Document and Entity Information
Document and Entity Information | 3 Months Ended |
Jan. 31, 2016shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | APPLIED MATERIALS INC /DE |
Entity Central Index Key | 6,951 |
Current Fiscal Year End Date | --10-30 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jan. 31, 2016 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock Shares Outstanding | 1,130,724,579 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 2,257 | $ 2,359 |
Cost of products sold | 1,341 | 1,400 |
Gross profit | 916 | 959 |
Operating expenses: | ||
Research, development and engineering | 374 | 351 |
Marketing and selling | 106 | 111 |
General and administrative | 82 | 117 |
Gain on derivatives associated with terminated business combination | 0 | (78) |
Total operating expenses | 562 | 501 |
Income from operations | 354 | 458 |
Interest expense | 42 | 23 |
Interest and other income, net | 2 | 2 |
Income before income taxes | 314 | 437 |
Provision for income taxes | 28 | 89 |
Net income | $ 286 | $ 348 |
Earnings per share: | ||
Basic and diluted (in dollars per share) | $ 0.25 | $ 0.28 |
Weighted average number of shares: | ||
Basic (in shares) | 1,146 | 1,224 |
Diluted (in shares) | 1,154 | 1,240 |
Consolidated Condensed Stateme3
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 286 | $ 348 |
Other comprehensive loss, net of tax: | ||
Change in unrealized net gain on investments | 1 | (1) |
Change in unrealized net loss on derivative instruments | (3) | 1 |
Change in cumulative translation adjustments | 0 | (1) |
Other comprehensive loss, net of tax | (2) | (1) |
Comprehensive income | $ 284 | $ 347 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,962 | $ 4,797 |
Short-term investments | 154 | 168 |
Accounts receivable, net of allowance for doubtful accounts of $48 at January 31, 2016 and $49 at October 25, 2015 | 1,625 | 1,739 |
Inventories | 1,835 | 1,833 |
Other current assets | 334 | 724 |
Total current assets | 6,910 | 9,261 |
Long-term investments | 996 | 946 |
Property, plant and equipment, net | 908 | 892 |
Goodwill | 3,302 | 3,302 |
Purchased technology and other intangible assets, net | 714 | 762 |
Deferred income taxes and other assets | 496 | 145 |
Total assets | 13,326 | 15,308 |
Current liabilities: | ||
Short-term debt | 0 | 1,200 |
Accounts payable and accrued expenses | 1,457 | 1,833 |
Customer deposits and deferred revenue | 850 | 765 |
Total current liabilities | 2,307 | 3,798 |
Long-term debt | 3,343 | 3,342 |
Other liabilities | 508 | 555 |
Total liabilities | 6,158 | 7,695 |
Stockholders’ equity: | ||
Common stock | 11 | 11 |
Additional paid-in capital | 6,582 | 6,575 |
Retained earnings | 14,142 | 13,967 |
Treasury stock | (13,473) | (12,848) |
Accumulated other comprehensive loss | (94) | (92) |
Total stockholders’ equity | 7,168 | 7,613 |
Total liabilities and stockholders’ equity | $ 13,326 | $ 15,308 |
Consolidated Condensed Balance5
Consolidated Condensed Balance Sheets Consolidated Condensed Balance Sheet - Parenthetical - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 48 | $ 49 |
Consolidated Condensed Stateme6
Consolidated Condensed Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Beginning Balance, Shares at Oct. 26, 2014 | 1,221 | 717 | ||||
Beginning Balance at Oct. 26, 2014 | $ 7,868 | $ 12 | $ 6,384 | $ 13,072 | $ (11,524) | $ (76) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 348 | 348 | ||||
Other comprehensive loss, net of tax | (1) | (1) | ||||
Dividends | (123) | (123) | ||||
Share-based compensation | 48 | 48 | ||||
Issuance under stock plans, net of a tax benefit and other | (68) | (68) | ||||
Issuance under stock plans, net of a tax benefit and other, Shares | 8 | |||||
Ending Balance, Shares at Jan. 25, 2015 | 1,229 | 717 | ||||
Ending Balance at Jan. 25, 2015 | 8,072 | $ 12 | 6,364 | 13,297 | $ (11,524) | (77) |
Beginning Balance, Shares at Oct. 25, 2015 | 1,160 | 793 | ||||
Beginning Balance at Oct. 25, 2015 | 7,613 | $ 11 | 6,575 | 13,967 | $ (12,848) | (92) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 286 | 286 | ||||
Other comprehensive loss, net of tax | (2) | (2) | ||||
Dividends | (111) | (111) | ||||
Share-based compensation | 54 | 54 | ||||
Issuance under stock plans, net of a tax benefit and other | (47) | (47) | ||||
Issuance under stock plans, net of a tax benefit and other, Shares | 6 | |||||
Common stock repurchases (in shares) | (35) | 35 | ||||
Common stock repurchases | (625) | $ (625) | ||||
Ending Balance, Shares at Jan. 31, 2016 | 1,131 | 828 | ||||
Ending Balance at Jan. 31, 2016 | $ 7,168 | $ 11 | $ 6,582 | $ 14,142 | $ (13,473) | $ (94) |
Consolidated Condensed Stateme7
Consolidated Condensed Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||
Tax benefit included in issuance under stock plans | $ 10 | $ 39 |
Consolidated Condensed Stateme8
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 286 | $ 348 |
Adjustments required to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 96 | 92 |
Share-based compensation | 54 | 48 |
Excess tax benefits from share-based compensation | (10) | (39) |
Deferred income taxes | 15 | 28 |
Other | 10 | 8 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 113 | 90 |
Inventories | (2) | (74) |
Other current and non-current assets | (14) | (77) |
Accounts payable and accrued expenses | (423) | (156) |
Customer deposits and deferred revenue | 85 | (156) |
Income taxes payable | 5 | (39) |
Other liabilities | (8) | (13) |
Cash provided by operating activities | 207 | 60 |
Cash flows from investing activities: | ||
Capital expenditures | (68) | (49) |
Proceeds from sales and maturities of investments | 241 | 140 |
Purchases of investments | (282) | (141) |
Cash used in investing activities | (109) | (50) |
Cash flows from financing activities: | ||
Debt repayments | (1,205) | 0 |
Proceeds from common stock issuances and other | 2 | 0 |
Common stock repurchases | (625) | 0 |
Excess tax benefits from share-based compensation | 10 | 39 |
Payments of dividends to stockholders | (115) | (122) |
Cash used in financing activities | (1,933) | (83) |
Decrease in cash and cash equivalents | (1,835) | (73) |
Cash and cash equivalents — beginning of period | 4,797 | 3,002 |
Cash and cash equivalents — end of period | 2,962 | 2,929 |
Supplemental cash flow information: | ||
Cash payments for income taxes | 44 | 89 |
Cash refunds from income taxes | 5 | 3 |
Cash payments for interest | $ 34 | $ 39 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Jan. 31, 2016 | |
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 25, 2015 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 25, 2015 (2015 Form 10-K). Applied’s results of operations for the three months ended January 31, 2016 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2016 and 2015 contain 53 weeks and 52 weeks, respectively, and the first three months of fiscal 2016 and 2015 contained 14 weeks and 13 weeks, respectively. 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 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. Revenue Recognition Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment or delivery, Applied recognizes revenue upon passage of title for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment or delivery, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided. When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables, and to the software deliverables as a group, using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (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 practicability exception. 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. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2019. Early adoption is permitted only for the provisions related to the recognition of changes in fair value of financial liabilities caused by instrument-specific credit risk. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In November 2015, the FASB issued authoritative guidance requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. Applied elected to prospectively adopt the authoritative guidance in the beginning of the first quarter of fiscal 2016. Prior periods were not retrospectively adjusted. In July 2015, the FASB issued authoritative guidance that requires inventory to be measured at the lower of cost and net realizable value instead of at lower of cost or market. This guidance does not apply to inventory that is measured using last-in, first out (LIFO) or the retail inventory method but applies to all other inventory including those measured using first-in, first-out (FIFO) or the average cost method. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2018 and should be applied prospectively. Early adoption is permitted as of the beginning of an interim or annual reporting period. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In May 2015, the FASB issued authoritative guidance to remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The new guidance also removes the requirement of certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The guidance becomes effective retrospectively for Applied in the first quarter of fiscal 2017. Early adoption is permitted. The adoption of this guidance will only impact disclosures in Applied's financial statements. In April 2015, the FASB issued authoritative guidance for customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance will not change accounting for service contracts. The guidance becomes effective for Applied in the first quarter of fiscal 2017 and may be adopted either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2015, the FASB issued authoritative guidance that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The authoritative guidance is effective for Applied in the first quarter of fiscal 2017 and should be applied retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied's consolidated financial statements. 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. This new standard will supersede most current revenue recognition guidance, including industry-specific guidance. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. With this amendment, the guidance will be effective for Applied in the first quarter of fiscal 2019. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Jan. 31, 2016 | |
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. Three Months Ended January 31, January 25, (In millions, except per share amounts) Numerator: Net income $ 286 $ 348 Denominator: Weighted average common shares outstanding 1,146 1,224 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 8 16 Denominator for diluted earnings per share 1,154 1,240 Basic and diluted earnings per share $ 0.25 $ 0.28 Potentially dilutive securities 2 1 Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share because the combined exercise price, average unamortized fair value and assumed tax benefits upon the exercise of options and the vesting of restricted stock units were greater than the average market price of Applied common stock, and therefore their inclusion would have been anti-dilutive. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 3 Months Ended |
Jan. 31, 2016 | |
