Cash, Cash Equivalents and Investments
Summary of Cash, Cash Equivalents and Investments
The following tables summarize Applied’s cash, cash equivalents and investments by security type:
|
| | | | | | | | | | | | | | | |
October 27, 2013 | Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
| | | | | | | |
| (In millions) |
Cash | $ | 611 |
| | $ | — |
| | $ | — |
| | $ | 611 |
|
Cash equivalents: | | | | | | | |
Money market funds | 1,095 |
| | — |
| | — |
| | 1,095 |
|
Municipal securities | 5 |
| | — |
| | — |
| | 5 |
|
Total Cash equivalents | 1,100 |
| | — |
| | — |
| | 1,100 |
|
Total Cash and Cash equivalents | $ | 1,711 |
| | $ | — |
| | $ | — |
| | $ | 1,711 |
|
Short-term and long-term investments: | | | | | | | |
U.S. Treasury and agency securities | $ | 170 |
| | $ | — |
| | $ | — |
| | $ | 170 |
|
Non-U.S. government securities* | 11 |
| | — |
| | — |
| | 11 |
|
Municipal securities | 379 |
| | 2 |
| | — |
| | 381 |
|
Commercial paper, corporate bonds and medium-term notes | 218 |
| | 2 |
| | 1 |
| | 219 |
|
Asset-backed and mortgage-backed securities | 268 |
| | 2 |
| | 2 |
| | 268 |
|
Total fixed income securities | 1,046 |
| | 6 |
| | 3 |
| | 1,049 |
|
Publicly traded equity securities | 27 |
| | 33 |
| | — |
| | 60 |
|
Equity investments in privately-held companies | 76 |
| | — |
| | — |
| | 76 |
|
Total short-term and long-term investments | $ | 1,149 |
| | $ | 39 |
| | $ | 3 |
| | $ | 1,185 |
|
Total Cash, Cash equivalents and Investments | $ | 2,860 |
| | $ | 39 |
| | $ | 3 |
| | $ | 2,896 |
|
_________________________
* Includes agency and corporate debt securities guaranteed by non-U.S. governments, which consist of Germany, Canada and Australia.
|
| | | | | | | | | | | | | | | |
October 28, 2012 | Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
| | | | | | | |
| (In millions) |
Cash | $ | 876 |
| | $ | — |
| | $ | — |
| | $ | 876 |
|
Cash equivalents: | | | | | | | |
Money market funds | 483 |
| | — |
| | — |
| | 483 |
|
Municipal securities | 33 |
| | — |
| | — |
| | 33 |
|
Total Cash equivalents | 516 |
| | — |
| | — |
| | 516 |
|
Total Cash and Cash equivalents | $ | 1,392 |
| | $ | — |
| | $ | — |
| | $ | 1,392 |
|
Short-term and long-term investments: | | | | | | | |
U.S. Treasury and agency securities | $ | 373 |
| | $ | 1 |
| | $ | — |
| | $ | 374 |
|
Non-U.S. government securities | 29 |
| | — |
| | — |
| | 29 |
|
Municipal securities | 396 |
| | 2 |
| | — |
| | 398 |
|
Commercial paper, corporate bonds and medium-term notes | 381 |
| | 3 |
| | — |
| | 384 |
|
Asset-backed and mortgage-backed securities | 294 |
| | 4 |
| | — |
| | 298 |
|
Total fixed income securities | 1,473 |
| | 10 |
| | — |
| | 1,483 |
|
Publicly traded equity securities | 32 |
| | 15 |
| | — |
| | 47 |
|
Equity investments in privately-held companies | 70 |
| | — |
| | — |
| | 70 |
|
Total short-term and long-term investments | $ | 1,575 |
| | $ | 25 |
| | $ | — |
| | $ | 1,600 |
|
Total Cash, Cash equivalents and Investments | $ | 2,967 |
| | $ | 25 |
| | $ | — |
| | $ | 2,992 |
|
Maturities of Investments
The following table summarizes the contractual maturities of Applied’s investments at October 27, 2013:
|
| | | | | | | |
| Cost | | Estimated Fair Value |
| | | |
| (In millions) |
Due in one year or less | $ | 149 |
| | $ | 149 |
|
Due after one through five years | 629 |
| | 632 |
|
No single maturity date** | 371 |
| | 404 |
|
| $ | 1,149 |
| | $ | 1,185 |
|
_________________________
** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities.
Gains and Losses on Investments
Gross realized gains and losses on sales of investments during fiscal 2013, 2012, and 2011 were as follows:
|
| | | | | | | | | | | |
| 2013 | | 2012 | | 2011 |
| | | | | |
| (In millions) |
Gross realized gains | $ | 7 |
| | $ | 3 |
| | $ | 20 |
|
Gross realized losses | $ | 2 |
| | $ | 3 |
| | $ | 4 |
|
At October 27, 2013, gross unrealized losses related to Applied's investment portfolio were not material. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at October 27, 2013, October 28, 2012 and October 30, 2011 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for fiscal 2013, 2012 or 2011. During fiscal 2013, 2012 and 2011, Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $6 million, $17 million and $3 million, respectively.
Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations.
