business or the acquired business; |
• | ineffective integration of operations, systems, technologies, products or employees, which can impact the ability to realize anticipated synergies or other benefits; |
• | failure to commercialize technologies from acquired businesses or developed through strategic investments; |
• | dependence on unfamiliar supply chains or relatively small supply partners; |
• | inability to capitalize on characteristics of new markets that may be significantly different from Applied’s existing markets and where competitors may have stronger market positions and customer relationships; |
• | failure to retain and motivate key employees of acquired businesses; |
• | the potential impact of the announcement or consummation of a proposed transaction on relationships with third parties; |
• | potential changes in Applied’s credit rating, which could adversely impact the Company’s access to and cost of capital; |
• | reductions in cash balances or increases in debt obligations to finance activities associated with a transaction, which reduce the availability of cash flow for general corporate or other purposes, including share repurchases and dividends; |
• | exposure to new operational risks, rules, regulations, worker expectations, customs and practices to the extent acquired businesses are located in regions where Applied has not historically conducted business; |
• | challenges associated with managing new, more diverse and more widespread operations, projects and people; |
• | inability to obtain and protect intellectual property rights in key technologies; |
• | inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, cybersecurity, privacy policies and procedures, or environmental, health and safety, anti-corruption, human resource, or other policies or practices; |
• | impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance of the segment; |
• | the risk of litigation or claims associated with a proposed or completed transaction; |
• | unknown, underestimated or undisclosed commitments or liabilities; and |
• | the inappropriate scale of acquired entities’ critical resources or facilities for business needs. |
• | the need to devote additional resources to develop new products for, and operate in, new markets; |
• | the need to develop new sales and technical marketing strategies, cultivate relationships with new customers and meet different customer service requirements; |
• | differing rates of profitability and growth among multiple businesses; |
• | Applied’s ability to anticipate demand, capitalize on opportunities, and avoid or minimize risks; |
• | the complexity of managing multiple businesses with variations in production planning, execution, supply chain management and logistics; |
• | the adoption of new business models, business processes and systems; |
• | the complexity of entering into and effectively managing strategic alliances or partnering opportunities; |
• | new materials, processes and technologies; |
• | the need to attract, motivate and retain employees with skills and expertise in these new areas; |
• | new and more diverse customers and suppliers, including some with limited operating histories, uncertain or limited funding, evolving business models or locations in regions where Applied does not have, or has limited, operations; |
• | new or different competitors with potentially more financial or other resources, industry experience and established customer relationships; |
• | entry into new industries and countries, with differing levels of government involvement, laws and regulations, and business, employment and safety practices; |
• | third parties’ intellectual property rights; and |
• | the need to comply with, or work to establish, industry standards and practices. |
• | the failure or inability to accurately forecast demand and obtain sufficient quantities of quality parts on a cost-effective basis; |
• | volatility in the availability and cost of materials; |
• | difficulties or delays in obtaining required import or export approvals; |
• | shipment delays due to transportation interruptions or capacity constraints; |
• | information technology or infrastructure failures, including those of a third party supplier or service provider; and |
• | natural disasters or other events beyond Applied’s control (such as earthquakes, floods or storms, regional economic downturns, pandemics, social unrest, political instability, terrorism, or acts of war), particularly where it conducts manufacturing. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Aggregate Price Paid | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Dollar Value of Shares That May Yet be Purchased Under the Program | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||||
Month #1 | |||||||||||||||||
(January 28, 2019 to February 24, 2019) | 5.1 | $ | 39.34 | $ | 200 | 5.1 | $ | 3,377 | |||||||||
Month #2 | |||||||||||||||||
(February 25, 2019 to March 24, 2019) | 6.0 | $ | 39.10 | 236 | 6.0 | $ | 3,141 | ||||||||||
Month #3 | |||||||||||||||||
(March 25, 2019 to April 28, 2019) | 4.5 | $ | 41.65 | 189 | 4.5 | $ | 2,952 | ||||||||||
Total | 15.6 | $ | 39.91 | $ | 625 | 15.6 |
Incorporated by Reference | |||||||||
Exhibit No. | Description | Form | File No. | Exhibit No. | Filing Date | ||||
101.INS | XBRL Instance Document‡ | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document‡ | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document‡ | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document‡ | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document‡ | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document‡ |
† | Filed herewith. |
‡ | Furnished herewith. |
APPLIED MATERIALS, INC. | |
By: | /s/ DANIEL J. DURN |
Daniel J. Durn Senior Vice President, Chief Financial Officer (Principal Financial Officer) |
By: | /s/ CHARLES W. READ |
Charles W. Read Corporate Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) |
/s/ GARY E. DICKERSON |
Gary E. Dickerson |
President, Chief Executive Officer |
/s/ DANIEL J. DURN |
Daniel J. Durn |
Senior Vice President, Chief Financial Officer |
/s/ GARY E. DICKERSON |
Gary E. Dickerson |
President, Chief Executive Officer |
/s/ DANIEL J. DURN |
Daniel J. Durn |
Senior Vice President, Chief Financial Officer |
Document and Entity Information |
6 Months Ended |
---|---|
Apr. 28, 2019
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | APPLIED MATERIALS INC /DE |
Entity Central Index Key | 0000006951 |
Current Fiscal Year End Date | --10-27 |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Document Type | 10-Q |
Document Period End Date | Apr. 28, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 936,104,929 |
Consolidated Condensed Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Income Statement [Abstract] | ||||
Net sales | $ 3,539 | $ 4,579 | $ 7,292 | $ 8,784 |
Cost of products sold | 2,009 | 2,523 | 4,097 | 4,788 |
Gross profit | 1,530 | 2,056 | 3,195 | 3,996 |
Operating expenses: | ||||
Research, development and engineering | 508 | 509 | 1,024 | 998 |
Marketing and selling | 133 | 130 | 264 | 256 |
General and administrative | 113 | 125 | 223 | 235 |
Total operating expenses | 754 | 764 | 1,511 | 1,489 |
Income from operations | 776 | 1,292 | 1,684 | 2,507 |
Interest expense | 60 | 56 | 120 | 115 |
Interest and other income, net | 43 | 25 | 83 | 52 |
Income before income taxes | 759 | 1,261 | 1,647 | 2,444 |
Provision for income taxes | 93 | 161 | 210 | 1,179 |
Net income | $ 666 | $ 1,100 | $ 1,437 | $ 1,265 |
Earnings per share: | ||||
Basic earnings per share (in dollars per share) | $ 0.71 | $ 1.07 | $ 1.51 | $ 1.21 |
Diluted earnings per share (in dollars per share) | $ 0.70 | $ 1.06 | $ 1.50 | $ 1.20 |
Weighted average number of shares: | ||||
Basic (in shares) | 942 | 1,029 | 950 | 1,042 |
Diluted (in shares) | 948 | 1,040 | 957 | 1,056 |
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 666 | $ 1,100 | $ 1,437 | $ 1,265 |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gain (losses) on available-for-sale investments | 8 | (7) | 13 | (1) |
Change in unrealized net loss on derivative instruments | 9 | 8 | (8) | (11) |
Change in defined and postretirement benefit plans | 0 | 0 | 0 | (2) |
Change in cumulative translation adjustments | (1) | 0 | (1) | 0 |
Other comprehensive income (loss), net of tax | 16 | 1 | 4 | (14) |
Comprehensive income | $ 682 | $ 1,101 | $ 1,441 | $ 1,251 |
Consolidated Condensed Statements of Stockholders' Equity (Parenthetical) - $ / shares |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Dividends declared per share (in dollars per share) | $ 0.21 | $ 0.20 | $ 0.21 | $ 0.20 | $ 0.41 | $ 0.30 |
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Cash flows from operating activities: | ||
Net income | $ 1,437 | $ 1,265 |
Adjustments required to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 182 | 227 |
Share-based compensation | 130 | 129 |
Deferred income taxes | 49 | 72 |
Other | (9) | 11 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 60 | (326) |
Inventories | 44 | (540) |
Other current and non-current assets | (9) | (34) |
Accounts payable and accrued expenses | (409) | 103 |
Contract liabilities | 192 | 282 |
Income taxes payable | (53) | 860 |
Other liabilities | 20 | 28 |
Cash provided by operating activities | 1,634 | 2,077 |
Cash flows from investing activities: | ||
Capital expenditures | (251) | (324) |
Cash paid for acquisitions, net of cash acquired | (23) | (5) |
Proceeds from sales and maturities of investments | 906 | 2,432 |
Purchases of investments | (827) | (729) |
Cash provided by (used in) investing activities | (195) | 1,374 |
Cash flows from financing activities: | ||
Proceeds from common stock issuances | 73 | 56 |
Common stock repurchases | (1,375) | (3,282) |
Tax withholding payments for vested equity awards | (80) | (154) |
Payments of dividends to stockholders | (381) | (211) |
Cash used in financing activities | (1,763) | (3,591) |
Decrease in cash and cash equivalents | (324) | (140) |
Cash and cash equivalents — beginning of period | 3,440 | 5,010 |
Cash and cash equivalents — end of period | 3,116 | 4,870 |
Supplemental cash flow information: | ||
Cash payments for income taxes | 232 | 217 |
Cash refunds from income taxes | 18 | 41 |
Cash payments for interest | $ 110 | $ 110 |
Basis of Presentation |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation Basis of Presentation In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 28, 2018 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 28, 2018 (2018 Form 10-K). Applied’s results of operations for the three and six months ended April 28, 2019 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2019 and 2018 each contain 52 weeks, and the first half of fiscal 2019 and 2018 each contained 26 weeks. At the beginning of the first quarter of fiscal 2019, Applied adopted the new revenue recognition standard using the full retrospective method. All financial statements and disclosures have been recast to comply with this new guidance. See "Recent Accounting Pronouncements - Accounting Standards Adopted" section below for further information. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to standalone selling price (SSP) related to revenue recognition, accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Changes to Significant Accounting Policies Applied adopted various amended guidance during the first quarter of fiscal 2019. The following accounting policies have been updated as part of the adoption of the new standards. Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expenses in the Consolidated Condensed Statement of Operations. Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Condensed Statements of Operations. Shipping and Handling Costs Applied accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, amounts billed for shipping and handling costs are recorded as a component of net sales and costs as a component of cost of products sold. Warranty Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied’s warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied’s estimates, revisions to the estimated warranty liability would be required. Applied also sells extended warranty contracts to its customers which provide an extension of the standard warranty coverage period of up to 2 years. Applied receives payment at the inception of the contract and recognizes revenue ratably over the extended warranty coverage period, as the customer simultaneously receives and consumes the benefits of the extended warranty. Revenue Recognition from Contracts with Customers Applied recognizes revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration to which Applied expects to be entitled in exchange for those goods or services. Applied determines revenue recognition through the following five steps; (1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied. Identifying the contract(s) with customers. Applied sells manufacturing equipment, services, and spare parts directly to its customers in the semiconductor, display, and related industries. The Company generally considers written documentation including, but not limited to, signed purchase orders, master agreements, and sales orders as contracts provided that collection is probable. Collectability is assessed based on the customer’s creditworthiness determined by reviewing the customer’s published credit and financial information, historical payment experience, as well as other relevant factors. Identifying the performance obligations. Applied’s performance obligations include delivery of manufacturing equipment, service agreements, spare parts, installation, extended warranty and training. Applied’s service agreements are considered one performance obligation and may include multiple goods and services that we provide to the customer to deliver against a performance metric. Judgment is used to determine whether multiple promised goods or services in a contract should be accounted for separately or as a group. Determine the transaction price. The transaction price for Applied’s contracts with customers may include fixed and variable consideration. Applied includes variable consideration in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Allocate the transaction price to the performance obligations. A contract’s transaction price is allocated to each distinct performance obligation identified within the contract. Applied generally estimates the standalone selling price of a distinct performance obligation based on historical cost plus an appropriate margin. For contracts with multiple performance obligations, Applied allocates the contract’s transaction price to each performance obligation using the relative standalone selling price of each distinct good or service in the contract. Recognizing the revenue as performance obligations are satisfied. Applied recognizes revenue from equipment and spares parts at a point in time when Applied has satisfied its performance obligation by transferring control of the goods to the customer which typically occurs at shipment or delivery. Revenue from service agreements is recognized over time as customers receive the benefits of services. The incremental costs to obtain a contract are not material. Payment Terms. Payment terms vary by contract. Generally, the majority of payments are due within a certain number of days from shipment of goods or performance of service. The remainder is typically due upon customer technical acceptance. Applied typically receives deposits on future deliverables from customers in the Display and Adjacent Markets segment and, in certain instances, may also receive deposits from customers in the Applied Global Services segment. Applied’s payment terms do not generally contain a significant financing component. Investments All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are measured and recorded at fair value with changes in fair value recorded in the accompanying Consolidated Statements of Operations. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest and other income, net in the accompanying Consolidated Condensed Statements of Operations. Equity investments without readily determinable fair value are measured at cost, less impairment, adjusted by observable price changes. Adjustments resulting from impairments and observable prices changes will be recorded in the accompanying Consolidated Condensed Statements of Operations. Recent Accounting Pronouncements Accounting Standards Adopted Retirement Benefits. In March 2017, the FASB issued authoritative guidance which requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Applied adopted this guidance in the first quarter of fiscal 2019 on a retrospective basis. The adoption of this guidance resulted in reclassification of other components of net benefit costs outside of income from operations and did not have a significant impact on Applied’s consolidated financial statements. Business Combinations. In January 2017, the FASB issued authoritative guidance that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. Applied adopted this guidance in the first quarter of fiscal 2019 on a prospective basis. The impact of the adoption depends on the facts and circumstances of future acquisition or disposal transactions. Income Taxes: Intra-Entity Asset Transfers. In October 2016, the FASB issued authoritative guidance that changed the tax accounting for intra-entity transfers of assets other than inventory. After adoption, the income tax effect of intra-entity transfers is realized at the time of the transfer instead of over the life of the asset. Applied adopted this guidance in the first quarter of fiscal 2019 using a modified retrospective approach, resulting in a cumulative effect adjustment to retained earnings. Upon adoption, deferred tax assets increased by $1.6 billion related to the estimated income tax effects of future amortization of intra-entity intangible asset transfers, with an offset to retained earnings. Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued authoritative guidance which addresses classification of certain cash receipts and cash payments related to the statement of cash flows. Effective in the first quarter of fiscal 2019, Applied adopted the authoritative guidance retrospectively. The adoption of this guidance did not have a significant impact and only impacts disclosures in Applied' s consolidated condensed statements of cash flow. Financial Instruments: Classification and Measurement. In January 2016, the FASB issued authoritative guidance that requires equity investments that do not result in consolidation, and are not accounted for under the equity method, to be measured at fair value, and requires recognition of any changes in fair value in net income unless the investments qualify for a new measurement alternative. For financial liabilities measured at fair value, the change in fair value caused by a change in instrument-specific credit risk will be required to be presented separately in other comprehensive income. Applied adopted this standard in the first quarter of fiscal year 2019. Upon adoption, Applied elected to apply the measurement alternative for equity investments without readily determinable fair value. Under the alternative, Applied measures investments without readily determinable fair value at cost, less impairment, adjusted by observable price changes prospectively to all equity investments that exist as of adoption and will reassess at each reporting period whether an investment qualifies for the alternative. Adopting this standard required Applied to record a cumulative net increase to retained earnings of approximately $21 million with the corresponding $17 million decrease in accumulated other comprehensive income, net of tax, for the unrealized gains and losses associated with equity investments with readily determinable fair values, as the authoritative guidance is required to be adopted prospectively. Going forward, the impact of this new standard could result in volatility in Applied’s consolidated statement of operations. Revenue Recognition. In May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires certain additional disclosures. Applied adopted this authoritative guidance in the first quarter of fiscal 2019 using the full retrospective method, which required restating each prior reporting period presented. Refer to the Impacts to Previously Reported Results section below for the impact of the adoption of the standard to Applied’s consolidated financial statements. For all periods prior to the date of initial adoption of this standard, Applied elected to use the practical expedient pursuant to which Applied excluded disclosures of both transaction prices allocated to remaining performance obligations and when these performance obligations are expected to be recognized as revenue. The most significant impact from the adoption of this standard is fewer constraints on revenue recognition upon shipment of manufacturing equipment. Impacts to Previously Reported Results Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Condensed Statement of Operations for the three and six months ended April 29, 2018 as follows:
Adoption of the retirement benefits standard did not have any impact on Applied’s Consolidated Balance Sheet or Consolidated Condensed Statement of Cash Flows. Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows:
Adoption of the revenue recognition standard did not impact cash provided by or used in investing or financing activities in Applied’s Consolidated Condensed Statement of Cash Flows for the first half of fiscal 2018. The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for the six months ended April 29, 2018 as follows:
Accounting Standards Not Yet Adopted Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit and other Postretirement Plans. In August 2018, the FASB issued authoritative guidance that adds, removes, and clarifies disclosure requirements for defined benefit and other postretirement plans. This authoritative guidance will be effective for Applied in fiscal 2021 on a retrospective basis, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued authoritative guidance that eliminates, amends, and adds disclosure requirements for fair value measurements. While the amended and new disclosure requirements primarily relate to Level 3 fair value measurements, the authoritative guidance also eliminates disclosure requirements related to the amount and reasons for transfer between Level 1 and Level 2 of fair value hierarchy, policy for timing of transfer between levels, and the valuation processes for Level 3 fair value measurements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020. Early adoption is permitted only for the removal and amendment of certain disclosures, while the new disclosures requirements are to be applied prospectively. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Derivatives and Hedging. In August 2017, the FASB issued authoritative guidance that modifies the recognition and presentation of hedge accounting to better align an entity’s risk management strategies and financial reporting for hedging relationships. The authoritative guidance expands the application of hedge accounting for non-financial and financial risk components and eases certain hedge effectiveness assessment requirements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs. In March 2017, the FASB issued authoritative guidance that will shorten the amortization period for certain callable debt securities held at a premium to the earliest call date to more closely align with expectations incorporated in market pricing. This authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 on a modified retrospective basis, with early adoption permitted. Applied is currently evaluating the impact of adopting this new accounting guidance on Applied’s consolidated financial statements. Goodwill Impairment. In January 2017, the FASB issued authoritative guidance that simplifies the process required to test goodwill for impairment. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied’s consolidated financial statements. Financial Instruments: Credit Losses. In June 2016, the FASB issued authoritative guidance that modifies the impairment model for certain financial assets by requiring use of an expected loss methodology, which will result in more timely recognition of credit losses. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted beginning in the first quarter of fiscal 2020. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Leases. In February 2016, the FASB issued authoritative guidance for lease accounting, which requires lessees to recognize lease assets and liabilities on the balance sheet for certain lease arrangements that are classified as operating leases under the previous standard, and to provide for enhanced disclosures. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 and should be applied using a modified retrospective approach. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plan shares) outstanding during the period. Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure.
Potentially weighted dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value are greater than the average market price of Applied common stock, and therefore their inclusion would be anti-dilutive. |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments Summary of Cash, Cash Equivalents and Investments The following tables summarize Applied’s cash, cash equivalents and investments:
_________________________ * Includes agency debt securities guaranteed by Canada.
_________________________ * Includes agency debt securities guaranteed by Canada. Maturities of Investments The following table summarizes the contractual maturities of Applied’s investments as of April 28, 2019:
_________________________ ** 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 six months ended April 28, 2019 and April 29, 2018, gross realized gains and losses on investments for these periods were not material. As of April 28, 2019, and October 28, 2018, 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. 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. Applied determined that the gross unrealized losses on its marketable fixed-income securities as of April 28, 2019 and April 29, 2018 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed-income securities during the three and six months ended April 28, 2019 or April 29, 2018. Impairment charges on equity investments in privately-held companies during the three and six months ended April 28, 2019 and April 29, 2018 were not material. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations. Unrealized gains and losses on investments classified as equity investments are recognized in other income (expense), net in the Consolidated Condensed Statement of Operations. Prior to the adoption of Accounting Standards Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019, these unrealized gains and temporary losses were included within accumulated other comprehensive income (loss), net of any related tax effect. The components of gain (losses) on equity investments for the three and six months ended April 28, 2019 were as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value on a recurring basis, except for equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Applied’s investments consist primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value. As of April 28, 2019, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. Applied’s equity investments with readily determinable values consist of publicly traded equity securities. Upon adoption of ASU 2016-01, these investments are measured at fair value using quoted prices for identical assets in an active market and the changes in fair value of these equity investments are recognized in the consolidated statements of operations. Applied adopted the standard using a modified retrospective transition method and reclassified the unrealized gains on these equity investments of $21 million to retained earnings as a cumulative-effect adjustment on the condensed consolidated balance sheets. Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. Assets Measured at Fair Value on a Recurring Basis Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below:
There were no transfers between Level 1 and Level 2 fair value measurements during the three and six months ended April 28, 2019 or April 29, 2018. Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of April 28, 2019 or October 28, 2018. Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring Basis Applied’s equity investments without readily determinable values consist of equity investments in privately-held companies. Upon adoption of ASU 2016-01, Applied elected the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes on a prospective basis for certain equity investments without readily determinable fair values and is required to account for any subsequent observable changes in fair value within the statements of operations. Applied adopted the guidance prospectively, effective October 29, 2018, and there was no impact to Applied’s condensed consolidated financial statements. Prior to the adoption of ASU 2016-01, these investments were generally accounted for under the cost method of accounting. These investments are periodically assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. Impairment charges on equity investments in privately-held companies during the three and six months ended April 28, 2019 and April 29, 2018 were not material. Other The carrying amounts of Applied’s financial instruments, including cash and cash equivalents, accounts receivable, notes payable - short term, and accounts payable and accrued expenses, approximate fair value due to their short maturities. As of April 28, 2019, the aggregate principal amount of long-term debt was $5.4 billion, and the estimated fair value was $5.7 billion. As of October 28, 2018, the aggregate principal and estimated fair value amounts of long-term debt were both $5.4 billion. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues. See Note 10 of the Notes to the Consolidated Condensed Financial Statements for further detail of existing debt. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Derivative Financial Instruments Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel and Taiwanese dollar. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange and interest rate contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI as of April 28, 2019 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for the three and six months ended April 28, 2019 and April 29, 2018. Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged. The fair values of foreign exchange derivative instruments as of April 28, 2019 and October 28, 2018 were not material. The effects of derivative instruments and hedging activities on the Consolidated Condensed Statements of Operations were as follows:
Credit Risk Contingent Features If Applied’s credit rating were to fall below investment grade, it would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was immaterial as of April 28, 2019. Entering into derivative contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant. |
Accounts Receivable, Net |
6 Months Ended |
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Apr. 28, 2019 | |
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 $677 million and $1.1 billion of accounts receivable during the three and six months ended April 28, 2019, respectively. Applied sold $390 million and $766 million of accounts receivable during the three and six months ended April 29, 2018, respectively. Applied did not discount letters of credit issued by customers or discount promissory notes during the three and six months ended April 28, 2019 and April 29, 2018. 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 $32 million and $33 million as of April 28, 2019 and October 28, 2018, respectively. 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 April 28, 2019, it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates. |
Contract Balances |
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Balances | Contract Balances Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Applied’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets are generally classified as current and included in Other Current Assets in the Consolidated Condensed Balance Sheets. Contract liabilities are classified as current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized. Contract balances at the end of each reporting period were as follows:
The increase in contract assets during the six months ended April 28, 2019, was primarily due to goods transferred to customers where payment was conditional upon technical sign off, offset by the reclassification of contract assets to net accounts receivable upon meeting conditions to the right to payment. During the six months ended April 28, 2019, Applied recognized revenue of approximately $539 million related to contract liabilities at October 28, 2018. This reduction in contract liabilities was offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of April 28, 2019. There were no impairment losses recognized on Applied’s accounts receivables and contract assets during the three and six months ended April 28, 2019. As of April 28, 2019, the amount of remaining unsatisfied performance obligations on contracts with an original estimated duration of one year or more was approximately $469 million, which is expected to be recognized within the next 36 months. Applied has elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. |
Balance Sheet Detail |
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Balance Sheet Detail [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Detail | Balance Sheet Detail
Included in finished goods inventory are $32 million as of April 28, 2019, and $19 million as of October 28, 2018, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $323 million and $350 million of evaluation inventory as of April 28, 2019 and October 28, 2018, respectively.