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 by security type: January 31, 2016 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,861 $ — $ — $ 1,861 Cash equivalents: Money market funds 856 — — 856 Non-U.S. government securities* 10 — — 10 Municipal securities 71 — — 71 Commercial paper, corporate bonds and medium-term notes 164 — — 164 Total Cash equivalents 1,101 — — 1,101 Total Cash and Cash equivalents $ 2,962 $ — $ — $ 2,962 Short-term and long-term investments: U.S. Treasury and agency securities $ 101 $ — $ — $ 101 Non-U.S. government securities* 9 — — 9 Municipal securities 408 2 — 410 Commercial paper, corporate bonds and medium-term notes 248 — 1 247 Asset-backed and mortgage-backed securities 274 — — 274 Total fixed income securities 1,040 2 1 1,041 Publicly traded equity securities 33 19 1 51 Equity investments in privately-held companies 58 — — 58 Total short-term and long-term investments $ 1,131 $ 21 $ 2 $ 1,150 Total Cash, Cash equivalents and Investments $ 4,093 $ 21 $ 2 $ 4,112 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. October 25, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,010 $ — $ — $ 1,010 Cash equivalents: Money market funds 3,272 — — 3,272 Non-U.S. government securities 60 — — 60 Municipal securities 73 — — 73 Commercial paper, corporate bonds and medium-term notes 382 — — 382 Total Cash equivalents 3,787 — — 3,787 Total Cash and Cash equivalents $ 4,797 $ — $ — $ 4,797 Short-term and long-term investments: U.S. Treasury and agency securities $ 84 $ — $ — $ 84 Non-U.S. government securities 9 — — 9 Municipal securities 384 2 — 386 Commercial paper, corporate bonds and medium-term notes 250 — — 250 Asset-backed and mortgage-backed securities 262 — — 262 Total fixed income securities 989 2 — 991 Publicly traded equity securities 28 17 — 45 Equity investments in privately-held companies 78 — — 78 Total short-term and long-term investments $ 1,095 $ 19 $ — $ 1,114 Total Cash, Cash equivalents and Investments $ 5,892 $ 19 $ — $ 5,911 Maturities of Investments The following table summarizes the contractual maturities of Applied’s investments at January 31, 2016 : Cost Estimated Fair Value (In millions) Due in one year or less $ 135 $ 135 Due after one through five years 631 632 No single maturity date** 365 383 $ 1,131 $ 1,150 _________________________ ** 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 months ended January 31, 2016 and January 25, 2015 , gross realized gains and losses on investments were not material. At January 31, 2016 and October 25, 2015 , gross unrealized losses related to Applied's investment portfolio were not material. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at January 31, 2016 and January 25, 2015 were temporary in nature and therefore it did not recognize any impairment of its marketable securities during the three months ended January 31, 2016 or January 25, 2015 . Impairment charges on equity investments in privately-held companies during the three months ended January 31, 2016 and January 25, 2015 were not material. These impairment charges are included in interest and other income, net in the Consolidated Condensed Statement of Operations. Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jan. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary 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 when events or circumstances indicate that an other-than-temporary decline in value may have occurred. 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: • 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. 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. 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. As of January 31, 2016 , 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. 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: January 31, 2016 October 25, 2015 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Money market funds $ 856 $ — $ 856 $ 3,272 $ — $ 3,272 U.S. Treasury and agency securities 83 18 101 72 12 84 Non-U.S. government securities — 19 19 — 69 69 Municipal securities — 481 481 — 459 459 Commercial paper, corporate bonds and medium-term notes — 411 411 — 632 632 Asset-backed and mortgage-backed securities — 274 274 — 262 262 Publicly traded equity securities 51 — 51 45 — 45 Total $ 990 $ 1,203 $ 2,193 $ 3,389 $ 1,434 $ 4,823 There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended January 31, 2016 or January 25, 2015 . Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of January 31, 2016 or October 25, 2015 . Assets and Liabilities Measured at Fair Value on a Non-recurring Basis Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. At January 31, 2016 , equity investments in privately-held companies totaled $58 million , of which $50 million of investments were accounted for under the cost method of accounting and $8 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. At October 25, 2015 , equity investments in privately-held companies totaled $78 million , of which $70 million of investments were accounted for under the cost method of accounting and $8 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. Impairment charges on equity investments in privately-held companies during the three months ended January 31, 2016 and January 25, 2015 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. At January 31, 2016 and October 25, 2015 , the carrying amount of long-term debt was $3.3 billion and the estimated fair value was $3.5 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 8 of the Notes to the Consolidated Condensed Financial Statements for further detail of existing debt. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Jan. 31, 2016 | |
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. During fiscal 2015, Applied entered into and settled a series of forward-starting interest rate swap agreements, with a total notional amount of $600 million to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. These instruments were designated as cash flow hedges at inception and settled in conjunction with the issuance of debt in September 2015. The loss from the settlement of the interest rate swap agreement that was included in accumulated other comprehensive income (AOCI) in stockholders' equity is being amortized to interest expense over the term of the senior unsecured 10 -year notes issued in September 2015. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange contracts and interest rate swap agreements, 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 at January 31, 2016 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 months ended January 31, 2016 and January 25, 2015 . 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. In September 2013, Applied purchased foreign exchange option contracts to limit its foreign exchange risk associated with the then-anticipated business combination with Tokyo Electron Limited (TEL). These derivatives did not qualify for hedge accounting treatment and were marked to market at the end of each reporting period with gains and losses recorded as part of operating expenses. During the three months ended January 25, 2015 , Applied recorded an unrealized gain of $78 million related to these contracts. The cash flow impact of these derivatives has been classified as operating cash flows in the Consolidated Condensed Statements of Cash Flows. Due to the termination of the proposed business combination with TEL on April 26, 2015, these foreign exchange option contracts were sold during the third quarter of fiscal 2015. Other than the foreign exchange option contracts discussed in the preceding paragraph, the fair values of other foreign exchange derivative instruments at January 31, 2016 and October 25, 2015 were not material. The effects of derivative instruments and hedging activities on the Consolidated Condensed Statements of Operations were as follows: Three Months Ended January 31, 2016 January 25, 2015 Effective Portion Ineffective Portion and Amount Effective Portion Ineffective Portion and Amount Location of Gain or Gain or Gain or (Loss) Gain or (Loss) Gain or Gain or (Loss) Gain or (Loss) (In millions) Derivatives in Cash Flow Hedging Relationships Foreign exchange contracts Cost of products sold $ (6 ) $ 1 $ — $ 5 $ 8 $ (1 ) Foreign exchange contracts General and administrative — (1 ) (1 ) — (4 ) — Interest rate swaps Interest expense — (1 ) — — — — Total $ (6 ) $ (1 ) $ (1 ) $ 5 $ 4 $ (1 ) Amount of Gain or (Loss) Recognized in Income Three Months Ended Location of Gain or January 31, 2016 January 25, 2015 (In millions) Derivatives Not Designated as Hedging Instruments Foreign exchange contracts Gain on derivatives associated with terminated business combination $ — $ 78 Foreign exchange contracts General and (4 ) 21 Total $ (4 ) $ 99 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 January 31, 2016 . 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. |
Balance Sheet Detail
Balance Sheet Detail | 3 Months Ended |
Jan. 31, 2016 | |
Balance Sheet Detail [Abstract] | |
Balance Sheet Detail | Balance Sheet Detail January 31, October 25, (In millions) Inventories Customer service spares $ 391 $ 382 Raw materials 512 438 Work-in-process 259 294 Finished goods 673 719 $ 1,835 $ 1,833 Included in finished goods inventory are $115 million at January 31, 2016 , and $155 million at October 25, 2015 , 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 $189 million and $185 million of evaluation inventory at January 31, 2016 and October 25, 2015 , respectively. January 31, October 25, (In millions) Other Current Assets Deferred income taxes, net 1 $ — $ 403 Prepaid income taxes and income taxes receivable 155 127 Prepaid expenses and other 179 194 $ 334 $ 724 1 January 31, 2016 balance reflects the effects of the prospective adoption of the authoritative guidance requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. Useful Life January 31, October 25, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 157 $ 157 Buildings and improvements 3-30 1,249 1,247 Demonstration and manufacturing equipment 3-5 927 920 Furniture, fixtures and other equipment 3-15 586 574 Construction in progress 59 48 Gross property, plant and equipment 2,978 2,946 Accumulated depreciation (2,070 ) (2,054 ) $ 908 $ 892 January 31, October 25, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 549 $ 658 Compensation and employee benefits 299 509 Warranty 119 126 Dividends payable 113 116 Income taxes payable 49 60 Other accrued taxes 42 58 Interest payable 36 36 Other 250 270 $ 1,457 $ 1,833 January 31, October 25, (In millions) Customer Deposits and Deferred Revenue Customer deposits $ 212 $ 132 Deferred revenue 638 633 $ 850 $ 765 Applied typically receives deposits on future deliverables from customers in the Energy and Environmental Solutions and Display segments. In certain instances, customer deposits may be received from customers in the Applied Global Services segment. January 31, October 25, (In millions) Other Liabilities Deferred income taxes $ 14 $ 56 Income taxes payable 232 227 Defined and postretirement benefit plans 180 187 Other 82 85 $ 508 $ 555 |
Goodwill, Purchased Technology
Goodwill, Purchased Technology and Other Intangible Assets | 3 Months Ended |
Jan. 31, 2016 | |
