Cash, Cash Equivalents and Investments

12 Months Ended

Oct. 27, 2019

Cash and Cash Equivalents [Abstract]

Summary of Cash, Cash Equivalents and Investments

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


October 27, 2019	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

	(In millions)
Cash	$	1,071	$	—	$	—	$	1,071
Cash equivalents:
Money market funds	1,677		—		—		1,677
U.S. Treasury and agency securities	4		—		—		4


Commercial paper, corporate bonds and medium-term notes	377		—		—		377

Total Cash equivalents	2,058		—		—		2,058
Total Cash and Cash equivalents	$	3,129	$	—	$	—	$	3,129
Short-term and long-term investments:
U.S. Treasury and agency securities	$	336	$	1	$	—	$	337
Non-U.S. government securities*	10		—		—		10
Municipal securities	402		4		—		406
Commercial paper, corporate bonds and medium-term notes	642		5		—		647
Asset-backed and mortgage-backed securities	631		4		—		635
Total fixed income securities	2,021		14		—		2,035
Publicly traded equity securities	8		40		3		45
Equity investments in privately-held companies	105		10		3		112
Total equity investments	113		50		6		157
Total short-term and long-term investments	$	2,134	$	64	$	6	$	2,192
Total Cash, Cash equivalents and Investments	$	5,263	$	64	$	6	$	5,321

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* Includes agency debt securities guaranteed by Canada.


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

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* Includes agency debt securities guaranteed by Canada.

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at October 27, 2019:


	Cost		Estimated Fair Value

	(In millions)
Due in one year or less	$	419	$	420
Due after one through five years	971		981

No single maturity date**	744		791
Total	$	2,134	$	2,192

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** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.

Gains and Losses on Investments

Gross realized gains and losses on sales of investments for each fiscal year were as follows:


	2019		2018		2017

	(In millions)
Gross realized gains	$	10	$	29	$	14
Gross realized losses	$	2	$	3	$	1

At October 27, 2019, 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 at October 27, 2019, October 28, 2018 and October 29, 2017 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed income securities for fiscal 2019, 2018 or 2017. During fiscal 2019, 2018 and 2017, Applied determined that certain of its equity investments were impaired and, accordingly, recognized impairment charges of $1 million, $5 million and $10 million, respectively. These impairment charges are included in interest and other income, net in the Consolidated Statement of Operations.

Unrealized gains and losses on investments classified as equity investments are recognized in other income (expense), net in the Consolidated 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 (loss) on equity investments for fiscal 2019 were as follows:


	2019

	(In millions)
Publicly traded equity securities
Unrealized gain	$	28
Unrealized loss	(5)
Gain on sales	2
Loss on sales	—
Equity investments in privately-held companies
Unrealized gain	13
Unrealized loss	(6)
Gain on sales	5
Loss on sales or impairment	(1)
Total gain on equity investments, net	$	36