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Goodwill, Purchased Technology and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Purchased Technology and Other Intangible Assets | Goodwill, Purchased Technology and Other Intangible Assets Goodwill and Purchased Intangible Assets Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and considers other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would in the first step compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. As of April 28, 2019, Applied’s reporting units include Semiconductor Product Group and Imaging and Process Control Group, which combine to form the Semiconductor Systems reporting segment, Applied Global Services, and Display and Adjacent Markets. The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time. Details of goodwill as of April 28, 2019 and October 28, 2018 were as follows:
During the six months ended April 28, 2019, the increase in goodwill was primarily due to acquisitions completed in the second quarter of fiscal 2019, which were not significant to Applied’s results of operations. A summary of Applied’s purchased technology and intangible assets is set forth below:
Finite-Lived Purchased Intangible Assets Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years. Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach. Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure. Details of finite-lived intangible assets were as follows:
Details of amortization expense by segment were as follows:
Amortization expense was charged to the following categories:
As of April 28, 2019, future estimated amortization expense is expected to be as follows:
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Borrowing Facilities and Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowing Facilities and Debt | Borrowing Facilities and 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 committed revolving credit agreement with a group of banks that is scheduled to expire in September 2021. This agreement provides for borrowings in United States dollars at interest rates keyed to one of various benchmark rates selected by Applied for each advance, plus a margin based on Applied’s public debt rating and includes financial and other covenants. Remaining credit facilities in the amount of approximately $72 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 as of both April 28, 2019 and October 28, 2018, and Applied has not utilized these credit facilities. In fiscal 2011, Applied established a short-term commercial paper program of up to $1.5 billion. As of April 28, 2019, Applied did not have any commercial paper outstanding. Debt outstanding as of April 28, 2019 and October 28, 2018 was as follows:
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Stockholders' Equity, Comprehensive Income and Share-Based Compensation |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity, Comprehensive Income and Share-Based Compensation | Stockholders’ Equity, Comprehensive Income and Share-Based Compensation Accumulated Other Comprehensive Income (Loss) Changes in the components of AOCI, net of tax, were as follows:
(a) - Represents the reclassification adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019. See Note 1.
The tax effects on net income of amounts reclassified from AOCI for the three and six months ended April 28, 2019 and April 29, 2018 were not material. Stock Repurchase Program In February 2018, the Board of Directors approved a common stock repurchase program authorizing up to an aggregate of $6.0 billion in repurchases. As of April 28, 2019, approximately $3.0 billion remained available for future stock repurchases under this repurchase program. The following table summarizes Applied’s stock repurchases for the three and six months ended April 28, 2019 and April 29, 2018:
Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings. Dividends In March 2019 and December 2018, Applied’s Board of Directors declared quarterly cash dividends, in the amount of $0.21 and $0.20 per share, respectively. The dividend declared in March 2019 is payable in June 2019. Dividends paid during the six months ended April 28, 2019 and April 29, 2018 totaled $381 million and $211 million, respectively. Applied currently anticipates that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on Applied’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of Applied’s stockholders. Share-Based Compensation Applied has a stockholder-approved equity plan, the Employee Stock Incentive Plan, which permits grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made under the plan may be subject to accelerated vesting under certain circumstances in the event of a change in control of Applied. Applied also has two Employee Stock Purchase Plans, one generally for United States employees and a second for employees of international subsidiaries (collectively, ESPP), which enable eligible employees to purchase Applied common stock. During the three and six months ended April 28, 2019 and April 29, 2018, Applied recognized share-based compensation expense related equity awards and ESPP shares. The effect of share-based compensation on the results of operations was as follows:
The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards, which include both performance and market goals, is recognized for each tranche over the service period. The cost of equity awards related to performance goals is based on an assessment of the likelihood that the applicable performance goals will be achieved. For the equity awards based on market goals, the cost is recognized based upon the assumption of 100% achievement of the goal. As of April 28, 2019, Applied had $470 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of share-based awards and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.6 years. As of April 28, 2019, there were 67 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 15 million shares available for issuance under the ESPP. Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units A summary of the changes in any restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the six months ended April 28, 2019 is presented below:
As of April 28, 2019, 1.6 million additional performance-based awards could be earned based upon achievement of certain levels of specified performance goals. During the first quarter of fiscal 2019, certain executive officers were granted awards that are subject to the achievement of targeted levels of adjusted operating margin and targeted levels of total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Index. Each metric will be weighted 50% and will be measured over a three-year period. The awards become eligible to vest only if performance goals are achieved and will vest only if the grantee remains employed by Applied through each applicable vesting date, subject to a qualifying retirement described below. The number of shares that may vest in full after three years ranges from 0% to 200% of the target amount. The awards provide for a partial payout based on actual performance at the conclusion of the three-year performance period in the event of a qualifying retirement based on age and years of service. The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant. If the performance goals are not met as of the end of the performance period, no compensation expense is recognized, and any previously recognized compensation expense is reversed. The expected cost is based on the portion of the awards that is probable to vest and is reflected over the service period and reduced for estimated forfeitures. The fair value of the portion of the awards subject to targeted levels of relative total shareholder return is estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upon the assumption of 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeitures. Employee Stock Purchase Plans Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Applied issued a total of 2 million shares during the three and six months ended April 28, 2019 and a total of 1 million shares during the three and six months ended April 29, 2018. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:
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Income Taxes |
6 Months Ended |
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Apr. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries payable over eight years. U.S. deferred tax assets and liabilities were subject to remeasurement due to the reduction of the U.S. federal corporate tax rate. The U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, which provided guidance on accounting for the income tax effects of the Tax Act and a measurement period for companies to complete this accounting. Applied completed the accounting for the Tax Act during the measurement period, which ended one year after the enactment date of the Tax Act. Accounting for the remeasurement of deferred tax assets was completed in the fourth quarter of fiscal 2018, and the accounting for the transition tax was completed in the first quarter of fiscal 2019. The Tax Act also includes provisions that impact Applied starting in fiscal 2019, including a provision designed to tax global intangible low-taxed income (“GILTI”). On September 13, 2018, the U.S. government issued proposed regulations that, if finalized, would significantly affect how the Tax Act is interpreted related to a tax benefit of $96 million realized by Applied in the first half of fiscal 2019. Proposed regulations are not authoritative and may change in the regulatory review process. This tax benefit may reverse if the regulations are finalized as proposed. An accounting policy choice is allowed to treat GILTI temporary differences in taxable income either as a current-period expense when incurred (the “period cost method”) or factor such amounts into the measurement of deferred taxes (the “deferred method”). Applied has chosen the period cost method. Applied’s effective tax rates for the second quarter of fiscal 2019 and 2018 were 12.3 percent and 12.8 percent, respectively. The effective tax rate for the second quarter of fiscal 2019 was lower than the same period in the prior fiscal year primarily due to tax expense of $71 million in the second quarter of fiscal 2018 for adjustments to the transition tax and remeasurement of deferred tax assets as a result of the Tax Act. Excluding the tax expense of $71 million, the effective tax rate for the second quarter of fiscal 2019 was higher than the rate in the same period of the prior fiscal year primarily due to changes in the geographical composition of income which includes jurisdictions with differing tax rates. Applied’s effective tax rates for the first half of fiscal 2019 and 2018 were 12.8 percent and 48.2 percent, respectively. The effective tax rate for the first half of fiscal 2019 was lower than the same period in the prior fiscal year primarily due to tax expense of $1.1 billion in the first half of fiscal 2018 for the transition tax and remeasurement of deferred tax assets as a result of the Tax Act. Excluding the tax expense of $1.1 billion, the effective tax rate for the first half of fiscal 2019 was higher than the rate in the same period of the prior fiscal year primarily due to tax expense of $81 million in the first half of fiscal 2019 related to changes in uncertain tax positions and the excess tax benefit from share-based compensation in the first half of fiscal 2019 being $45 million less than in the same period in the prior fiscal year. The effective tax rate for the first half of fiscal 2019 was also higher due to changes in the geographical composition of income which includes jurisdictions with differing tax rates. |
Warranty, Guarantees and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty, Guarantees and Contingencies | Warranty, Guarantees and Contingencies Warranty Changes in the warranty reserves are presented below:
Applied products are generally sold with a warranty for a 12-month period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales. Guarantees In the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of April 28, 2019, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $77 million. Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements. Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of April 28, 2019, Applied has provided parent guarantees to banks for approximately $149 million to cover these arrangements. Legal Matters From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material effect on its consolidated financial condition or results of operations. |
Industry Segment Operations |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Industry Segment Operations | Industry Segment Operations Applied’s three reportable segments are: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. As defined under the accounting literature, Applied’s chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of April 28, 2019 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments. The Semiconductor Systems reportable segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, certain remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products. The Display and Adjacent Markets segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), equipment upgrades and flexible coating systems and other display technologies for TVs, monitors, laptops, personal computers, smart phones, and other consumer-oriented devices. Each operating segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker. The chief operating decision-maker does not evaluate operating segments using total asset information. Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Corporate and Other category includes revenues from products, as well as costs of products sold, for fabricating solar photovoltaic cells and modules, and certain operating expenses that are not allocated to its reportable segments and are managed separately at the corporate level. These operating expenses include costs related to share-based compensation; certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income also excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments. Net sales and operating income (loss) for each reportable segment were as follows:
Net sales by geographic region, determined by the location of customers’ facilities to which products were shipped to, were as follows:
Net sales for Semiconductor Systems by end use application for the periods indicated were as follows:
The reconciling items included in Corporate and Other were as follows:
The following customers accounted for at least 10 percent of Applied’s net sales for the six months ended April 28, 2019, and sales to these customers included products and services from multiple reportable segments.