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 January 31, 2016 , Applied's reporting units include Transistor and Interconnect Group, Patterning and Packaging Group, and Imaging and Process Control Group, which combine to form the Silicon Systems reporting segment, Applied Global Services, Display and Energy and Environmental Solutions. 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 and other indefinite-lived intangible assets as of January 31, 2016 and October 25, 2015 were as follows: Goodwill Other Total (In millions) Silicon Systems $ 2,151 $ — $ 2,151 Applied Global Services 1,027 5 1,032 Display 124 18 142 Energy and Environmental Solutions — 2 2 Carrying amount $ 3,302 $ 25 $ 3,327 Other intangible assets that are not subject to amortization consist primarily of in-process technology, which will be subject to amortization upon commercialization. The fair value assigned to in-process technology was determined using the income approach taking into account estimates and judgments regarding risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. If an in-process technology project is abandoned, the acquired technology attributable to the project will be written-off. A summary of Applied's purchased technology and intangible assets is set forth below: January 31, October 25, (In millions) Purchased technology, net $ 532 $ 575 Intangible assets - finite-lived, net 157 162 Intangible assets - indefinite-lived 25 25 Total $ 714 $ 762 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: January 31, 2016 October 25, 2015 Purchased Technology Other Intangible Assets Total Purchased Technology Other Intangible Assets Total (In millions) Gross carrying amount: Silicon Systems $ 1,449 $ 252 $ 1,701 $ 1,449 $ 252 $ 1,701 Applied Global Services 28 44 72 28 44 72 Display 110 33 143 110 33 143 Energy and Environmental Solutions 4 12 16 4 12 16 Gross carrying amount $ 1,591 $ 341 $ 1,932 $ 1,591 $ 341 $ 1,932 Accumulated amortization: Silicon Systems $ (919 ) $ (99 ) $ (1,018 ) $ (876 ) $ (95 ) $ (971 ) Applied Global Services (26 ) (44 ) (70 ) (26 ) (44 ) (70 ) Display (110 ) (33 ) (143 ) (110 ) (33 ) (143 ) Energy and Environmental Solutions (4 ) (8 ) (12 ) (4 ) (7 ) (11 ) Accumulated amortization $ (1,059 ) $ (184 ) $ (1,243 ) $ (1,016 ) $ (179 ) $ (1,195 ) Carrying amount $ 532 $ 157 $ 689 $ 575 $ 162 $ 737 Details of amortization expense by segment were as follows: Three Months Ended January 31, January 25, (In millions) Silicon Systems $ 47 $ 43 Applied Global Services — 1 Display — 1 Energy and Environmental Solutions 1 1 Total $ 48 $ 46 Amortization expense was charged to the following categories: Three Months Ended January 31, January 25, (In millions) Cost of products sold $ 43 $ 40 Marketing and selling 5 5 General and administrative — 1 Total $ 48 $ 46 As of January 31, 2016 , future estimated amortization expense is expected to be as follows: Amortization Expense (In millions) 2016 (remaining 9 months) $ 141 2017 186 2018 185 2019 44 2020 39 Thereafter 94 Total $ 689 |
Borrowing Facilities and Debt
Borrowing Facilities and Debt | 3 Months Ended |
Jan. 31, 2016 | |
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 2020 . 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 $67 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 at both January 31, 2016 and October 25, 2015 , and Applied has not utilized these credit facilities. In September 2015, Applied issued senior unsecured notes in the aggregate principal amount of $1.8 billion and used a portion of the net proceeds to redeem $400 million in principal amount of its 2.650% senior notes due in 2016 at a redemption price of $405 million in November 2015. After adjusting for the carrying value of debt issuance costs and discounts, Applied recorded a $5 million loss on the prepayment of the $400 million debt, which is included in interest and other income, net in the Consolidated Condensed Statement of Operations for the first quarter of fiscal 2016. In October 2015, a wholly-owned foreign subsidiary of Applied entered into a short-term loan agreement with multiple lenders, under which it borrowed $800 million to facilitate the return of capital to Applied. In January 2016, Applied repaid the $800 million aggregated principal amount of the loan. Debt outstanding as of January 31, 2016 and October 25, 2015 was as follows: Principal Amount January 31, October 25, Effective Interest Rate Interest Pay Dates (In millions) Short-term debt: 2.650% Senior Notes Due 2016 $ — $ 400 2.666% June 15, December 15 Other debt — 800 1.0% - 1.25% Total short-term debt — 1,200 Long-term debt: 7.125% Senior Notes Due 2017 200 200 7.190% April 15, October 15 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 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 3,350 3,350 Total unamortized discount (7 ) (8 ) Total long-term debt 3,343 3,342 Total debt $ 3,343 $ 4,542 |
Stockholders' Equity, Comprehen
Stockholders' Equity, Comprehensive Income and Share-Based Compensation | 3 Months Ended |
Jan. 31, 2016 | |
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: 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 at October 25, 2015 $ 14 $ (15 ) $ (105 ) $ 14 $ (92 ) Other comprehensive income (loss) before reclassifications 1 (3 ) — — (2 ) Amounts reclassified out of AOCI — — — — — Other comprehensive income (loss), net of tax 1 (3 ) — — (2 ) Balance at January 31, 2016 $ 15 $ (18 ) $ (105 ) $ 14 $ (94 ) 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 at October 26, 2014 $ 24 $ — $ (105 ) $ 5 $ (76 ) Other comprehensive income (loss) before reclassifications (1 ) 3 — (1 ) 1 Amounts reclassified out of AOCI — (2 ) — — (2 ) Other comprehensive income (loss), net of tax (1 ) 1 — (1 ) (1 ) Balance at January 25, 2015 $ 23 $ 1 $ (105 ) $ 4 $ (77 ) The effects on net income of amounts reclassified from AOCI for the three months ended January 31, 2016 and January 25, 2015 were not material. Stock Repurchase Program On April 26, 2015, Applied's Board of Directors approved a common stock repurchase program authorizing up to $3.0 billion in repurchases over the three years ending April 2018. At January 31, 2016 , $1.1 billion remained available for future stock repurchases under this repurchase program. The following table summarizes Applied’s stock repurchases for the three months ended January 31, 2016 : Three Months Ended January 31, 2016 (In millions, except per share amounts) Shares of common stock repurchased 35 Cost of stock repurchased $ 625 Average price paid per share $ 17.64 Applied did not purchase any shares of its common stock during the three months ended January 25, 2015 . 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 December 2015, Applied's Board of Directors declared a quarterly cash dividend in the amount of $0.10 per share. Dividends paid during the three months ended January 31, 2016 and January 25, 2015 totaled $115 million and $122 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 beginning in March 2012 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 months ended January 31, 2016 and January 25, 2015 , Applied recognized share-based compensation expense related to stock options, ESPP shares, restricted stock, restricted stock units, performance shares and performance units. The effect of share-based compensation on the results of operations was as follows: Three Months Ended January 31, January 25, (In millions) Cost of products sold $ 17 $ 15 Research, development, and engineering 20 18 Marketing and selling 7 6 General and administrative 10 9 Total share-based compensation $ 54 $ 48 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 is recognized for each tranche over the service period, based on an assessment of the likelihood that the applicable performance goals will be achieved. At January 31, 2016 , Applied had $366 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 2.9 years. At January 31, 2016 , there were 107 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 29 million shares available for issuance under the ESPP. Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the three months ended January 31, 2016 is presented below: Shares Weighted Average Grant Date Fair Value (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2015 27 $ 16.41 Granted 10 $ 18.24 Vested (9 ) $ 14.07 Canceled (1 ) $ 17.47 Non-vested restricted stock units, restricted stock, performance shares and performance units at January 31, 2016 27 $ 17.90 At January 31, 2016 , 1 million additional performance-based awards could be earned upon certain levels of achievement of Applied's total shareholder return relative to a peer group at a future date. During the first quarter of fiscal 2016, certain executive officers were granted awards that are subject to the achievement of specified performance goals (performance-based awards). These performance-based 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. These performance-based awards require the achievement of targeted levels of adjusted annual operating profit margin. Additional shares become eligible for time-based vesting if Applied achieves certain levels of total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Information Technology Index, measured at the end of a two -year period. The fair value of these performance-based awards is estimated on the date of grant and assumes that the specified performance goals will be achieved. If the goals are achieved, these awards vest over a specified remaining service period of generally four years , provided that the grantee remains employed by Applied through each scheduled vesting date. 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 of each award is reflected over the service period and is reduced for estimated forfeitures. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Jan. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Applied sponsors a number of employee benefit plans, including defined benefit plans of certain foreign subsidiaries, and a plan that provides certain medical and vision benefits to eligible retirees. A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three months ended January 31, 2016 and January 25, 2015 is presented below: Three Months Ended January 31, January 25, (In millions) Service cost $ 3 $ 3 Interest cost 4 4 Expected return on plan assets (4 ) (4 ) Amortization of actuarial loss 1 2 Curtailment and settlement gain (4 ) (1 ) Net periodic benefit cost $ — $ 4 |
Income Taxes
Income Taxes | 3 Months Ended |
Jan. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Applied’s effective tax rates for the first quarters of fiscal 2016 and 2015 were 8.9 percent and 20.4 percent , respectively. The effective tax rate for the first quarter of fiscal 2016 was lower than in the same period in the prior year primarily due to changes in the geographical composition of income and changes related to income tax liabilities for prior years. The effective tax rates for the first quarters of fiscal 2016 and 2015 both included the benefit of the reinstatement of the U.S. federal research and development tax credit during these periods retroactive to its expiration in December of the prior years. During the next twelve months, it is reasonably possible that existing liabilities for unrecognized tax benefits could be reduced by up to $16 million as a result of the expiration of statutes of limitation. |
Warranty, Guarantees and Contin
Warranty, Guarantees and Contingencies | 3 Months Ended |
Jan. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty, Guarantees and Contingencies | Warranty, Guarantees and Contingencies Warranty Changes in the warranty reserves are presented below: Three Months Ended January 31, January 25, (In millions) Beginning balance $ 126 $ 113 Provisions for warranty 26 37 Releases of reserves related to preexisting warranty (11 ) (1 ) Consumption of reserves (22 ) (30 ) Ending balance $ 119 $ 119 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 January 31, 2016 , the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $56 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 January 31, 2016 , Applied has provided parent guarantees to banks for approximately $100 million to cover these arrangements. Legal Matters Korea Criminal Proceedings In 2010, the Seoul Eastern District Court began hearings on indictments brought by the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) alleging that employees of several companies improperly received and used confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The individuals charged included the former head of Applied Materials Korea (AMK), who at the time of the indictment was a vice president of Applied Materials, Inc., and certain other AMK employees. Neither Applied nor any of its subsidiaries was named as a party to the proceedings. Hearings on these matters concluded in November 2012 and the Court issued its decision on February 7, 2013. As part of the ruling, nine AMK employees (including the former head of AMK) were acquitted of all charges, while one AMK employee was found guilty on some of the charges and received a suspended jail sentence. The Prosecutor's Office and various individuals appealed the matter to the High Court. On June 20, 2014, the High Court rendered its decision, finding all defendants not guilty, including all ten AMK employees. The prosecutor has appealed the High Court decision to the Korean Supreme Court. Other 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
