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:



April 29, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Cash	$	620	$	—	$	—	$	620
Cash equivalents:
Money market funds	1,141		—		—		1,141
Total Cash equivalents	1,141		—		—		1,141
Total Cash and Cash equivalents	$	1,761	$	—	$	—	$	1,761
Short-term and long-term investments:
U.S. Treasury and agency securities	$	302	$	1	$	—	$	303
Non-U.S. government securities*	22		—		—		22
Municipal securities	395		2		—		397
Commercial paper, corporate bonds and medium-term notes	314		3		—		317
Asset-backed and mortgage-backed securities	301		3		1		303
Total fixed income securities	1,334		9		1		1,342
Publicly traded equity securities	45		30		6		69
Equity investments in privately-held companies	69		—		—		69
Total short-term and long-term investments	$	1,448	$	39	$	7	$	1,480
Total Cash, Cash equivalents and Investments	$	3,209	$	39	$	7	$	3,241

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



October 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Cash	$	297	$	—	$	—	$	297
Cash equivalents:
Money market funds	5,663		—		—		5,663
Total Cash equivalents	5,663		—		—		5,663
Total Cash and Cash equivalents	$	5,960	$	—	$	—	$	5,960
Short-term and long-term investments:
U.S. Treasury and agency securities	$	184	$	1	$	—	$	185
Non-U.S. government securities	40		—		—		40
Municipal securities	371		2		—		373
Commercial paper, corporate bonds and medium-term notes	216		3		1		218
Asset-backed and mortgage-backed securities	307		3		1		309
Total fixed income securities	1,118		9		2		1,125
Publicly traded equity securities	8		19		—		27
Equity investments in privately-held companies	62		—		—		62
Total short-term and long-term investments	$	1,188	$	28	$	2	$	1,214
Total Cash, Cash equivalents and Investments	$	7,148	$	28	$	2	$	7,174

Maturities of Investments

The following table summarizes the contractual maturities of Applied’s investments at April 29, 2012:



	Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	365	$	365
Due after one through five years	667		672
Due after five years	1		2
No single maturity date**	415		441
	$	1,448	$	1,480

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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 during the three and six months ended April 29, 2012 and May 1, 2011 were as follows:



	Three Months Ended				Six Months Ended
	April 29, 2012		May 1, 2011		April 29, 2012		May 1, 2011
	(In millions)
Gross realized gains	$	1	$	8	$	2	$	13
Gross realized losses	$	1	$	1	$	2	$	1

At April 29, 2012, Applied had a gross unrealized loss of $1 million due to a decrease in the fair value of certain fixed income securities. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at April 29, 2012 and May 1, 2011 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for the three and six months ended April 29, 2012 and May 1, 2011. During the first half of fiscal 2012, Applied determined that certain of its equity investments held in privately held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $3 million for the three and six months ended April 29, 2012. Applied did not recognize any impairment on its equity investments in privately-held companies for the three and six months ended May 1, 2011.

The following table provides the fair market value of Applied’s investments with unrealized losses that were not deemed to be other-than-temporarily impaired as of April 29, 2012.



	In Loss Position for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Asset-backed and mortgage-backed securities	$	42	$	1	$	42	$	1
Publicly traded equity securities	$	19	$	6	$	19	$	6
Total	$	61	$	7	$	61	$	7

The following table provides the fair market value of Applied’s investments with unrealized losses that were not deemed to be other-than-temporarily impaired as of October 30, 2011.



	In Loss Position for Less Than 12 Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Commercial paper, corporate bonds and medium-term notes	$	32	$	1	$	32	$	1
Asset-backed and mortgage-backed securities	77		1		77		1
Total	$	109	$	2	$	109	$	2

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.