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Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | In the opinion of management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (Applied or the Company) included herein have been prepared on a basis consistent with the October 28, 2018 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly present the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Applied’s Annual Report on Form 10-K for the fiscal year ended October 28, 2018 (2018 Form 10-K). Applied’s results of operations for the three and six months ended April 28, 2019 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2019 and 2018 each contain 52 weeks, and the first half of fiscal 2019 and 2018 each contained 26 weeks. At the beginning of the first quarter of fiscal 2019, Applied adopted the new revenue recognition standard using the full retrospective method. All financial statements and disclosures have been recast to comply with this new guidance. See "Recent Accounting Pronouncements - Accounting Standards Adopted" section below for further information. |
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Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to standalone selling price (SSP) related to revenue recognition, accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. |
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Revenue Recognition | Applied recognizes revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration to which Applied expects to be entitled in exchange for those goods or services. Applied determines revenue recognition through the following five steps; (1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied. Identifying the contract(s) with customers. Applied sells manufacturing equipment, services, and spare parts directly to its customers in the semiconductor, display, and related industries. The Company generally considers written documentation including, but not limited to, signed purchase orders, master agreements, and sales orders as contracts provided that collection is probable. Collectability is assessed based on the customer’s creditworthiness determined by reviewing the customer’s published credit and financial information, historical payment experience, as well as other relevant factors. Identifying the performance obligations. Applied’s performance obligations include delivery of manufacturing equipment, service agreements, spare parts, installation, extended warranty and training. Applied’s service agreements are considered one performance obligation and may include multiple goods and services that we provide to the customer to deliver against a performance metric. Judgment is used to determine whether multiple promised goods or services in a contract should be accounted for separately or as a group. Determine the transaction price. The transaction price for Applied’s contracts with customers may include fixed and variable consideration. Applied includes variable consideration in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Allocate the transaction price to the performance obligations. A contract’s transaction price is allocated to each distinct performance obligation identified within the contract. Applied generally estimates the standalone selling price of a distinct performance obligation based on historical cost plus an appropriate margin. For contracts with multiple performance obligations, Applied allocates the contract’s transaction price to each performance obligation using the relative standalone selling price of each distinct good or service in the contract. Recognizing the revenue as performance obligations are satisfied. Applied recognizes revenue from equipment and spares parts at a point in time when Applied has satisfied its performance obligation by transferring control of the goods to the customer which typically occurs at shipment or delivery. Revenue from service agreements is recognized over time as customers receive the benefits of services. The incremental costs to obtain a contract are not material. Payment Terms. Payment terms vary by contract. Generally, the majority of payments are due within a certain number of days from shipment of goods or performance of service. The remainder is typically due upon customer technical acceptance. Applied typically receives deposits on future deliverables from customers in the Display and Adjacent Markets segment and, in certain instances, may also receive deposits from customers in the Applied Global Services segment. Applied’s payment terms do not generally contain a significant financing component. Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expenses in the Consolidated Condensed Statement of Operations. Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Condensed Statements of Operations. Shipping and Handling Costs Applied accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, amounts billed for shipping and handling costs are recorded as a component of net sales and costs as a component of cost of products sold. Contract Balances Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Applied’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. |
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Warranty | Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied’s warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied’s estimates, revisions to the estimated warranty liability would be required. Applied also sells extended warranty contracts to its customers which provide an extension of the standard warranty coverage period of up to 2 years. Applied receives payment at the inception of the contract and recognizes revenue ratably over the extended warranty coverage period, as the customer simultaneously receives and consumes the benefits of the extended warranty. Applied products are generally sold with a warranty for a 12-month period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales. |
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Investments | All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are measured and recorded at fair value with changes in fair value recorded in the accompanying Consolidated Statements of Operations. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest and other income, net in the accompanying Consolidated Condensed Statements of Operations. Equity investments without readily determinable fair value are measured at cost, less impairment, adjusted by observable price changes. Adjustments resulting from impairments and observable prices changes will be recorded in the accompanying Consolidated Condensed Statements of Operations. Unrealized gains and losses on investments classified as equity investments are recognized in other income (expense), net in the Consolidated Condensed Statement of Operations. Prior to the adoption of Accounting Standards Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019, these unrealized gains and temporary losses were included within accumulated other comprehensive income (loss), net of any related tax effect. Applied regularly reviews its debt 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. |
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Recent Accounting Pronouncements | Accounting Standards Adopted Retirement Benefits. In March 2017, the FASB issued authoritative guidance which requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Applied adopted this guidance in the first quarter of fiscal 2019 on a retrospective basis. The adoption of this guidance resulted in reclassification of other components of net benefit costs outside of income from operations and did not have a significant impact on Applied’s consolidated financial statements. Business Combinations. In January 2017, the FASB issued authoritative guidance that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. Applied adopted this guidance in the first quarter of fiscal 2019 on a prospective basis. The impact of the adoption depends on the facts and circumstances of future acquisition or disposal transactions. Income Taxes: Intra-Entity Asset Transfers. In October 2016, the FASB issued authoritative guidance that changed the tax accounting for intra-entity transfers of assets other than inventory. After adoption, the income tax effect of intra-entity transfers is realized at the time of the transfer instead of over the life of the asset. Applied adopted this guidance in the first quarter of fiscal 2019 using a modified retrospective approach, resulting in a cumulative effect adjustment to retained earnings. Upon adoption, deferred tax assets increased by $1.6 billion related to the estimated income tax effects of future amortization of intra-entity intangible asset transfers, with an offset to retained earnings. Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued authoritative guidance which addresses classification of certain cash receipts and cash payments related to the statement of cash flows. Effective in the first quarter of fiscal 2019, Applied adopted the authoritative guidance retrospectively. The adoption of this guidance did not have a significant impact and only impacts disclosures in Applied' s consolidated condensed statements of cash flow. Financial Instruments: Classification and Measurement. In January 2016, the FASB issued authoritative guidance that requires equity investments that do not result in consolidation, and are not accounted for under the equity method, to be measured at fair value, and requires recognition of any changes in fair value in net income unless the investments qualify for a new measurement alternative. For financial liabilities measured at fair value, the change in fair value caused by a change in instrument-specific credit risk will be required to be presented separately in other comprehensive income. Applied adopted this standard in the first quarter of fiscal year 2019. Upon adoption, Applied elected to apply the measurement alternative for equity investments without readily determinable fair value. Under the alternative, Applied measures investments without readily determinable fair value at cost, less impairment, adjusted by observable price changes prospectively to all equity investments that exist as of adoption and will reassess at each reporting period whether an investment qualifies for the alternative. Adopting this standard required Applied to record a cumulative net increase to retained earnings of approximately $21 million with the corresponding $17 million decrease in accumulated other comprehensive income, net of tax, for the unrealized gains and losses associated with equity investments with readily determinable fair values, as the authoritative guidance is required to be adopted prospectively. Going forward, the impact of this new standard could result in volatility in Applied’s consolidated statement of operations. Revenue Recognition. In May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires certain additional disclosures. Applied adopted this authoritative guidance in the first quarter of fiscal 2019 using the full retrospective method, which required restating each prior reporting period presented. Refer to the Impacts to Previously Reported Results section below for the impact of the adoption of the standard to Applied’s consolidated financial statements. For all periods prior to the date of initial adoption of this standard, Applied elected to use the practical expedient pursuant to which Applied excluded disclosures of both transaction prices allocated to remaining performance obligations and when these performance obligations are expected to be recognized as revenue. The most significant impact from the adoption of this standard is fewer constraints on revenue recognition upon shipment of manufacturing equipment. Impacts to Previously Reported Results Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Condensed Statement of Operations for the three and six months ended April 29, 2018 as follows:
Adoption of the retirement benefits standard did not have any impact on Applied’s Consolidated Balance Sheet or Consolidated Condensed Statement of Cash Flows. Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows:
Adoption of the revenue recognition standard did not impact cash provided by or used in investing or financing activities in Applied’s Consolidated Condensed Statement of Cash Flows for the first half of fiscal 2018. The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for the six months ended April 29, 2018 as follows:
Accounting Standards Not Yet Adopted Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit and other Postretirement Plans. In August 2018, the FASB issued authoritative guidance that adds, removes, and clarifies disclosure requirements for defined benefit and other postretirement plans. This authoritative guidance will be effective for Applied in fiscal 2021 on a retrospective basis, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued authoritative guidance that eliminates, amends, and adds disclosure requirements for fair value measurements. While the amended and new disclosure requirements primarily relate to Level 3 fair value measurements, the authoritative guidance also eliminates disclosure requirements related to the amount and reasons for transfer between Level 1 and Level 2 of fair value hierarchy, policy for timing of transfer between levels, and the valuation processes for Level 3 fair value measurements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020. Early adoption is permitted only for the removal and amendment of certain disclosures, while the new disclosures requirements are to be applied prospectively. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Derivatives and Hedging. In August 2017, the FASB issued authoritative guidance that modifies the recognition and presentation of hedge accounting to better align an entity’s risk management strategies and financial reporting for hedging relationships. The authoritative guidance expands the application of hedge accounting for non-financial and financial risk components and eases certain hedge effectiveness assessment requirements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs. In March 2017, the FASB issued authoritative guidance that will shorten the amortization period for certain callable debt securities held at a premium to the earliest call date to more closely align with expectations incorporated in market pricing. This authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 on a modified retrospective basis, with early adoption permitted. Applied is currently evaluating the impact of adopting this new accounting guidance on Applied’s consolidated financial statements. Goodwill Impairment. In January 2017, the FASB issued authoritative guidance that simplifies the process required to test goodwill for impairment. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied’s consolidated financial statements. Financial Instruments: Credit Losses. In June 2016, the FASB issued authoritative guidance that modifies the impairment model for certain financial assets by requiring use of an expected loss methodology, which will result in more timely recognition of credit losses. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted beginning in the first quarter of fiscal 2020. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Leases. In February 2016, the FASB issued authoritative guidance for lease accounting, which requires lessees to recognize lease assets and liabilities on the balance sheet for certain lease arrangements that are classified as operating leases under the previous standard, and to provide for enhanced disclosures. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 and should be applied using a modified retrospective approach. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. |
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Fair Value Measurement | Applied’s financial assets are measured and recorded at fair value on a recurring basis, except for equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Applied’s investments consist primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value. As of April 28, 2019, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. Applied’s equity investments with readily determinable values consist of publicly traded equity securities. Upon adoption of ASU 2016-01, these investments are measured at fair value using quoted prices for identical assets in an active market and the changes in fair value of these equity investments are recognized in the consolidated statements of operations. Applied adopted the standard using a modified retrospective transition method and reclassified the unrealized gains on these equity investments of $21 million to retained earnings as a cumulative-effect adjustment on the condensed consolidated balance sheets. Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. |
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Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring Basis | Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring Basis Applied’s equity investments without readily determinable values consist of equity investments in privately-held companies. Upon adoption of ASU 2016-01, Applied elected the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes on a prospective basis for certain equity investments without readily determinable fair values and is required to account for any subsequent observable changes in fair value within the statements of operations. Applied adopted the guidance prospectively, effective October 29, 2018, and there was no impact to Applied’s condensed consolidated financial statements. Prior to the adoption of ASU 2016-01, these investments were generally accounted for under the cost method of accounting. These investments are periodically assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. Impairment charges on equity investments in privately-held companies during the three and six months ended April 28, 2019 and April 29, 2018 were not material. |
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Derivatives | Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange and interest rate contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI as of April 28, 2019 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. |
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Goodwill | Goodwill and Purchased Intangible Assets Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and considers other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would in the first step compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. |
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Goodwill and Intangible Assets | The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time. |
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Finite-Lived Purchased Intangible Assets | Finite-Lived Purchased Intangible Assets Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years. Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach. Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure. |
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Treasury Stock | Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings. |
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Share-based Compensation | The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards, which include both performance and market goals, is recognized for each tranche over the service period. The cost of equity awards related to performance goals is based on an assessment of the likelihood that the applicable performance goals will be achieved. For the equity awards based on market goals, the cost is recognized based upon the assumption of 100% achievement of the goal. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:
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Performance Based Awards | During the first quarter of fiscal 2019, certain executive officers were granted awards that are subject to the achievement of targeted levels of adjusted operating margin and targeted levels of total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Index. Each metric will be weighted 50% and will be measured over a three-year period. The awards become eligible to vest only if performance goals are achieved and will vest only if the grantee remains employed by Applied through each applicable vesting date, subject to a qualifying retirement described below. The number of shares that may vest in full after three years ranges from 0% to 200% of the target amount. The awards provide for a partial payout based on actual performance at the conclusion of the three-year performance period in the event of a qualifying retirement based on age and years of service. The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant. If the performance goals are not met as of the end of the performance period, no compensation expense is recognized, and any previously recognized compensation expense is reversed. The expected cost is based on the portion of the awards that is probable to vest and is reflected over the service period and reduced for estimated forfeitures. The fair value of the portion of the awards subject to targeted levels of relative total shareholder return is estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upon the assumption of 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeitures. |
Basis of Presentation Basis of Presentation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Condensed Statement of Operations for the three and six months ended April 29, 2018 as follows:
Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows:
The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for the six months ended April 29, 2018 as follows:
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share |
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Cash, Cash Equivalents and Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash, cash equivalents and investments | The following tables summarize Applied’s cash, cash equivalents and investments:
_________________________ * Includes agency debt securities guaranteed by Canada.
_________________________ * Includes agency debt securities guaranteed by Canada. |
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Contractual maturities of investments | The following table summarizes the contractual maturities of Applied’s investments as of April 28, 2019:
_________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities and asset-backed and mortgage-backed securities. |
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Equity Securities, FV-NI | The components of gain (losses) on equity investments for the three and six months ended April 28, 2019 were as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets measured at fair value on a recurring basis | Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below:
|
Derivative Instruments and Hedging Activities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of derivative instruments on the consolidated statement of operations | The effects of derivative instruments and hedging activities on the Consolidated Condensed Statements of Operations were as follows:
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Derivatives not designated as hedging instruments in statement of operations |
|
Contract Balances (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability | Contract balances at the end of each reporting period were as follows:
|
Balance Sheet Detail (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Detail [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
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Other current assets |
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Property, plant and equipment, net |
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Deferred Income Taxes and Other Assets |
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Accounts Payable and Accrued Expenses |
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Other liabilities |
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Goodwill, Purchased Technology and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Details of goodwill as of April 28, 2019 and October 28, 2018 were as follows:
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Summary of purchased technology and intangible assets | A summary of Applied’s purchased technology and intangible assets is set forth below:
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Finite-lived intangible assets | Details of finite-lived intangible assets were as follows:
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Summary of amortization expense | Details of amortization expense by segment were as follows:
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Schedule of categories amortization expense was charged to | Amortization expense was charged to the following categories:
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Future estimated amortization expense | As of April 28, 2019, future estimated amortization expense is expected to be as follows:
|
Borrowing Facilities and Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Outstanding | Debt outstanding as of April 28, 2019 and October 28, 2018 was as follows:
|
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive loss, after-tax basis | Changes in the components of AOCI, net of tax, were as follows:
(a) - Represents the reclassification adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019. See Note 1.
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Summary of stock repurchases | The following table summarizes Applied’s stock repurchases for the three and six months ended April 28, 2019 and April 29, 2018:
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Effect of share-based compensation on the results of operations | The effect of share-based compensation on the results of operations was as follows:
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Restricted stock units and restricted stock activity | A summary of the changes in any restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the six months ended April 28, 2019 is presented below:
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | Underlying assumptions used in the model are outlined in the following table:
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Warranty, Guarantees And Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the warranty reserves | Changes in the warranty reserves are presented below:
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Industry Segment Operations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales and operating income (loss) for each reportable segment | Net sales and operating income (loss) for each reportable segment were as follows:
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Revenue from External Customers by Geographic Areas | Net sales by geographic region, determined by the location of customers’ facilities to which products were shipped to, were as follows:
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Disaggregation of Revenue | Net sales for Semiconductor Systems by end use application for the periods indicated were as follows:
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Reconciliations of total segment operating income to Applied's consolidated operating income (loss) | The reconciling items included in Corporate and Other were as follows:
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Companies accounted for at least 10 percent of Applied's net sales | The following customers accounted for at least 10 percent of Applied’s net sales for the six months ended April 28, 2019, and sales to these customers included products and services from multiple reportable segments.
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Basis of Presentation Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | ||
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Apr. 28, 2019 |
Oct. 29, 2018 |
Oct. 28, 2018 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Extended product warranty period | 2 years | ||
Retained earnings | $ 23,502 | $ 20,880 | |
Accumulated other comprehensive loss | $ 138 | $ 125 | |
Accounting Standards Update 2016-16 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred income taxes | $ 1,600 | ||
Accounting Standards Update 2016-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | 21 | ||
Accumulated other comprehensive loss | $ 17 |
Basis of Presentation - Effects of New Accounting Standards (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
Oct. 28, 2018 |
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Income Statement [Abstract] | |||||
Net sales | $ 3,539 | $ 4,579 | $ 7,292 | $ 8,784 | |
Cost of products sold | 2,009 | 2,523 | 4,097 | 4,788 | |
Gross profit | 1,530 | 2,056 | 3,195 | 3,996 | |
Research, development and engineering | 508 | 509 | 1,024 | 998 | |
General and administrative | 113 | 125 | 223 | 235 | |
Interest and other income, net | 43 | 25 | 83 | 52 | |
Income before income taxes | 759 | 1,261 | 1,647 | 2,444 | |
Provision for income taxes | 93 | 161 | 210 | 1,179 | |
Net income | $ 666 | $ 1,100 | $ 1,437 | $ 1,265 | |
Basic earnings per share (in dollars per share) | $ 0.71 | $ 1.07 | $ 1.51 | $ 1.21 | |
Diluted earnings per share (in dollars per share) | $ 0.70 | $ 1.06 | $ 1.50 | $ 1.20 | |
Balance Sheet Detail [Abstract] | |||||
Accounts receivable, net | $ 2,264 | $ 2,264 | $ 2,323 | ||
Inventories | 3,677 | 3,677 | 3,721 | ||
Other current assets | 498 | 498 | 530 | ||
Deferred income taxes and other assets | 2,026 | 2,026 | 473 | ||
Customer deposits and deferred revenue | 0 | ||||
Contract liabilities | 1,393 | 1,393 | 1,201 | ||
Retained earnings | 23,502 | 23,502 | 20,880 | ||
Cash flows from operating activities: | |||||
Net income | $ 666 | $ 1,100 | 1,437 | $ 1,265 | |
Adjustments required to reconcile net income to cash provided by operating activities: | |||||
Deferred income taxes | 49 | 72 | |||
Changes in operating assets and liabilities: | |||||
Inventories | 44 | (540) | |||
Accounts payable and accrued expenses | (409) | 103 | |||
Contract liabilities | $ 192 | 282 | |||
As Previously Reported | |||||
Income Statement [Abstract] | |||||
Net sales | 4,567 | 8,771 | |||
Cost of products sold | 2,477 | 4,761 | |||
Gross profit | 2,090 | 4,010 | |||
Research, development and engineering | 509 | 997 | |||
General and administrative | 124 | 234 | |||
Interest and other income, net | 24 | 49 | |||
Income before income taxes | 1,295 | 2,457 | |||
Provision for income taxes | 166 | 1,193 | |||
Net income | $ 1,129 | $ 1,264 | |||
Basic earnings per share (in dollars per share) | $ 1.10 | $ 1.21 | |||
Diluted earnings per share (in dollars per share) | $ 1.09 | $ 1.20 | |||
Balance Sheet Detail [Abstract] | |||||
Accounts receivable, net | 2,565 | ||||
Inventories | 3,722 | ||||
Other current assets | 430 | ||||
Deferred income taxes and other assets | 470 | ||||
Customer deposits and deferred revenue | 1,347 | ||||
Contract liabilities | 0 | ||||
Retained earnings | 20,874 | ||||
Cash flows from operating activities: | |||||
Net income | $ 1,129 | $ 1,264 | |||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||
Deferred income taxes | 86 | ||||
Changes in operating assets and liabilities: | |||||
Inventories | (564) | ||||
Accounts payable and accrued expenses | 100 | ||||
Contract liabilities | 296 | ||||
Accounting Standards Update 2014-09 | Restatement Adjustment | |||||
Income Statement [Abstract] | |||||
Net sales | 12 | 13 | |||
Cost of products sold | 46 | 26 | |||
Gross profit | (34) | (13) | |||
Research, development and engineering | 0 | 0 | |||
General and administrative | 0 | 0 | |||
Interest and other income, net | 0 | 0 | |||
Income before income taxes | (34) | (13) | |||
Provision for income taxes | (5) | (14) | |||
Net income | $ (29) | $ 1 | |||
Basic earnings per share (in dollars per share) | $ (0.03) | $ 0.00 | |||
Diluted earnings per share (in dollars per share) | $ (0.03) | $ 0.00 | |||
Balance Sheet Detail [Abstract] | |||||
Accounts receivable, net | (242) | ||||
Inventories | (1) | ||||
Other current assets | 100 | ||||
Deferred income taxes and other assets | 3 | ||||
Customer deposits and deferred revenue | (1,347) | ||||
Contract liabilities | 1,201 | ||||
Retained earnings | $ 6 | ||||
Cash flows from operating activities: | |||||
Net income | $ (29) | $ 1 | |||
Adjustments required to reconcile net income to cash provided by operating activities: | |||||
Deferred income taxes | (14) | ||||
Changes in operating assets and liabilities: | |||||
Inventories | 24 | ||||
Accounts payable and accrued expenses | 3 | ||||
Contract liabilities | (14) | ||||
Accounting Standards Update 2017-07 | Restatement Adjustment | |||||
Income Statement [Abstract] | |||||
Net sales | 0 | 0 | |||
Cost of products sold | 0 | 1 | |||
Gross profit | 0 | (1) | |||
Research, development and engineering | 0 | 1 | |||
General and administrative | 1 | 1 | |||
Interest and other income, net | 1 | 3 | |||
Income before income taxes | 0 | 0 | |||
Provision for income taxes | 0 | 0 | |||
Net income | $ 0 | $ 0 | |||
Basic earnings per share (in dollars per share) | $ 0.00 | $ 0.00 | |||
Diluted earnings per share (in dollars per share) | $ 0.00 | $ 0.00 | |||
Cash flows from operating activities: | |||||
Net income | $ 0 | $ 0 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
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Numerator: | ||||
Net income | $ 666 | $ 1,100 | $ 1,437 | $ 1,265 |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 942 | 1,029 | 950 | 1,042 |
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares (in shares) | 6 | 11 | 7 | 14 |
Denominator for diluted earnings per share (in shares) | 948 | 1,040 | 957 | 1,056 |
Basic earnings per share (in dollars per share) | $ 0.71 | $ 1.07 | $ 1.51 | $ 1.21 |
Diluted earnings per share (in dollars per share) | $ 0.70 | $ 1.06 | $ 1.50 | $ 1.20 |
Potentially dilutive securities (in shares) | 3 | 0 | 3 | 0 |
Cash, Cash Equivalents and Investments (Summary of Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Summary of Cash, Cash Equivalents and Investments | ||
Cash | $ 1,185 | $ 1,489 |
Total Cash equivalents | 1,931 | 1,951 |
Total Cash and Cash equivalents | 3,116 | 3,440 |
Equity investments cost | 107 | |
Equity investments unrealized gain | 36 | |
Equity investments unrealized loss | 6 | |
Equity investments estimated fair value | 137 | |
Total short-term and long-term investments cost | 2,082 | |
Gross unrealized gains on short-term and long-term investments | 43 | |
Gross unrealized losses on short-term and long-term investments | 9 | |
Estimated fair value of short-term and long-term investments | 2,116 | |
Gross unrealized gain on publicly traded equity securities | 25 | |