Industry Segment Operations | 3 Months Ended |
Jan. 31, 2016 | |
Segment Reporting [Abstract] | |
Industry Segment Operations | Industry Segment Operations Applied’s four reportable segments are: Silicon Systems, Applied Global Services, Display, and Energy and Environmental Solutions. 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 January 31, 2016 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments. 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. 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. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level, which 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 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. The Silicon 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 includes technically differentiated products and services to improve operating efficiency, reduce operating costs and lessen the environmental impact of semiconductor, display and solar customers’ factories. Applied Global Services’ products consist of spares, services, certain earlier generation products, remanufactured equipment, and products that have reached a particular stage in the product lifecycle. Customer demand for these products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites. The Display segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), and other display technologies for TVs, personal computers, tablets, smart phones, and other consumer-oriented devices. The Energy and Environmental Solutions segment includes products for fabricating solar photovoltaic cells and modules, as well as high throughput roll-to-roll deposition equipment for flexible electronics and other applications. Net sales and operating income (loss) for each reportable segment were as follows: Three Months Ended Net Sales Operating Income (Loss) (In millions) January 31, 2016: Silicon Systems $ 1,373 $ 265 Applied Global Services 626 156 Display 213 38 Energy and Environmental Solutions 45 6 Total Segment $ 2,257 $ 465 January 25, 2015: Silicon Systems $ 1,446 $ 307 Applied Global Services 583 153 Display 275 72 Energy and Environmental Solutions 55 (4 ) Total Segment $ 2,359 $ 528 Reconciliations of total segment operating results to Applied consolidated totals were as follows: Three Months Ended January 31, January 25, (In millions) Total segment operating income $ 465 $ 528 Corporate and unallocated costs (111 ) (128 ) Certain items associated with terminated business combination — (20 ) Gain on derivatives associated with terminated business combination — 78 Income from operations $ 354 $ 458 The following customers accounted for at least 10 percent of Applied’s net sales for the three months ended January 31, 2016 , which were for products in multiple reportable segments. Percentage of Net Sales Taiwan Semiconductor Manufacturing Company Limited 13 % Micron Technology, Inc. 11 % Samsung Electronics Co., Ltd. 10 % |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Jan. 31, 2016 | |
Accounting Policies [Abstract] | |
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 25, 2015 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 25, 2015 (2015 Form 10-K). Applied’s results of operations for the three months ended January 31, 2016 are not necessarily indicative of future operating results. Applied’s fiscal year ends on the last Sunday in October of each year. Fiscal 2016 and 2015 contain 53 weeks and 52 weeks, respectively, and the first three months of fiscal 2016 and 2015 contained 14 weeks and 13 weeks, respectively. |
Use of Estimates | 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 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. |
Revenue Recognition | Revenue Recognition Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment or delivery, Applied recognizes revenue upon passage of title for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment or delivery, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided. When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables, and to the software deliverables as a group, using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (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 practicability exception. 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. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2019. Early adoption is permitted only for the provisions related to the recognition of changes in fair value of financial liabilities caused by instrument-specific credit risk. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In November 2015, the FASB issued authoritative guidance requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. Applied elected to prospectively adopt the authoritative guidance in the beginning of the first quarter of fiscal 2016. Prior periods were not retrospectively adjusted. In July 2015, the FASB issued authoritative guidance that requires inventory to be measured at the lower of cost and net realizable value instead of at lower of cost or market. This guidance does not apply to inventory that is measured using last-in, first out (LIFO) or the retail inventory method but applies to all other inventory including those measured using first-in, first-out (FIFO) or the average cost method. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2018 and should be applied prospectively. Early adoption is permitted as of the beginning of an interim or annual reporting period. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In May 2015, the FASB issued authoritative guidance to remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The new guidance also removes the requirement of certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The guidance becomes effective retrospectively for Applied in the first quarter of fiscal 2017. Early adoption is permitted. The adoption of this guidance will only impact disclosures in Applied's financial statements. In April 2015, the FASB issued authoritative guidance for customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance will not change accounting for service contracts. The guidance becomes effective for Applied in the first quarter of fiscal 2017 and may be adopted either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2015, the FASB issued authoritative guidance that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The authoritative guidance is effective for Applied in the first quarter of fiscal 2017 and should be applied retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied's consolidated financial statements. 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. This new standard will supersede most current revenue recognition guidance, including industry-specific guidance. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. With this amendment, the guidance will be effective for Applied in the first quarter of fiscal 2019. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. |
Investments | Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. |
Fair Value Measurements | Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary 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 when events or circumstances indicate that an other-than-temporary decline in value may have occurred. 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: • 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. 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. 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. As of January 31, 2016 , 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. |
Cost Method Investments | Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. |
Derivative Financial Instruments | Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange contracts and interest rate swap agreements, 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 at January 31, 2016 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. 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. |
Goodwill and Purchased 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. 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. |
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. |
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. |
Share-based Awards | 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 is recognized for each tranche over the service period, based on an assessment of the likelihood that the applicable performance goals will be achieved. |
Performance-Based Awards | The fair value of these performance-based awards is estimated on the date of grant and assumes that the specified performance goals will be achieved. If the goals are achieved, these awards vest over a specified remaining service period of generally four years , provided that the grantee remains employed by Applied through each scheduled vesting date. 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 of each award is reflected over the service period and is reduced for estimated forfeitures. |
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. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Earnings Per Share [Abstract] | |
Elements used in computing both basic and diluted net earnings per share | Three Months Ended January 31, January 25, (In millions, except per share amounts) Numerator: Net income $ 286 $ 348 Denominator: Weighted average common shares outstanding 1,146 1,224 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 8 16 Denominator for diluted earnings per share 1,154 1,240 Basic and diluted earnings per share $ 0.25 $ 0.28 Potentially dilutive securities 2 1 |
Cash, Cash Equivalents and In24
Cash, Cash Equivalents and Investments (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
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: January 31, 2016 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,861 $ — $ — $ 1,861 Cash equivalents: Money market funds 856 — — 856 Non-U.S. government securities* 10 — — 10 Municipal securities 71 — — 71 Commercial paper, corporate bonds and medium-term notes 164 — — 164 Total Cash equivalents 1,101 — — 1,101 Total Cash and Cash equivalents $ 2,962 $ — $ — $ 2,962 Short-term and long-term investments: U.S. Treasury and agency securities $ 101 $ — $ — $ 101 Non-U.S. government securities* 9 — — 9 Municipal securities 408 2 — 410 Commercial paper, corporate bonds and medium-term notes 248 — 1 247 Asset-backed and mortgage-backed securities 274 — — 274 Total fixed income securities 1,040 2 1 1,041 Publicly traded equity securities 33 19 1 51 Equity investments in privately-held companies 58 — — 58 Total short-term and long-term investments $ 1,131 $ 21 $ 2 $ 1,150 Total Cash, Cash equivalents and Investments $ 4,093 $ 21 $ 2 $ 4,112 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. October 25, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,010 $ — $ — $ 1,010 Cash equivalents: Money market funds 3,272 — — 3,272 Non-U.S. government securities 60 — — 60 Municipal securities 73 — — 73 Commercial paper, corporate bonds and medium-term notes 382 — — 382 Total Cash equivalents 3,787 — — 3,787 Total Cash and Cash equivalents $ 4,797 $ — $ — $ 4,797 Short-term and long-term investments: U.S. Treasury and agency securities $ 84 $ — $ — $ 84 Non-U.S. government securities 9 — — 9 Municipal securities 384 2 — 386 Commercial paper, corporate bonds and medium-term notes 250 — — 250 Asset-backed and mortgage-backed securities 262 — — 262 Total fixed income securities 989 2 — 991 Publicly traded equity securities 28 17 — 45 Equity investments in privately-held companies 78 — — 78 Total short-term and long-term investments $ 1,095 $ 19 $ — $ 1,114 Total Cash, Cash equivalents and Investments $ 5,892 $ 19 $ — $ 5,911 |