Gross unrealized loss on publicly traded equity securities | 4 | |
Equity investments in privately-held companies | 89 | |
Cost of equity investments | 106 | |
Estimated fair value of equity investments | 127 | |
Cost of short-term and long-term investments | 2,082 | 2,150 |
Gross unrealized gain on short term and long term investments | 25 | |
Gross unrealized loss on short term and long term investments | 17 | |
Estimated fair value of short-term and long-term investments | 2,116 | 2,158 |
Cash, cash equivalents and investments, cost | 5,198 | 5,590 |
Cash, cash equivalents and investments, gross unrealized gains | 43 | 25 |
Cash, cash equivalents and investments, gross unrealized losses | 9 | 17 |
Cash, cash equivalents and investments, estimated fair value | 5,232 | 5,598 |
Total fixed income securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 1,975 | 2,044 |
Gross unrealized gains on fixed income securities | 7 | 0 |
Gross unrealized losses on fixed income securities | 3 | 13 |
Estimated fair value of fixed income securities | 1,979 | 2,031 |
U.S. Treasury and agency securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 367 | 335 |
Gross unrealized gains on fixed income securities | 1 | 0 |
Gross unrealized losses on fixed income securities | 0 | 2 |
Estimated fair value of fixed income securities | 368 | 333 |
Municipal securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 410 | 399 |
Gross unrealized gains on fixed income securities | 2 | 0 |
Gross unrealized losses on fixed income securities | 1 | 4 |
Estimated fair value of fixed income securities | 411 | 395 |
Commercial paper, corporate bonds and medium-term notes | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 588 | 705 |
Gross unrealized gains on fixed income securities | 3 | 0 |
Gross unrealized losses on fixed income securities | 1 | 3 |
Estimated fair value of fixed income securities | 590 | 702 |
Asset-backed and mortgage-backed securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 601 | 595 |
Gross unrealized gains on fixed income securities | 1 | 0 |
Gross unrealized losses on fixed income securities | 1 | 4 |
Estimated fair value of fixed income securities | 601 | 591 |
Publicly traded equity securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Equity investments cost | 10 | |
Equity investments unrealized gain | 27 | |
Equity investments unrealized loss | 3 | |
Equity investments estimated fair value | 34 | |
Publicly traded equity securities cost | 17 | |
Gross unrealized gain on publicly traded equity securities | 25 | |
Gross unrealized loss on publicly traded equity securities | 4 | |
Publicly traded equity securities estimated fair value | 38 | |
Equity investments in privately-held companies | ||
Summary of Cash, Cash Equivalents and Investments | ||
Equity investments cost | 97 | |
Equity investments unrealized gain | 9 | |
Equity investments unrealized loss | 3 | |
Equity investments estimated fair value | 103 | |
Money market funds | ||
Summary of Cash, Cash Equivalents and Investments | ||
Total Cash equivalents | 1,671 | 1,599 |
Municipal securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Total Cash equivalents | 1 | |
Commercial paper, corporate bonds and medium-term notes | ||
Summary of Cash, Cash Equivalents and Investments | ||
Total Cash equivalents | 253 | 352 |
Asset-backed and mortgage-backed securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Total Cash equivalents | 6 | |
CANADA | Non-U.S. government securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 9 | |
Gross unrealized gains on fixed income securities | 0 | |
Gross unrealized losses on fixed income securities | 0 | |
Estimated fair value of fixed income securities | $ 9 | |
Canada and Germany | Non-U.S. government securities | ||
Summary of Cash, Cash Equivalents and Investments | ||
Cost of fixed income securities | 10 | |
Gross unrealized gains on fixed income securities | 0 | |
Gross unrealized losses on fixed income securities | 0 | |
Estimated fair value of fixed income securities | $ 10 |
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Contractual maturities of investments | ||
Due in one year or less, Cost | $ 414 | |
Due after one through five years, Cost | 960 | |
No single maturity date, Cost | 708 | |
Cost of short-term and long-term investments | 2,082 | $ 2,150 |
Due in one year or less, Estimated Fair Value | 414 | |
Due after one through five years, Estimated Fair Value | 964 | |
No single maturity date, Estimated Fair Value | 738 | |
Estimated fair value of short-term and long-term investments | $ 2,116 | $ 2,158 |
Cash, Cash Equivalents and Investments - Narrative (Details Textual) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Fixed Income Securities | ||||
Schedule of Cash, Cash Equivalents and Investments [Line Items] | ||||
Other than temporary impairment losses, investments | $ 0 | $ 0 | $ 0 | $ 0 |
Cash, Cash Equivalents and Investments - Gain (Loss) on Equity Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Apr. 28, 2019 |
Apr. 28, 2019 |
|
Gain (Loss) on Securities [Line Items] | ||
Total gain on equity investments, net | $ 10 | $ 22 |
Publicly traded equity securities | ||
Gain (Loss) on Securities [Line Items] | ||
Unrealized gain | 7 | 13 |
Unrealized loss | (1) | (3) |
Gain on sales | 1 | 2 |
Equity investments in privately-held companies | ||
Gain (Loss) on Securities [Line Items] | ||
Unrealized gain | 2 | 9 |
Unrealized loss | (2) | (3) |
Gain on sales | $ 3 | $ 4 |
Fair Value Measurements (Details Textual) - USD ($) |
Apr. 28, 2019 |
Oct. 29, 2018 |
Oct. 28, 2018 |
Apr. 29, 2018 |
---|---|---|---|---|
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Retained earnings | $ 23,502,000,000 | $ 20,880,000,000 | ||
Fair value of transfers from level one to level two | 0 | $ 0 | ||
Fair value of transfers from level two to level one | 0 | $ 0 | ||
Investment securities | 2,116,000,000 | 2,158,000,000 | ||
Long-term debt, principal amount | 5,400,000,000 | 5,400,000,000 | ||
Recurring fair value measurements | Level 3 | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment securities | 0 | 0 | ||
Estimated fair value | Level 2 | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Long-term debt fair value | $ 5,700,000,000 | $ 5,400,000,000 | ||
Accounting Standards Update 2016-01 | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Retained earnings | $ 21,000,000 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Assets: | ||
Equity investments with readily determinable values | $ 137 | |
Recurring fair value measurements | ||
Assets: | ||
Available-for-sale debt security investments | 3,910 | $ 3,982 |
Equity investments with readily determinable values | 34 | 38 |
Total | 3,944 | 4,020 |
Recurring fair value measurements | Money market funds | ||
Assets: | ||
Available-for-sale debt security investments | 1,671 | 1,599 |
Recurring fair value measurements | U.S. Treasury and agency securities | ||
Assets: | ||
Available-for-sale debt security investments | 368 | 333 |
Recurring fair value measurements | Non-U.S. government securities | ||
Assets: | ||
Available-for-sale debt security investments | 9 | 10 |
Recurring fair value measurements | Municipal securities | ||
Assets: | ||
Available-for-sale debt security investments | 412 | 395 |
Recurring fair value measurements | Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Available-for-sale debt security investments | 843 | 1,054 |
Recurring fair value measurements | Asset-backed and mortgage-backed securities | ||
Assets: | ||
Available-for-sale debt security investments | 607 | 591 |
Recurring fair value measurements | Publicly traded equity securities | ||
Assets: | ||
Equity investments with readily determinable values | 34 | 38 |
Recurring fair value measurements | Level 1 | ||
Assets: | ||
Available-for-sale debt security investments | 2,007 | 1,896 |
Equity investments with readily determinable values | 34 | 38 |
Total | 2,041 | 1,934 |
Recurring fair value measurements | Level 1 | Money market funds | ||
Assets: | ||
Available-for-sale debt security investments | 1,671 | 1,599 |
Recurring fair value measurements | Level 1 | U.S. Treasury and agency securities | ||
Assets: | ||
Available-for-sale debt security investments | 336 | 297 |
Recurring fair value measurements | Level 1 | Non-U.S. government securities | ||
Assets: | ||
Available-for-sale debt security investments | 0 | 0 |
Recurring fair value measurements | Level 1 | Municipal securities | ||
Assets: | ||
Available-for-sale debt security investments | 0 | 0 |
Recurring fair value measurements | Level 1 | Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Available-for-sale debt security investments | 0 | 0 |
Recurring fair value measurements | Level 1 | Asset-backed and mortgage-backed securities | ||
Assets: | ||
Available-for-sale debt security investments | 0 | 0 |
Recurring fair value measurements | Level 1 | Publicly traded equity securities | ||
Assets: | ||
Equity investments with readily determinable values | 34 | 38 |
Recurring fair value measurements | Level 2 | ||
Assets: | ||
Available-for-sale debt security investments | 1,903 | 2,086 |
Equity investments with readily determinable values | 0 | 0 |
Total | 1,903 | 2,086 |
Recurring fair value measurements | Level 2 | Money market funds | ||
Assets: | ||
Available-for-sale debt security investments | 0 | 0 |
Recurring fair value measurements | Level 2 | U.S. Treasury and agency securities | ||
Assets: | ||
Available-for-sale debt security investments | 32 | 36 |
Recurring fair value measurements | Level 2 | Non-U.S. government securities | ||
Assets: | ||
Available-for-sale debt security investments | 9 | 10 |
Recurring fair value measurements | Level 2 | Municipal securities | ||
Assets: | ||
Available-for-sale debt security investments | 412 | 395 |
Recurring fair value measurements | Level 2 | Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Available-for-sale debt security investments | 843 | 1,054 |
Recurring fair value measurements | Level 2 | Asset-backed and mortgage-backed securities | ||
Assets: | ||
Available-for-sale debt security investments | 607 | 591 |
Recurring fair value measurements | Level 2 | Publicly traded equity securities | ||
Assets: | ||
Equity investments with readily determinable values | $ 0 | $ 0 |
Derivative Instruments and Hedging Activities (Details Textual) |
6 Months Ended |
---|---|
Apr. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Time period for hedging of foreign currency transaction | 24 months |
Time period over which majority of after tax gain loss related to derivatives to be reclassified into earnings | 12 months |
Derivative Instruments and Hedging Activities (Derivatives in Statements of Operations) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effective portion - gain (loss) recognized in AOCI | $ 11 | $ 2 | $ (5) | $ (16) |
Effective portion - gain or (loss) reclassified from AOCI into income | (2) | (8) | 5 | (2) |
Ineffective portion and amount excluded from effectiveness testing - gain or (loss) recognized in income | 2 | 3 | 6 | 3 |
Foreign exchange contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effective portion - gain (loss) recognized in AOCI | 11 | 2 | (5) | (16) |
Effective portion - gain or (loss) reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Ineffective portion and amount excluded from effectiveness testing - gain or (loss) recognized in income | 0 | 0 | 0 | 0 |
Foreign exchange contracts | Cost of products sold | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effective portion - gain (loss) recognized in AOCI | 0 | 0 | 0 | 0 |
Effective portion - gain or (loss) reclassified from AOCI into income | (2) | (12) | 10 | (4) |
Ineffective portion and amount excluded from effectiveness testing - gain or (loss) recognized in income | 4 | 4 | 9 | 6 |
Foreign exchange contracts | General and administrative | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effective portion - gain (loss) recognized in AOCI | 0 | 0 | 0 | 0 |
Effective portion - gain or (loss) reclassified from AOCI into income | 2 | 5 | (3) | 4 |
Ineffective portion and amount excluded from effectiveness testing - gain or (loss) recognized in income | (2) | (1) | (3) | (3) |
Interest rate contracts | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effective portion - gain (loss) recognized in AOCI | 0 | 0 | 0 | 0 |
Effective portion - gain or (loss) reclassified from AOCI into income | (2) | (1) | (2) | (2) |
Ineffective portion and amount excluded from effectiveness testing - gain or (loss) recognized in income | $ 0 | $ 0 | $ 0 | $ 0 |
Derivative Instruments and Hedging Activities (Gain/Loss Recognized in Income) (Details) - Foreign exchange contracts - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives not designated as hedging instruments | $ 6 | $ (2) | $ (4) | $ (10) |
General and administrative | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives not designated as hedging instruments | $ 6 | $ (2) | $ (4) | $ (10) |
Accounts Receivable, Net (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
Oct. 28, 2018 |
|
Receivables [Abstract] | |||||
Factored accounts receivable | $ 677 | $ 390 | $ 1,100 | $ 766 | |
Allowance for doubtful accounts | $ 32 | $ 32 | $ 33 |
Contract Balances - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 111 | $ 99 |
Contract liabilities | $ 1,393 | $ 1,201 |
Contract Balances - Narrative (Details Textual) |
3 Months Ended | 6 Months Ended |
---|---|---|
Apr. 28, 2019
USD ($)
|
Apr. 28, 2019
USD ($)
|
|
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized | $ 539,000,000 | |
Impairment loss on accounts receivable and contract assets | $ 0 | 0 |
Long-term Contract with Customer | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation | $ 469,000,000 | $ 469,000,000 |
Revenue performance obligation description of timing | expected to be recognized within the next 36 months. |
Balance Sheet Detail (Inventories) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Inventories | ||
Customer service spares | $ 1,195 | $ 989 |
Raw materials | 918 | 1,020 |
Work-in-process | 549 | 505 |
Finished goods | 1,015 | 1,207 |
Inventories | 3,677 | 3,721 |
Inventory at customer locations included in finished goods | 32 | 19 |
Inventory, finished goods, evaluation inventory, net of reserves | $ 323 | $ 350 |
Balance Sheet Detail (Other Current Assets) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Other Current Assets [Abstract] | ||
Prepaid income taxes and income taxes receivable | $ 65 | $ 40 |
Prepaid expenses and other | 433 | 490 |
Other Current Assets | $ 498 | $ 530 |
Balance Sheet Detail (Property, Plant and Equipment) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Apr. 28, 2019 |
Oct. 28, 2018 |
|
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 4,028 | $ 3,812 |
Accumulated depreciation | (2,534) | (2,405) |
Property, Plant and Equipment, Net | 1,494 | 1,407 |
Land and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | 245 | 245 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 1,585 | 1,448 |
Buildings and improvements | Min | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 3 years | |
Buildings and improvements | Max | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 30 years | |
Demonstration and manufacturing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 1,404 | 1,282 |
Demonstration and manufacturing equipment | Min | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 3 years | |
Demonstration and manufacturing equipment | Max | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 5 years | |
Furniture, fixtures and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 661 | 634 |
Furniture, fixtures and other equipment | Min | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 3 years | |
Furniture, fixtures and other equipment | Max | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life | 5 years | |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 133 | $ 203 |
Balance Sheet Detail Balance Sheet Detail (Deferred Income Taxes and Other Assets) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Balance Sheet Detail [Abstract] | ||
Non-current deferred income taxes and income taxes receivable | $ 1,843 | $ 319 |
Other assets | 183 | 154 |
Deferred Income Taxes and Other Assets | $ 2,026 | $ 473 |
Balance Sheet Detail (Accounts Payable and Accrued Expense) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 903 | $ 996 |
Compensation and employee benefits | 451 | 639 |
Warranty | 195 | 208 |
Dividends payable | 197 | 193 |
Income taxes payable | 12 | 136 |
Other accrued taxes | 61 | 112 |
Interest payable | 38 | 38 |
Other | 355 | 399 |
Accounts Payable and Accrued Expenses | $ 2,212 | $ 2,721 |
Balance Sheet Detail (Other Liabilities) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Other Liabilities | ||
Defined and postretirement benefit plans | $ 175 | $ 177 |
Other | 157 | 126 |
Other Liabilities | $ 332 | $ 303 |
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Goodwill and Other Indefinite-lived Intangible Assets) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 3,399 | $ 3,368 |
Semiconductor Systems | ||
Goodwill [Line Items] | ||
Goodwill | 2,182 | 2,151 |
Applied Global Services | ||
Goodwill [Line Items] | ||
Goodwill | 1,018 | 1,018 |
Display and Adjacent Markets | ||
Goodwill [Line Items] | ||
Goodwill | $ 199 | $ 199 |
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Purchased Technology and Intangible Assets) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Finite lived assets | $ 185 | $ 213 |
Purchased technology, net | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Finite lived assets | 90 | 109 |
Intangible assets | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Finite lived assets | $ 95 | $ 104 |
Goodwill, Purchased Technology and Other Intangible Assets Narrative (Details Textual) |
6 Months Ended |
---|---|
Apr. 28, 2019 | |
Min | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 1 year |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 15 years |
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Finite-lived Intangible Assets) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Finite-lived intangible assets | ||
Gross carrying amount: | $ 1,988 | $ 1,988 |
Accumulated amortization: | (1,803) | (1,775) |
Total | 185 | 213 |
Corporate and Other | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 9 | 9 |
Accumulated amortization: | (9) | (9) |
Semiconductor Systems | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 1,701 | 1,701 |
Accumulated amortization: | (1,546) | (1,525) |
Applied Global Services | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 77 | 77 |
Accumulated amortization: | (74) | (73) |
Display and Adjacent Markets | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 201 | 201 |
Accumulated amortization: | (174) | (168) |
Purchased technology, net | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 1,645 | 1,645 |
Accumulated amortization: | (1,555) | (1,536) |
Total | 90 | 109 |
Purchased technology, net | Corporate and Other | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 0 | 0 |
Accumulated amortization: | 0 | 0 |
Purchased technology, net | Semiconductor Systems | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 1,449 | 1,449 |
Accumulated amortization: | (1,387) | (1,375) |
Purchased technology, net | Applied Global Services | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 33 | 33 |
Accumulated amortization: | (30) | (29) |
Purchased technology, net | Display and Adjacent Markets | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 163 | 163 |
Accumulated amortization: | (138) | (132) |
Intangible assets | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 343 | 343 |
Accumulated amortization: | (248) | (239) |
Total | 95 | 104 |
Intangible assets | Corporate and Other | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 9 | 9 |
Accumulated amortization: | (9) | (9) |
Intangible assets | Semiconductor Systems | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 252 | 252 |
Accumulated amortization: | (159) | (150) |
Intangible assets | Applied Global Services | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 44 | 44 |
Accumulated amortization: | (44) | (44) |
Intangible assets | Display and Adjacent Markets | Operating Segments | ||
Finite-lived intangible assets | ||
Gross carrying amount: | 38 | 38 |
Accumulated amortization: | $ (36) | $ (36) |
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 14 | $ 49 | $ 28 | $ 99 |
Semiconductor Systems | Operating Segments | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | 10 | 45 | 21 | 91 |
Applied Global Services [Member] | Operating Segments | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | 1 | 1 | 1 | 1 |
Display and Adjacent Markets | Operating Segments | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 3 | $ 3 | $ 6 | $ 7 |
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 14 | $ 49 | $ 28 | $ 99 |
Cost of products sold | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | 10 | 45 | 19 | 90 |
Marketing and selling | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 4 | $ 4 | $ 9 | $ 9 |
Goodwill, Purchased Technology and Other Intangible Assets (Estimated Amortization Expense) (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Future estimated amortization expense | ||
2019 (remaining 6 months) | $ 29 | |
2020 | 52 | |
2021 | 39 | |
2022 | 24 | |
2023 | 11 | |
Thereafter | 30 | |
Total | $ 185 | $ 213 |
Borrowing Facilities and Debt (Details Textual) - USD ($) |
Apr. 28, 2019 |
Oct. 28, 2018 |
Oct. 30, 2011 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Available revolving credit agreement | $ 1,600,000,000.0 | ||
Outstanding credit facilities | 0 | $ 0 | |
Commercial paper | $ 1,500,000,000 | ||
Revolving Credit | |||
Debt Instrument [Line Items] | |||
Available revolving credit agreement | 1,500,000,000.0 | ||
Foreign Line of Credit | |||
Debt Instrument [Line Items] | |||
Available revolving credit agreement | 72,000,000 | ||
Commercial paper | |||
Debt Instrument [Line Items] | |||
Outstanding commercial paper | $ 0 |
Borrowing Facilities and Debt (Details) - USD ($) $ in Millions |
Apr. 28, 2019 |
Oct. 28, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt, principal amount | $ 5,400 | $ 5,400 |
Total long-term debt | 5,311 | 5,309 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, principal amount | 5,350 | 5,350 |
Total unamortized discount | (10) | (11) |
Total unamortized debt issuance costs | $ (29) | (30) |
Senior Notes | 2.625% Senior Notes Due 2020 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 2.625% | |
Long-term debt, principal amount | $ 600 | 600 |
Effective Interest Rate | 2.64% | |
Senior Notes | 4.300% Senior Notes Due 2021 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 4.30% | |
Long-term debt, principal amount | $ 750 | 750 |
Effective Interest Rate | 4.326% | |
Senior Notes | 3.900% Senior Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 3.90% | |
Long-term debt, principal amount | $ 700 | 700 |
Effective Interest Rate | 3.944% | |
Senior Notes | 3.300% Senior Notes Due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 3.30% | |
Long-term debt, principal amount | $ 1,200 | 1,200 |
Effective Interest Rate | 3.342% | |
Senior Notes | 5.100% Senior Notes Due 2035 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 5.10% | |
Long-term debt, principal amount | $ 500 | 500 |
Effective Interest Rate | 5.127% | |
Senior Notes | 5.850% Senior Notes Due 2041 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 5.85% | |
Long-term debt, principal amount | $ 600 | 600 |
Effective Interest Rate | 5.879% | |
Senior Notes | 4.350% Senior Notes Due 2047 | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 4.35% | |
Long-term debt, principal amount | $ 1,000 | $ 1,000 |
Effective Interest Rate | 4.361% |
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Changes in Components of AOCI) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
Oct. 29, 2018 |
||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | $ 8,209 | $ 8,817 | $ 6,845 | $ 9,630 | ||||
Adoption of new accounting standards | [1] | $ 1,553 | ||||||
Other comprehensive income (loss) before reclassifications | 8 | (16) | ||||||
Amounts reclassified out of AOCI | (4) | 2 | ||||||
Other comprehensive income (loss), net of tax | 16 | 1 | 4 | (14) | ||||
Ending Balance | 8,201 | 7,324 | 8,201 | 7,324 | ||||
Unrealized Gain on Investments, Net | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | 7 | 53 | ||||||
Adoption of new accounting standards | (17) | |||||||
Other comprehensive income (loss) before reclassifications | 13 | (3) | ||||||
Amounts reclassified out of AOCI | 0 | 2 | ||||||
Other comprehensive income (loss), net of tax | 13 | (1) | ||||||
Ending Balance | 3 | 52 | 3 | 52 | ||||
Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | (9) | (11) | ||||||
Adoption of new accounting standards | 0 | |||||||
Other comprehensive income (loss) before reclassifications | (4) | (13) | ||||||
Amounts reclassified out of AOCI | (4) | 2 | ||||||
Other comprehensive income (loss), net of tax | (8) | (11) | ||||||
Ending Balance | (17) | (22) | (17) | (22) | ||||
Defined and Postretirement Benefit Plans | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | (137) | (120) | ||||||
Adoption of new accounting standards | 0 | |||||||
Other comprehensive income (loss) before reclassifications | 0 | 0 | ||||||