Contractual maturities of investments | The following table summarizes the contractual maturities of Applied’s investments at January 31, 2016 : Cost Estimated Fair Value (In millions) Due in one year or less $ 135 $ 135 Due after one through five years 631 632 No single maturity date** 365 383 $ 1,131 $ 1,150 _________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
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: January 31, 2016 October 25, 2015 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Money market funds $ 856 $ — $ 856 $ 3,272 $ — $ 3,272 U.S. Treasury and agency securities 83 18 101 72 12 84 Non-U.S. government securities — 19 19 — 69 69 Municipal securities — 481 481 — 459 459 Commercial paper, corporate bonds and medium-term notes — 411 411 — 632 632 Asset-backed and mortgage-backed securities — 274 274 — 262 262 Publicly traded equity securities 51 — 51 45 — 45 Total $ 990 $ 1,203 $ 2,193 $ 3,389 $ 1,434 $ 4,823 |
Derivative Instruments and He26
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
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: Three Months Ended January 31, 2016 January 25, 2015 Effective Portion Ineffective Portion and Amount Effective Portion Ineffective Portion and Amount Location of Gain or Gain or Gain or (Loss) Gain or (Loss) Gain or Gain or (Loss) Gain or (Loss) (In millions) Derivatives in Cash Flow Hedging Relationships Foreign exchange contracts Cost of products sold $ (6 ) $ 1 $ — $ 5 $ 8 $ (1 ) Foreign exchange contracts General and administrative — (1 ) (1 ) — (4 ) — Interest rate swaps Interest expense — (1 ) — — — — Total $ (6 ) $ (1 ) $ (1 ) $ 5 $ 4 $ (1 ) |
Derivatives not designated as hedging instruments in statement of operations | Amount of Gain or (Loss) Recognized in Income Three Months Ended Location of Gain or January 31, 2016 January 25, 2015 (In millions) Derivatives Not Designated as Hedging Instruments Foreign exchange contracts Gain on derivatives associated with terminated business combination $ — $ 78 Foreign exchange contracts General and (4 ) 21 Total $ (4 ) $ 99 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Balance Sheet Detail [Abstract] | |
Inventories | January 31, October 25, (In millions) Inventories Customer service spares $ 391 $ 382 Raw materials 512 438 Work-in-process 259 294 Finished goods 673 719 $ 1,835 $ 1,833 |
Other current assets | January 31, October 25, (In millions) Other Current Assets Deferred income taxes, net 1 $ — $ 403 Prepaid income taxes and income taxes receivable 155 127 Prepaid expenses and other 179 194 $ 334 $ 724 1 January 31, 2016 balance reflects the effects of the prospective adoption of the authoritative guidance requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. |
Property, plant and equipment, net | Useful Life January 31, October 25, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 157 $ 157 Buildings and improvements 3-30 1,249 1,247 Demonstration and manufacturing equipment 3-5 927 920 Furniture, fixtures and other equipment 3-15 586 574 Construction in progress 59 48 Gross property, plant and equipment 2,978 2,946 Accumulated depreciation (2,070 ) (2,054 ) $ 908 $ 892 |
Accounts payable, notes payable, and accrued expenses | January 31, October 25, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 549 $ 658 Compensation and employee benefits 299 509 Warranty 119 126 Dividends payable 113 116 Income taxes payable 49 60 Other accrued taxes 42 58 Interest payable 36 36 Other 250 270 $ 1,457 $ 1,833 |
Customer deposits and deferred revenue | January 31, October 25, (In millions) Customer Deposits and Deferred Revenue Customer deposits $ 212 $ 132 Deferred revenue 638 633 $ 850 $ 765 |
Other liabilities | January 31, October 25, (In millions) Other Liabilities Deferred income taxes $ 14 $ 56 Income taxes payable 232 227 Defined and postretirement benefit plans 180 187 Other 82 85 $ 508 $ 555 |
Goodwill, Purchased Technolog28
Goodwill, Purchased Technology and Other Intangible Assets (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other indefinite-lived intangible assets | Details of goodwill and other indefinite-lived intangible assets as of January 31, 2016 and October 25, 2015 were as follows: Goodwill Other Total (In millions) Silicon Systems $ 2,151 $ — $ 2,151 Applied Global Services 1,027 5 1,032 Display 124 18 142 Energy and Environmental Solutions — 2 2 Carrying amount $ 3,302 $ 25 $ 3,327 |
Summary of purchased technology and intangible assets | A summary of Applied's purchased technology and intangible assets is set forth below: January 31, October 25, (In millions) Purchased technology, net $ 532 $ 575 Intangible assets - finite-lived, net 157 162 Intangible assets - indefinite-lived 25 25 Total $ 714 $ 762 |
Finite-lived intangible assets | Details of finite-lived intangible assets were as follows: January 31, 2016 October 25, 2015 Purchased Technology Other Intangible Assets Total Purchased Technology Other Intangible Assets Total (In millions) Gross carrying amount: Silicon Systems $ 1,449 $ 252 $ 1,701 $ 1,449 $ 252 $ 1,701 Applied Global Services 28 44 72 28 44 72 Display 110 33 143 110 33 143 Energy and Environmental Solutions 4 12 16 4 12 16 Gross carrying amount $ 1,591 $ 341 $ 1,932 $ 1,591 $ 341 $ 1,932 Accumulated amortization: Silicon Systems $ (919 ) $ (99 ) $ (1,018 ) $ (876 ) $ (95 ) $ (971 ) Applied Global Services (26 ) (44 ) (70 ) (26 ) (44 ) (70 ) Display (110 ) (33 ) (143 ) (110 ) (33 ) (143 ) Energy and Environmental Solutions (4 ) (8 ) (12 ) (4 ) (7 ) (11 ) Accumulated amortization $ (1,059 ) $ (184 ) $ (1,243 ) $ (1,016 ) $ (179 ) $ (1,195 ) Carrying amount $ 532 $ 157 $ 689 $ 575 $ 162 $ 737 |
Summary of amortization expense | Details of amortization expense by segment were as follows: Three Months Ended January 31, January 25, (In millions) Silicon Systems $ 47 $ 43 Applied Global Services — 1 Display — 1 Energy and Environmental Solutions 1 1 Total $ 48 $ 46 |
Schedule of categories amortization expense was charged to | Amortization expense was charged to the following categories: Three Months Ended January 31, January 25, (In millions) Cost of products sold $ 43 $ 40 Marketing and selling 5 5 General and administrative — 1 Total $ 48 $ 46 |
Future estimated amortization expense | As of January 31, 2016 , future estimated amortization expense is expected to be as follows: Amortization Expense (In millions) 2016 (remaining 9 months) $ 141 2017 186 2018 185 2019 44 2020 39 Thereafter 94 Total $ 689 |
Borrowing Facilities and Debt (
Borrowing Facilities and Debt (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt Outstanding | Debt outstanding as of January 31, 2016 and October 25, 2015 was as follows: Principal Amount January 31, October 25, Effective Interest Rate Interest Pay Dates (In millions) Short-term debt: 2.650% Senior Notes Due 2016 $ — $ 400 2.666% June 15, December 15 Other debt — 800 1.0% - 1.25% Total short-term debt — 1,200 Long-term debt: 7.125% Senior Notes Due 2017 200 200 7.190% April 15, October 15 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 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 3,350 3,350 Total unamortized discount (7 ) (8 ) Total long-term debt 3,343 3,342 Total debt $ 3,343 $ 4,542 |
Stockholders' Equity, Compreh30
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Equity [Abstract] | |
Components of accumulated other comprehensive loss, after-tax basis | Changes in the components of AOCI, net of tax, were as follows: 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 at October 25, 2015 $ 14 $ (15 ) $ (105 ) $ 14 $ (92 ) Other comprehensive income (loss) before reclassifications 1 (3 ) — — (2 ) Amounts reclassified out of AOCI — — — — — Other comprehensive income (loss), net of tax 1 (3 ) — — (2 ) Balance at January 31, 2016 $ 15 $ (18 ) $ (105 ) $ 14 $ (94 ) 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 at October 26, 2014 $ 24 $ — $ (105 ) $ 5 $ (76 ) Other comprehensive income (loss) before reclassifications (1 ) 3 — (1 ) 1 Amounts reclassified out of AOCI — (2 ) — — (2 ) Other comprehensive income (loss), net of tax (1 ) 1 — (1 ) (1 ) Balance at January 25, 2015 $ 23 $ 1 $ (105 ) $ 4 $ (77 ) |
Summary of stock repurchases | The following table summarizes Applied’s stock repurchases for the three months ended January 31, 2016 : Three Months Ended January 31, 2016 (In millions, except per share amounts) Shares of common stock repurchased 35 Cost of stock repurchased $ 625 Average price paid per share $ 17.64 |
Effect of share-based compensation on the results of operations | The effect of share-based compensation on the results of operations was as follows: Three Months Ended January 31, January 25, (In millions) Cost of products sold $ 17 $ 15 Research, development, and engineering 20 18 Marketing and selling 7 6 General and administrative 10 9 Total share-based compensation $ 54 $ 48 |
Restricted stock units and restricted stock activity | A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the three months ended January 31, 2016 is presented below: Shares Weighted Average Grant Date Fair Value (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2015 27 $ 16.41 Granted 10 $ 18.24 Vested (9 ) $ 14.07 Canceled (1 ) $ 17.47 Non-vested restricted stock units, restricted stock, performance shares and performance units at January 31, 2016 27 $ 17.90 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of net periodic benefit costs of defined and postretirement benefit plans | A summary of the components of net periodic benefit costs of these defined and postretirement benefit plans for the three months ended January 31, 2016 and January 25, 2015 is presented below: Three Months Ended January 31, January 25, (In millions) Service cost $ 3 $ 3 Interest cost 4 4 Expected return on plan assets (4 ) (4 ) Amortization of actuarial loss 1 2 Curtailment and settlement gain (4 ) (1 ) Net periodic benefit cost $ — $ 4 |
Warranty, Guarantees And Cont32
Warranty, Guarantees And Contingencies (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in the warranty reserves | Changes in the warranty reserves are presented below: Three Months Ended January 31, January 25, (In millions) Beginning balance $ 126 $ 113 Provisions for warranty 26 37 Releases of reserves related to preexisting warranty (11 ) (1 ) Consumption of reserves (22 ) (30 ) Ending balance $ 119 $ 119 |
Industry Segment Operations (Ta
Industry Segment Operations (Tables) | 3 Months Ended |
Jan. 31, 2016 | |
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: Three Months Ended Net Sales Operating Income (Loss) (In millions) January 31, 2016: Silicon Systems $ 1,373 $ 265 Applied Global Services 626 156 Display 213 38 Energy and Environmental Solutions 45 6 Total Segment $ 2,257 $ 465 January 25, 2015: Silicon Systems $ 1,446 $ 307 Applied Global Services 583 153 Display 275 72 Energy and Environmental Solutions 55 (4 ) Total Segment $ 2,359 $ 528 |