Amounts reclassified out of AOCI | 0 | (2) | ||||||
Other comprehensive income (loss), net of tax | 0 | (2) | ||||||
Ending Balance | (137) | (122) | (137) | (122) | ||||
Cumulative Translation Adjustments | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | 14 | 14 | ||||||
Adoption of new accounting standards | 0 | |||||||
Other comprehensive income (loss) before reclassifications | (1) | 0 | ||||||
Amounts reclassified out of AOCI | 0 | 0 | ||||||
Other comprehensive income (loss), net of tax | (1) | 0 | ||||||
Ending Balance | 13 | 14 | 13 | 14 | ||||
AOCI Attributable to Parent | ||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||||||
Beginning Balance | (154) | (79) | (125) | (64) | ||||
Adoption of new accounting standards | [1] | $ (17) | ||||||
Other comprehensive income (loss), net of tax | 16 | 1 | 4 | (14) | ||||
Ending Balance | $ (138) | $ (78) | $ (138) | $ (78) | ||||
|
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details Textual) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2019
$ / shares
|
Dec. 31, 2018
$ / shares
|
Apr. 28, 2019
USD ($)
$ / shares
shares
|
Apr. 29, 2018
$ / shares
shares
|
Apr. 28, 2019
USD ($)
employee_stock_purchase_plan
$ / shares
shares
|
Apr. 29, 2018
USD ($)
$ / shares
shares
|
Feb. 28, 2018
USD ($)
|
|
Equity [Line Items] | |||||||
Amount authorized by board of directors to repurchase shares | $ | $ 6,000,000,000.0 | ||||||
Remaining authorized repurchase amount | $ | $ 3,000,000,000 | $ 3,000,000,000 | |||||
Dividends declared per share (in dollars per share) | $ / shares | $ 0.21 | $ 0.20 | $ 0.21 | $ 0.20 | $ 0.41 | $ 0.30 | |
Payments of dividends | $ | $ 381,000,000 | $ 211,000,000 | |||||
Employee Stock | |||||||
Equity [Line Items] | |||||||
Performance of total shareholder return | 100.00% | ||||||
Total unrecognized compensation expense | $ | $ 470,000,000 | $ 470,000,000 | |||||
Weighted average period for unrecognized compensation expense to be recognized (in years) | 2 years 7 months 20 days | ||||||
Performance Shares | |||||||
Equity [Line Items] | |||||||
Additional performance-based awards to be earned upon certain levels of achievement (in shares) | shares | 1,600,000 | 1,600,000 | |||||
Award measurement metric relative weight | 50.00% | ||||||
Award measurement period | 3 years | ||||||
Performance Shares | Min | |||||||
Equity [Line Items] | |||||||
Award vesting rights, percentage of target amount | 0.00% | ||||||
Performance Shares | Maximum | |||||||
Equity [Line Items] | |||||||
Award vesting rights, percentage of target amount | 200.00% | ||||||
Employee Stock Incentive Plan | Employee Stock Option | |||||||
Equity [Line Items] | |||||||
Number of shares available for grant (in shares) | shares | 67,000,000 | 67,000,000 | |||||
Employee Stock Purchase Plan | |||||||
Equity [Line Items] | |||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 2 | ||||||
Employee stock purchase plan purchase period | 6 months | ||||||
Shares issued under employee stock purchase plans (in shares) | shares | 2,000,000 | 1,000,000 | 2,000,000 | 1,000,000 | |||
Employee Stock Purchase Plan | Employee Stock | |||||||
Equity [Line Items] | |||||||
Purchase price of common stock | 85.00% | ||||||
Employee Stock Purchase Plan | Employee Stock Option | |||||||
Equity [Line Items] | |||||||
Number of shares available for grant (in shares) | shares | 15,000,000 | 15,000,000 | |||||
United States | Employee Stock Purchase Plan | |||||||
Equity [Line Items] | |||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 1 | ||||||
Non-US | Employee Stock Purchase Plan | |||||||
Equity [Line Items] | |||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 1 |
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Equity [Abstract] | ||||
Common stock repurchases (in shares) | 16 | 44 | 38 | 59 |
Cost of stock repurchased | $ 625 | $ 2,500 | $ 1,375 | $ 3,282 |
Average price paid per share (in dollars per share) | $ 39.91 | $ 56.35 | $ 36.48 | $ 55.62 |
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Share-Based Compensation) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total share-based compensation | $ 65 | $ 64 | $ 130 | $ 129 |
Cost of products sold | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total share-based compensation | 22 | 21 | 44 | 43 |
Research, development and engineering | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total share-based compensation | 25 | 24 | 49 | 48 |
Marketing and selling | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total share-based compensation | 7 | 8 | 15 | 16 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total share-based compensation | $ 11 | $ 11 | $ 22 | $ 22 |
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units) (Details) - Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units shares in Millions |
6 Months Ended |
---|---|
Apr. 28, 2019
$ / shares
shares
| |
Restricted stock units, restricted stock, performance shares and performance units | |
Beginning balance (in shares) | shares | 18 |
Granted (in shares) | shares | 7 |
Vested (in shares) | shares | (7) |
Canceled (in shares) | shares | 0 |
Ending balance (in shares) | shares | 18 |
Weighted Average Grant Date Fair Value | |
Beginning of period (in dollars per share) | $ / shares | $ 32.64 |
Granted (in dollars per share) | $ / shares | 35.42 |
Vested (in dollars per share) | $ / shares | 28.09 |
Canceled (in dollars per share) | $ / shares | 33.52 |
Ending balance (in dollars per share) | $ / shares | $ 35.47 |
Stockholders' Equity Comprehensive Income and Share-Based Compensation (Employee Stock Purchase Plans) (Details) - Employee Stock Purchase Plan - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividend yield | 2.18% | 1.40% | 2.18% | 1.40% |
Expected volatility | 37.10% | 35.50% | 37.10% | 35.50% |
Risk-free interest rate | 2.51% | 1.83% | 2.51% | 1.83% |
Expected life (in years) | 6 months | 6 months | 6 months | 6 months |
Weighted average estimated fair value (in dollars per share) | $ 9.78 | $ 14.26 | $ 9.78 | $ 14.26 |
Income Taxes (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
GILTI expense (benefit) | $ 96 | |||
Effective income tax rate provision (as percent) | 12.30% | 12.80% | 12.80% | 48.20% |
Provisional tax expense for Tax Cuts and Jobs Act of 2017 | $ 71 | $ 1,100 | ||
Increase in uncertain tax positions | $ 81 | |||
Decrease in excess tax benefit from share-based compensation | $ 45 |
Warranty, Guarantees and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Beginning balance | $ 200 | $ 210 | $ 208 | $ 206 |
Warranties issued | 34 | 56 | 73 | 101 |
Change in reserves related to preexisting warranty | 5 | (3) | 6 | (1) |
Consumption of reserves | (44) | (36) | (92) | (79) |
Ending balance | $ 195 | $ 227 | $ 195 | $ 227 |
Warranty, Guarantees and Contingencies (Details Textual) $ in Millions |
6 Months Ended |
---|---|
Apr. 28, 2019
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Standard product warranty period | 12 months |
Maximum potential amount of future payments for letters of credit or other guarantee instruments | $ 77 |
Parent guarantees to banks | $ 149 |
Industry Segment Operations Narrative (Details Textual) |
6 Months Ended |
---|---|
Apr. 28, 2019
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Industry Segment Operations (Net Sales and Operating Income (Loss)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Net sales and operating income (loss) for each reportable segment | ||||
Net Sales | $ 3,539 | $ 4,579 | $ 7,292 | $ 8,784 |
Operating Income (Loss) | 776 | 1,292 | 1,684 | 2,507 |
Corporate and Other | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Net Sales | 23 | 14 | 39 | 43 |
Operating Income (Loss) | (128) | (189) | (251) | (343) |
Semiconductor Systems | Operating Segments | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Net Sales | 2,184 | 2,901 | 4,452 | 5,753 |
Operating Income (Loss) | 579 | 992 | 1,210 | 2,016 |
Applied Global Services | Operating Segments | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Net Sales | 984 | 945 | 1,946 | 1,826 |
Operating Income (Loss) | 283 | 279 | 568 | 534 |
Display and Adjacent Markets | Operating Segments | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Net Sales | 348 | 719 | 855 | 1,162 |
Operating Income (Loss) | $ 42 | $ 210 | $ 157 | $ 300 |
Sales Revenue | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Percentage of net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Sales Revenue | Semiconductor Systems | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Percentage of net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Foundry, logic and other | Sales Revenue | Semiconductor Systems | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Percentage of net sales | 58.00% | 30.00% | 51.00% | 33.00% |
Dynamic random-access memory (DRAM) | Sales Revenue | Semiconductor Systems | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Percentage of net sales | 18.00% | 32.00% | 19.00% | 29.00% |
Flash memory | Sales Revenue | Semiconductor Systems | ||||
Net sales and operating income (loss) for each reportable segment | ||||
Percentage of net sales | 24.00% | 38.00% | 30.00% | 38.00% |
Industry Segment Operations (Net Sales by Geographic Region) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 3,539 | $ 4,579 | $ 7,292 | $ 8,784 |
Asia Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 2,867 | 3,942 | 5,874 | 7,525 |
China | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 993 | 1,300 | 1,961 | 2,264 |
Korea | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 441 | 1,232 | 1,013 | 2,435 |
Taiwan | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 794 | 666 | 1,450 | 1,407 |
Japan | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 520 | 502 | 1,171 | 984 |
Southeast Asia | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 119 | 242 | 279 | 435 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 457 | 345 | 907 | 715 |
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 215 | $ 292 | $ 511 | $ 544 |
Sales Revenue | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Sales Revenue | Asia Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 81.00% | 86.00% | 81.00% | 86.00% |
Sales Revenue | China | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 28.00% | 28.00% | 27.00% | 26.00% |
Sales Revenue | Korea | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 13.00% | 27.00% | 14.00% | 28.00% |
Sales Revenue | Taiwan | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 22.00% | 15.00% | 20.00% | 16.00% |
Sales Revenue | Japan | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 15.00% | 11.00% | 16.00% | 11.00% |
Sales Revenue | Southeast Asia | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 3.00% | 5.00% | 4.00% | 5.00% |
Sales Revenue | United States | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 13.00% | 8.00% | 12.00% | 8.00% |
Sales Revenue | Europe | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net sales | 6.00% | 6.00% | 7.00% | 6.00% |
Industry Segment Operations (Reconciliations of Total Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net Sales | $ 3,539 | $ 4,579 | $ 7,292 | $ 8,784 |
Share-based compensation | (65) | (64) | (130) | (129) |
Income before income taxes | 776 | 1,292 | 1,684 | 2,507 |
Corporate and Other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net Sales | 23 | 14 | 39 | 43 |
Cost of products sold and expenses | (86) | (139) | (160) | (257) |
Share-based compensation | (65) | (64) | (130) | (129) |
Income before income taxes | $ (128) | $ (189) | $ (251) | $ (343) |
Industry Segment Operations (Percentage by Customer) (Details) - Sales Revenue |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 28, 2019 |
Apr. 29, 2018 |
Apr. 28, 2019 |
Apr. 29, 2018 |
|
Entity-Wide Revenue, Major Customer [Line Items] | ||||
Percentage of net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Customer Concentration Risk | Taiwan Semiconductor Manufacturing Company Limited | ||||
Entity-Wide Revenue, Major Customer [Line Items] | ||||
Percentage of net sales | 15.00% | |||
Customer Concentration Risk | Intel Corporation | ||||
Entity-Wide Revenue, Major Customer [Line Items] | ||||
Percentage of net sales | 12.00% | |||
Customer Concentration Risk | Toshiba | ||||
Entity-Wide Revenue, Major Customer [Line Items] | ||||
Percentage of net sales | 11.00% | |||
Customer Concentration Risk | SK Hynix Inc. | ||||
Entity-Wide Revenue, Major Customer [Line Items] | ||||
Percentage of net sales | 11.00% |
Label | Element | Value | ||
---|---|---|---|---|
Retained Earnings [Member] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,570,000,000 | [1] | |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 281,000,000 | ||
|
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