Reconciliations of total segment operating income to Applied's consolidated operating income (loss) | Reconciliations of total segment operating results to Applied consolidated totals were as follows: Three Months Ended January 31, January 25, (In millions) Total segment operating income $ 465 $ 528 Corporate and unallocated costs (111 ) (128 ) Certain items associated with terminated business combination — (20 ) Gain on derivatives associated with terminated business combination — 78 Income from operations $ 354 $ 458 |
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 three months ended January 31, 2016 , which were for products in multiple reportable segments. Percentage of Net Sales Taiwan Semiconductor Manufacturing Company Limited 13 % Micron Technology, Inc. 11 % Samsung Electronics Co., Ltd. 10 % |
Basis of Presentation (Details)
Basis of Presentation (Details) | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Accounting Policies [Abstract] | ||
Operating cycle | 98 days | 91 days |
Fiscal year operating cycle | 371 days | 364 days |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Numerator: | ||
Net income | $ 286 | $ 348 |
Denominator: | ||
Weighted average common shares outstanding (in shares) | 1,146 | 1,224 |
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares (in shares) | 8 | 16 |
Denominator for diluted earnings per share (in shares) | 1,154 | 1,240 |
Basic and diluted (in dollars per share) | $ 0.25 | $ 0.28 |
Potentially dilutive securities (in shares) | 2 | 1 |
Cash, Cash Equivalents and In36
Cash, Cash Equivalents and Investments (Summary of Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 | Jan. 25, 2015 | Oct. 26, 2014 |
Summary of Cash, Cash Equivalents and Investments | ||||
Cash | $ 1,861 | $ 1,010 | ||
Total Cash equivalents | 1,101 | 3,787 | ||
Total Cash and Cash equivalents | 2,962 | 4,797 | $ 2,929 | $ 3,002 |
Short-term and long-term investments, Cost | 1,131 | 1,095 | ||
Short-term and long-term investments, Gross Unrealized Gains | 21 | 19 | ||
Short-term and long-term investments, Gross Unrealized Losses | 2 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 1,150 | 1,114 | ||
Equity investments in privately-held companies | 58 | 78 | ||
Cash, Cash Equivalents and Investments, Cost | 4,093 | 5,892 | ||
Cash, Cash Equivalents and Investments, Gross Unrealized Gains | 21 | 19 | ||
Cash, Cash Equivalents and Investments, Gross Unrealized Losses | 2 | 0 | ||
Cash, Cash Equivalents and Investments, Estimated Fair Value | 4,112 | 5,911 | ||
Total fixed income securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 1,040 | 989 | ||
Short-term and long-term investments, Gross Unrealized Gains | 2 | 2 | ||
Short-term and long-term investments, Gross Unrealized Losses | 1 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 1,041 | 991 | ||
U.S. Treasury and agency securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 101 | 84 | ||
Short-term and long-term investments, Gross Unrealized Gains | 0 | 0 | ||
Short-term and long-term investments, Gross Unrealized Losses | 0 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 101 | 84 | ||
Non-US government securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 9 | 9 | ||
Short-term and long-term investments, Gross Unrealized Gains | 0 | 0 | ||
Short-term and long-term investments, Gross Unrealized Losses | 0 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 9 | 9 | ||
Municipal securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 408 | 384 | ||
Short-term and long-term investments, Gross Unrealized Gains | 2 | 2 | ||
Short-term and long-term investments, Gross Unrealized Losses | 0 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 410 | 386 | ||
Commercial paper, corporate bonds and medium-term notes [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 248 | 250 | ||
Short-term and long-term investments, Gross Unrealized Gains | 0 | 0 | ||
Short-term and long-term investments, Gross Unrealized Losses | 1 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 247 | 250 | ||
Asset-backed and mortgage-backed securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 274 | 262 | ||
Short-term and long-term investments, Gross Unrealized Gains | 0 | 0 | ||
Short-term and long-term investments, Gross Unrealized Losses | 0 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 274 | 262 | ||
Publicly traded equity securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Short-term and long-term investments, Cost | 33 | 28 | ||
Short-term and long-term investments, Gross Unrealized Gains | 19 | 17 | ||
Short-term and long-term investments, Gross Unrealized Losses | 1 | 0 | ||
Short-term and long-term investments, Estimated Fair Value | 51 | 45 | ||
Money market funds [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Total Cash equivalents | 856 | 3,272 | ||
Non-U.S. government securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Total Cash equivalents | 10 | 60 | ||
Municipal securities [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Total Cash equivalents | 71 | 73 | ||
Commercial paper, corporate bonds and medium-term notes [Member] | ||||
Summary of Cash, Cash Equivalents and Investments | ||||
Total Cash equivalents | $ 164 | $ 382 |
Cash, Cash Equivalents and In37
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Contractual maturities of investments | ||
Due in one year or less, Cost | $ 135 | |
Due after one through five years, Cost | 631 | |
No single maturity date, Cost | 365 | |
Short-term and long-term investments, Cost | 1,131 | $ 1,095 |
Due in one year or less, Estimated Fair Value | 135 | |
Due after one through five years, Estimated Fair Value | 632 | |
No single maturity date, Estimated Fair Value | 383 | |
Investments maturities, Estimated Fair Value | $ 1,150 | $ 1,114 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair value, measurements, recurring [Member] - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Assets: | ||
Total | $ 2,193 | $ 4,823 |
Money market funds [Member] | ||
Assets: | ||
Investment securities | 856 | 3,272 |
U.S. Treasury and agency securities [Member] | ||
Assets: | ||
Investment securities | 101 | 84 |
Non-US government securities [Member] | ||
Assets: | ||
Investment securities | 19 | 69 |
Municipal securities [Member] | ||
Assets: | ||
Investment securities | 481 | 459 |
Commercial paper, corporate bonds and medium-term notes [Member] | ||
Assets: | ||
Investment securities | 411 | 632 |
Asset-backed and mortgage-backed securities [Member] | ||
Assets: | ||
Investment securities | 274 | 262 |
Publicly traded equity securities [Member] | ||
Assets: | ||
Investment securities | 51 | 45 |
Level 1 [Member] | ||
Assets: | ||
Total | 990 | 3,389 |
Level 1 [Member] | Money market funds [Member] | ||
Assets: | ||
Investment securities | 856 | 3,272 |
Level 1 [Member] | U.S. Treasury and agency securities [Member] | ||
Assets: | ||
Investment securities | 83 | 72 |
Level 1 [Member] | Non-US government securities [Member] | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 [Member] | Municipal securities [Member] | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 [Member] | Commercial paper, corporate bonds and medium-term notes [Member] | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 [Member] | Asset-backed and mortgage-backed securities [Member] | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 [Member] | Publicly traded equity securities [Member] | ||
Assets: | ||
Investment securities | 51 | 45 |
Level 2 [Member] | ||
Assets: | ||
Total | 1,203 | 1,434 |
Level 2 [Member] | Money market funds [Member] | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 2 [Member] | U.S. Treasury and agency securities [Member] | ||
Assets: | ||
Investment securities | 18 | 12 |
Level 2 [Member] | Non-US government securities [Member] | ||
Assets: | ||
Investment securities | 19 | 69 |
Level 2 [Member] | Municipal securities [Member] | ||
Assets: | ||
Investment securities | 481 | 459 |
Level 2 [Member] | Commercial paper, corporate bonds and medium-term notes [Member] | ||
Assets: | ||
Investment securities | 411 | 632 |
Level 2 [Member] | Asset-backed and mortgage-backed securities [Member] | ||
Assets: | ||
Investment securities | 274 | 262 |
Level 2 [Member] | Publicly traded equity securities [Member] | ||
Assets: | ||
Investment securities | $ 0 | $ 0 |
Fair Value Measurements (Deta39
Fair Value Measurements (Details Textual) - USD ($) | 3 Months Ended | |
Jan. 31, 2016 | Oct. 25, 2015 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Fair value of level one and level two transfers amount | $ 0 | |
Carrying Amount [Member] | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Long-term debt | 3,300,000,000 | |
Carrying Amount [Member] | Equity Investments In Privately Held Companies [Member] | Short Term And Long Term Investments [Member] | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Equity investments in privately-held companies measured on non-recurring basis | 58,000,000 | $ 78,000,000 |
Portion at Cost [Member] | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Equity investments in privately-held companies measured on non-recurring basis | 50,000,000 | 70,000,000 |
Estimated fair value [Member] | Level 2 [Member] | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Long-term debt | 3,500,000,000 | |
Estimated fair value [Member] | Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member] | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Equity investments in privately-held companies measured on non-recurring basis | $ 8,000,000 | $ 8,000,000 |
Derivative Instruments and He40
Derivative Instruments and Hedging Activities (Details Textual) - USD ($) | 3 Months Ended | ||
Jan. 31, 2016 | Jan. 25, 2015 | Oct. 25, 2015 | |
Derivative [Line Items] | |||
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 | ||
Gain (loss) on derivatives associated with terminated business combination | $ 0 | $ 78,000,000 | |
Interest rate contract [Member] | Designated as hedging instrument [Member] | Cash flow hedging [Member] | |||
Derivative [Line Items] | |||
Notional Amount | $ 600,000,000 | ||
Foreign exchange contracts [Member] | |||
Derivative [Line Items] | |||
Gain (loss) on derivatives associated with terminated business combination | (4,000,000) | 99,000,000 | |
Gain (loss) recognized on income [Member] | Foreign exchange contracts [Member] | |||
Derivative [Line Items] | |||
Gain (loss) on derivatives associated with terminated business combination | $ 0 | $ 78,000,000 | |
Senior Notes [Member] | |||
Derivative [Line Items] | |||
Debt instrument term | 10 years |
Derivative Instruments and He41
Derivative Instruments and Hedging Activities (Derivatives in Statements of Operations) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Effective Portion - Gain or (Loss) Recognized in AOCI | $ (6) | $ 5 |
Effective Portion - Gain or (Loss) Reclassified from AOCI into Income | (1) | 4 |
Ineffective Portion and Amount Excluded from Effectiveness Testing - Gain or (Loss) Recognized in Income | (1) | (1) |
Foreign exchange contracts [Member] | Cost of products sold [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Effective Portion - Gain or (Loss) Recognized in AOCI | (6) | 5 |
Effective Portion - Gain or (Loss) Reclassified from AOCI into Income | 1 | 8 |
Ineffective Portion and Amount Excluded from Effectiveness Testing - Gain or (Loss) Recognized in Income | 0 | (1) |
Foreign exchange contracts [Member] | General and administrative [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Effective Portion - Gain or (Loss) Recognized in AOCI | 0 | 0 |
Effective Portion - Gain or (Loss) Reclassified from AOCI into Income | (1) | (4) |
Ineffective Portion and Amount Excluded from Effectiveness Testing - Gain or (Loss) Recognized in Income | (1) | 0 |
Interest rate swap [Member] | Interest expense [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Effective Portion - Gain or (Loss) Recognized in AOCI | 0 | 0 |
Effective Portion - Gain or (Loss) Reclassified from AOCI into Income | (1) | 0 |
Ineffective Portion and Amount Excluded from Effectiveness Testing - Gain or (Loss) Recognized in Income | $ 0 | $ 0 |
Derivative Instruments and He42
Derivative Instruments and Hedging Activities (Gain/Loss Recognized in Income) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivatives Not Designated as Hedging Instruments | $ 0 | $ 78 |
Foreign exchange contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivatives Not Designated as Hedging Instruments | (4) | 99 |
Foreign exchange contracts [Member] | Gain on derivatives associated with terminated business combination [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivatives Not Designated as Hedging Instruments | 0 | 78 |
Foreign exchange contracts [Member] | General and administrative [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivatives Not Designated as Hedging Instruments | $ (4) | $ 21 |
Balance Sheet Detail (Inventori
Balance Sheet Detail (Inventories) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Inventories | ||
Customer service spares | $ 391 | $ 382 |
Raw materials | 512 | 438 |
Work-in-process | 259 | 294 |
Finished goods | 673 | 719 |
Total Inventories | 1,835 | 1,833 |
Inventory at customer locations included in finished goods | 115 | 155 |
Inventory, finished goods, evaluation inventory, net of reserves | $ 189 | $ 185 |
Balance Sheet Detail (Other Cur
Balance Sheet Detail (Other Current Assets) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Other Current Assets [Abstract] | ||
Deferred income taxes, net | $ 0 | $ 403 |
Prepaid income taxes and income taxes receivable | 155 | 127 |
Prepaid expenses and other | 179 | 194 |
Total other current assets | $ 334 | $ 724 |
Balance Sheet Detail (Property,
Balance Sheet Detail (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Oct. 25, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 2,978 | $ 2,946 |
Accumulated depreciation | (2,070) | (2,054) |
Net property, plant and equipment | 908 | 892 |
Land and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | 157 | 157 |
Building and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 1,249 | 1,247 |
Building and improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Building and improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 30 years | |
Demonstration and manufacturing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 927 | 920 |
Demonstration and manufacturing equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Demonstration and manufacturing equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Furniture, fixtures and other equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 586 | 574 |
Furniture, fixtures and other equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Furniture, fixtures and other equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 15 years | |
Construction in progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross property, plant and equipment | $ 59 | $ 48 |
Balance Sheet Detail (Accounts
Balance Sheet Detail (Accounts Payable, Notes Payable and Accrued Expense) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 549 | $ 658 |
Compensation and employee benefits | 299 | 509 |
Warranty | 119 | 126 |
Dividends payable | 113 | 116 |
Income taxes payable | 49 | 60 |
Other accrued taxes | 42 | 58 |
Interest payable | 36 | 36 |
Other | 250 | 270 |
Accounts payable, notes payable and accrued expenses | $ 1,457 | $ 1,833 |
Balance Sheet Detail (Customer
Balance Sheet Detail (Customer Deposits and Deferred Revenue) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Customer Deposits and Deferred Revenue | ||
Customer deposits | $ 212 | $ 132 |
Deferred revenue | 638 | 633 |
Customer deposits and deferred revenue | $ 850 | $ 765 |
Balance Sheet Detail (Other Lia
Balance Sheet Detail (Other Liabilities) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Other Liabilities | ||
Deferred income taxes | $ 14 | $ 56 |
Income taxes payable | 232 | 227 |
Defined and postretirement benefit plans | 180 | 187 |
Other | 82 | 85 |
Total other liabilities | $ 508 | $ 555 |
Goodwill, Purchased Technolog49
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Goodwill and Other Indefinite-lived Intangible Assets) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Indefinite-lived intangible assets | ||
Goodwill | $ 3,302 | $ 3,302 |
Other Intangible Assets | 25 | 25 |
Total | 3,327 | 3,327 |
Silicon Systems [Member] | ||
Indefinite-lived intangible assets | ||
Goodwill | 2,151 | 2,151 |
Other Intangible Assets | 0 | 0 |
Total | 2,151 | 2,151 |
Applied Global Services [Member] | ||
Indefinite-lived intangible assets | ||
Goodwill | 1,027 | 1,027 |
Other Intangible Assets | 5 | 5 |
Total | 1,032 | 1,032 |
Display [Member] | ||
Indefinite-lived intangible assets | ||
Goodwill | 124 | 124 |
Other Intangible Assets | 18 | 18 |
Total | 142 | 142 |
Energy And Environmental Solutions [Member] | ||
Indefinite-lived intangible assets | ||
Goodwill | 0 | 0 |
Other Intangible Assets | 2 | 2 |
Total | $ 2 | $ 2 |
Goodwill, Purchased Technolog50
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Purchased Technology and Intangible Assets) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | $ 689 | $ 737 |
Intangible assets - indefinite-lived | 25 | 25 |
Total | 714 | 762 |
Purchased technology [Member] | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | 532 | 575 |
Intangible assets [Member] | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | $ 157 | $ 162 |
Goodwill, Purchased Technolog51
Goodwill, Purchased Technology and Other Intangible Assets (Details Textual) | 3 Months Ended |
Jan. 31, 2016 | |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 1 year |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful life | 15 years |
Goodwill, Purchased Technolog52
Goodwill, Purchased Technology and Other Intangible Assets (Schedule of Finite-lived Intangible Assets) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Finite-lived intangible assets | ||
Gross carrying amount | $ 1,932 | $ 1,932 |
Accumulated amortization | (1,243) | (1,195) |
Total | 689 | 737 |
Silicon Systems [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 1,701 | 1,701 |
Accumulated amortization | (1,018) | (971) |
Applied Global Services [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 72 | 72 |
Accumulated amortization | (70) | (70) |
Display [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 143 | 143 |
Accumulated amortization | (143) | (143) |
Energy And Environmental Solutions [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 16 | 16 |
Accumulated amortization | (12) | (11) |
Purchased technology [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 1,591 | 1,591 |
Accumulated amortization | (1,059) | (1,016) |
Total | 532 | 575 |
Purchased technology [Member] | Silicon Systems [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 1,449 | 1,449 |
Accumulated amortization | (919) | (876) |
Purchased technology [Member] | Applied Global Services [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 28 | 28 |
Accumulated amortization | (26) | (26) |
Purchased technology [Member] | Display [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 110 | 110 |
Accumulated amortization | (110) | (110) |
Purchased technology [Member] | Energy And Environmental Solutions [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 4 | 4 |
Accumulated amortization | (4) | (4) |
Other [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 341 | 341 |
Accumulated amortization | (184) | (179) |
Total | 157 | 162 |
Other [Member] | Silicon Systems [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 252 | 252 |
Accumulated amortization | (99) | (95) |
Other [Member] | Applied Global Services [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 44 | 44 |
Accumulated amortization | (44) | (44) |
Other [Member] | Display [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 33 | 33 |
Accumulated amortization | (33) | (33) |
Other [Member] | Energy And Environmental Solutions [Member] | ||
Finite-lived intangible assets | ||
Gross carrying amount | 12 | 12 |
Accumulated amortization | $ (8) | $ (7) |
Goodwill, Purchased Technolog53
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 48 | $ 46 |
Silicon Systems [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 47 | 43 |
Applied Global Services [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 0 | 1 |
Display [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 0 | 1 |
Energy And Environmental Solutions [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 1 | $ 1 |
Goodwill, Purchased Technolog54
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 48 | $ 46 |
Cost of products sold [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 43 | 40 |
Marketing and selling [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | 5 | 5 |
General and administrative [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 0 | $ 1 |
Goodwill, Purchased Technolog55
Goodwill, Purchased Technology and Other Intangible Assets (Estimated Amortization Expense) (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 |
Future estimated amortization expense | ||
2016 (remaining 9 months) | $ 141 | |
2,017 | 186 | |
2,018 | 185 | |
2,019 | 44 | |
2,020 | 39 | |
Thereafter | 94 | |
Total | $ 689 | $ 737 |
Borrowing Facilities and Debt56
Borrowing Facilities and Debt (Details Textual) - USD ($) | 1 Months Ended | |||
Nov. 30, 2015 | Jan. 31, 2016 | Oct. 25, 2015 | Sep. 30, 2015 | |
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | $ 1,600,000,000 | |||
Outstanding credit facilities | 0 | $ 0 | ||
Notes payable, short-term | 0 | 1,200,000,000 | ||
Revolving Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | 1,500,000,000 | |||
Foreign Line of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | 67,000,000 | |||
2.650% Unsecured Senior Notes Due 2016 [Member] | Senior Notes [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Extinguishment of debt, amount | $ 405,000,000 | |||
Loss on extinguishment of debt | $ 5,000,000 | |||
Other Long Term Debt [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Notes payable, short-term | 0 | 800,000,000 | ||
Senior Notes [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Long-term debt, principal amount | 3,350,000,000 | 3,350,000,000 | $ 1,800,000,000 | |
Senior Notes [Member] | 2.650% Unsecured Senior Notes Due 2016 [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Notes payable, short-term | $ 0 | $ 400,000,000 | ||
Stated interest rate (as percent) | 2.65% | 2.65% |
Borrowing Facilities and Debt57
Borrowing Facilities and Debt (Details) - USD ($) $ in Millions | Jan. 31, 2016 | Oct. 25, 2015 | Sep. 30, 2015 |
Debt Instrument [Line Items] | |||
Short-term debt, principal amount | $ 0 | $ 1,200 | |
Total long-term debt | 3,343 | 3,342 | |
Total debt | 3,343 | 4,542 | |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | 3,350 | 3,350 | $ 1,800 |
Total unamortized discount | (7) | (8) | |
Total long-term debt | 3,343 | 3,342 | |
Senior Notes [Member] | 2.650% Unsecured Senior Notes Due 2016 [Member] | |||
Debt Instrument [Line Items] | |||
Short-term debt, principal amount | $ 0 | $ 400 | |
Stated interest rate (as percent) | 2.65% | 2.65% | |
Effective Interest Rate | 2.666% | 2.666% | |
Senior Notes [Member] | 7.125% Unsecured Senior Notes Due 2017 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 200 | $ 200 | |
Stated interest rate (as percent) | 7.125% | 7.125% | |
Effective Interest Rate | 7.19% | 7.19% | |
Senior Notes [Member] | 2.625% Unsecured Senior Notes Due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 600 | $ 600 | |
Stated interest rate (as percent) | 2.625% | 2.625% | |
Effective Interest Rate | 2.64% | 2.64% | |
Senior Notes [Member] | 4.300% Unsecured Senior Notes Due 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 750 | $ 750 | |
Stated interest rate (as percent) | 4.30% | 4.30% | |
Effective Interest Rate | 4.326% | 4.326% | |
Senior Notes [Member] | 3.900% Unsecured Senior Notes Due 2025 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 700 | $ 700 | |
Stated interest rate (as percent) | 3.90% | 3.90% | |
Effective Interest Rate | 3.944% | 3.944% | |
Senior Notes [Member] | 5.100% Unsecured Senior Notes Due 2035 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 500 | $ 500 | |
Stated interest rate (as percent) | 5.10% | 5.10% | |
Effective Interest Rate | 5.127% | 5.127% | |
Senior Notes [Member] | 5.850% Unsecured Senior Notes Due 2041 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, principal amount | $ 600 | $ 600 | |
Stated interest rate (as percent) | 5.85% | 5.85% | |
Effective Interest Rate | 5.879% | 5.879% | |
Other Long Term Debt [Member] | |||
Debt Instrument [Line Items] | |||
Short-term debt, principal amount | $ 0 | $ 800 | |
Other Long Term Debt [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Effective Interest Rate | 1.00% | 1.00% | |
Other Long Term Debt [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Effective Interest Rate | 1.25% | 1.25% |
Stockholders' Equity, Compreh58
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Details Textual) $ / shares in Units, shares in Millions | Apr. 26, 2015USD ($) | Dec. 31, 2015$ / shares | Jan. 31, 2016USD ($)employee_stock_purchase_plans$ / sharesshares | Jan. 25, 2015USD ($) |
Equity [Line Items] | ||||
Other comprehensive loss, net of tax | $ (2,000,000) | $ (1,000,000) | ||
Amount authorized by board of directors to repurchase shares | $ 3,000,000,000 | |||
Period of stock repurchase program | 3 years | |||
Remaining authorized repurchase amount | $ 1,100,000,000 | |||
Dividends declared per share (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | ||
Payments of Dividends | $ 115,000,000 | 122,000,000 | ||
Number of employee stock purchase plans | employee_stock_purchase_plans | 2 | |||
Employee Stock [Member] | ||||
Equity [Line Items] | ||||
Total unrecognized compensation expense | $ 366,000,000 | |||
Weighted average period for unrecognized compensation expense to be recognized (in years) | 2 years 10 months 29 days | |||
Employee Stock Option [Member] | ||||
Equity [Line Items] | ||||
Number of shares available for grant (in shares) | shares | 29 | |||
Performance Shares [Member] | ||||
Equity [Line Items] | ||||
Additional performance-based awards to be earned upon certain levels of achievement | shares | 1 | |||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member] | Certain Executive Officers [Member] | ||||
Equity [Line Items] | ||||
Measurement period for achieving TSR goals | 2 years | |||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units [Member] | Certain Executive Officers [Member] | Maximum [Member] | ||||
Equity [Line Items] | ||||
Vesting period for performance-based awards | 4 years | |||
ESIP [Member] | Employee Stock Option [Member] | ||||
Equity [Line Items] | ||||
Number of shares available for grant (in shares) | shares | 107 | |||
Employee Stock Purchase Plan, United States [Member] | ||||
Equity [Line Items] | ||||
Number of employee stock purchase plans | employee_stock_purchase_plans | 1 | |||
Employee Stock Purchase Plan, International [Member] | ||||
Equity [Line Items] | ||||
Number of employee stock purchase plans | employee_stock_purchase_plans | 1 | |||
Treasury Stock [Member] | ||||
Equity [Line Items] | ||||
Common stock repurchases (in shares) | shares | 35 | |||
Defined and Postretirement Benefit Plans [Member] | ||||
Equity [Line Items] | ||||
Other comprehensive loss, net of tax | $ 0 | $ 0 |
Stockholders' Equity, Compreh59
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Changes in Components of AOCI) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | $ (92) | $ (76) |
Other comprehensive income (loss) before reclassifications | (2) | 1 |
Amounts reclassified out of AOCI | 0 | (2) |
Other comprehensive loss, net of tax | (2) | (1) |
Ending balance | (94) | (77) |
Unrealized Gain on Investments, Net [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | 14 | 24 |
Other comprehensive income (loss) before reclassifications | 1 | (1) |
Amounts reclassified out of AOCI | 0 | 0 |
Other comprehensive loss, net of tax | 1 | (1) |
Ending balance | 15 | 23 |
Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | (15) | 0 |
Other comprehensive income (loss) before reclassifications | (3) | 3 |
Amounts reclassified out of AOCI | 0 | (2) |
Other comprehensive loss, net of tax | (3) | 1 |
Ending balance | (18) | 1 |
Defined and Postretirement Benefit Plans [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | (105) | (105) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Amounts reclassified out of AOCI | 0 | 0 |
Other comprehensive loss, net of tax | 0 | 0 |
Ending balance | (105) | (105) |
Cumulative Translation Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | 14 | 5 |
Other comprehensive income (loss) before reclassifications | 0 | (1) |
Amounts reclassified out of AOCI | 0 | 0 |
Other comprehensive loss, net of tax | 0 | (1) |
Ending balance | $ 14 | $ 4 |
Stockholders' Equity, Compreh60
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Repurchase Program) (Details) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended |
Jan. 31, 2016USD ($)$ / sharesshares | |
Equity, Class of Treasury Stock [Line Items] | |
Cost of stock repurchased | $ 625 |
Treasury Stock [Member] | |
Equity, Class of Treasury Stock [Line Items] | |
Shares of common stock repurchased | shares | 35 |
Cost of stock repurchased | $ 625 |
Average price paid per share | $ / shares | $ 17.64 |
Stockholders' Equity, Compreh61
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Share-Based Compensation) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation | $ 54 | $ 48 |
Cost of products sold [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation | 17 | 15 |
Research, development, and engineering [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation | 20 | 18 |
Marketing and selling [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation | 7 | 6 |
General and administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation | $ 10 | $ 9 |
Stockholders' Equity, Compreh62
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 [Member] shares in Millions | 3 Months Ended |
Jan. 31, 2016$ / sharesshares | |
Restricted stock units, restricted stock, performance shares and performance units | |
Beginning balance (in shares) | shares | 27 |
Granted (in shares) | shares | 10 |
Vested (in shares) | shares | (9) |
Canceled (in shares) | shares | (1) |
Ending balance (in shares) | shares | 27 |
Weighted Average Grant Date Fair Value | |
Beginning of period (in dollars per share) | $ / shares | $ 16.41 |
Granted (in dollars per share) | $ / shares | 18.24 |
Vested (in dollars per share) | $ / shares | 14.07 |
Canceled (in dollars per share) | $ / shares | 17.47 |
Ending balance (in dollars per share) | $ / shares | $ 17.90 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Components of net periodic benefit costs of defined and postretirement benefit plans | ||
Service cost | $ 3 | $ 3 |
Interest cost | 4 | 4 |
Expected return on plan assets | (4) | (4) |
Amortization of actuarial loss | 1 | 2 |
Curtailment and settlement gain | 4 | 1 |
Net periodic benefit cost | $ 0 | $ 4 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate provision (as percent) | 8.90% | 20.40% |
Decrease in unrecognized tax benefits reasonably possible | $ 16 |
Warranty, Guarantees and Cont65
Warranty, Guarantees and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 126 | $ 113 |
Provisions for warranty | 26 | 37 |
Releases of reserves related to preexisting warranty | (11) | (1) |
Consumption of reserves | (22) | (30) |
Ending balance | $ 119 | $ 119 |
Warranty, Guarantees and Cont66
Warranty, Guarantees and Contingencies (Details Textual) $ in Millions | 3 Months Ended | ||
Jan. 31, 2016USD ($) | Jun. 20, 2014employee | Feb. 07, 2013employee | |
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 | $ | $ 56 | ||
Parent guarantees to banks | $ | $ 100 | ||
Number of employees acquitted | 9 | ||
Number of employees found guilty | 1 | ||
Number of employees found not guilty | 10 |
Industry Segment Operations (De
Industry Segment Operations (Details Textual) | 3 Months Ended |
Jan. 31, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Industry Segment Operations (Ne
Industry Segment Operations (Net Sales and Operating Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | $ 2,257 | $ 2,359 |
Operating Income (Loss) | 354 | 458 |
Operating Segments [Member] | ||
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | 2,257 | 2,359 |
Operating Income (Loss) | 465 | 528 |
Operating Segments [Member] | Silicon Systems [Member] | ||
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | 1,373 | 1,446 |
Operating Income (Loss) | 265 | 307 |
Operating Segments [Member] | Applied Global Services [Member] | ||
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | 626 | 583 |
Operating Income (Loss) | 156 | 153 |
Operating Segments [Member] | Display [Member] | ||
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | 213 | 275 |
Operating Income (Loss) | 38 | 72 |
Operating Segments [Member] | Energy And Environmental Solutions [Member] | ||
Net sales and operating income (loss) for each reportable segment | ||
Net Sales | 45 | 55 |
Operating Income (Loss) | $ 6 | $ (4) |
Industry Segment Operations (Re
Industry Segment Operations (Reconciliations of Total Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2016 | Jan. 25, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Income from operations | $ 354 | $ 458 |
Total segment operating income [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Income from operations | 465 | 528 |
Corporate and unallocated costs [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Income from operations | (111) | (128) |
Certain items associated with terminated business combination [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Income from operations | 0 | (20) |
Gain (loss) recognized on income [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Income from operations | $ 0 | $ 78 |
Industry Segment Operations (Pe
Industry Segment Operations (Percentage of New Sales) (Details) - Customer Concentration Risk [Member] - Sales Revenue, Net [Member] | 3 Months Ended |
Jan. 31, 2016 | |
Taiwan Semiconductor Manufacturing Company Limited [Member] | |
Entity-Wide Revenue, Major Customer [Line Items] | |
Percentage of net sales | 13.00% |
Micron Technology, Inc. [Member] | |
Entity-Wide Revenue, Major Customer [Line Items] | |
Percentage of net sales | 11.00% |
Samsung Electronics Co., Ltd. [Member] | |
Entity-Wide Revenue, Major Customer [Line Items] | |
Percentage of net sales | 10.00% |