Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Oct. 27, 2019 | Dec. 06, 2019 | Apr. 28, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Oct. 27, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 000-06920 | ||
Entity Registrant Name | APPLIED MATERIALS INC /DE | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 94-1655526 | ||
Entity Address, Address Line One | 3050 Bowers Avenue | ||
Entity Address, Address Line Two | P.O. Box 58039 | ||
Entity Address, City or Town | Santa Clara | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 95052-8039 | ||
City Area Code | 408 | ||
Local Phone Number | 727-5555 | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | ||
Trading Symbol | AMAT | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 41,677,858,958 | ||
Entity Common Stock, Shares Outstanding | 915,304,098 | ||
Documents Incorporated by Reference | Portions of Part III will be provided in accordance with Instruction G(3) to Form 10-K no later than February 24, 2020. | ||
Entity Central Index Key | 0000006951 | ||
Current Fiscal Year End Date | --10-27 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Income Statement [Abstract] | |||
Net sales | $ 14,608 | $ 16,705 | $ 14,698 |
Cost of products sold | 8,222 | 9,188 | 8,086 |
Gross profit | 6,386 | 7,517 | 6,612 |
Operating expenses: | |||
Research, development and engineering | 2,054 | 2,022 | 1,781 |
Marketing and selling | 521 | 521 | 457 |
General and administrative | 461 | 483 | 438 |
Total operating expenses | 3,036 | 3,026 | 2,676 |
Income from operations | 3,350 | 4,491 | 3,936 |
Interest expense | 237 | 234 | 198 |
Interest and other income, net | 156 | 139 | 78 |
Income before income taxes | 3,269 | 4,396 | 3,816 |
Provision for income taxes | 563 | 1,358 | 297 |
Net income | $ 2,706 | $ 3,038 | $ 3,519 |
Earnings per share: | |||
Basic (in dollars per share) | $ 2.89 | $ 3 | $ 3.28 |
Diluted (in dollars per share) | $ 2.86 | $ 2.96 | $ 3.25 |
Weighted average number of shares: | |||
Basic (in shares) | 937 | 1,013 | 1,073 |
Diluted (in shares) | 945 | 1,026 | 1,084 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 2,706 | $ 3,038 | $ 3,519 |
Other comprehensive income (loss), net of tax: | |||
Change in unrealized gain (loss) on available-for-sale investments | 21 | (51) | 23 |
Change in unrealized net loss on derivative instruments | (7) | 4 | 7 |
Change in defined and postretirement benefit plans | (51) | (17) | 21 |
Change in cumulative translation adjustments | (1) | 0 | 0 |
Other comprehensive income (loss), net of tax | (38) | (64) | 51 |
Comprehensive income | $ 2,668 | $ 2,974 | $ 3,570 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,129 | $ 3,440 |
Short-term investments | 489 | 590 |
Accounts receivable, net | 2,533 | 2,323 |
Inventories | 3,474 | 3,721 |
Other current assets | 581 | 530 |
Total current assets | 10,206 | 10,604 |
Long-term investments | 1,703 | 1,568 |
Property, plant and equipment, net | 1,529 | 1,407 |
Goodwill | 3,399 | 3,368 |
Purchased technology and other intangible assets, net | 156 | 213 |
Deferred income taxes and other assets | 2,031 | 473 |
Total assets | 19,024 | 17,633 |
Current liabilities: | ||
Current portion of long-term debt | 600 | 0 |
Accounts payable and accrued expenses | 2,511 | 2,721 |
Contract liabilities | 1,336 | 1,201 |
Total current liabilities | 4,447 | 3,922 |
Long-term debt | 4,713 | 5,309 |
Income taxes payable | 1,275 | 1,254 |
Other liabilities | 375 | 303 |
Total liabilities | 10,810 | 10,788 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock: $0.01 par value per share; 1 shares authorized; no shares issued | 0 | 0 |
Common stock: $0.01 par value per share; 2,500 shares authorized; 916 and 967 shares outstanding at 2019 and 2018, respectively | 9 | 10 |
Additional paid-in capital | 7,595 | 7,274 |
Retained earnings | 24,386 | 20,880 |
Treasury stock: 1,079 and 1,019 shares at 2019 and 2018, respectively | (23,596) | (21,194) |
Accumulated other comprehensive loss | (180) | (125) |
Total stockholders’ equity | 8,214 | 6,845 |
Total liabilities and stockholders’ equity | $ 19,024 | $ 17,633 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 27, 2019 | Oct. 28, 2018 |
Stockholders’ equity: | ||
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,500,000,000 | 2,500,000,000 |
Common stock, shares outstanding | 916,000,000 | 967,000,000 |
Treasury stock, shares | 1,079,000,000 | 1,019,000,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (b) | [1] | Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance (in shares) at Oct. 30, 2016 | 1,078 | 889 | |||||
Beginning Balance at Oct. 30, 2016 | $ 7,413 | $ 11 | $ 6,809 | $ 15,448 | $ (14,740) | $ (115) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 3,519 | 3,519 | |||||
Other comprehensive income (loss), net of tax | 51 | 51 | |||||
Dividends | (428) | (428) | |||||
Share-based compensation | 220 | 220 | |||||
Issuance under stock plans, net of a tax benefit, (in shares) | 10 | ||||||
Issuance under stock plans, net of a tax benefit | $ 27 | 27 | |||||
Common stock repurchases, (in shares) | (28) | (28) | (28) | ||||
Common stock repurchases | $ (1,172) | $ 0 | $ (1,172) | ||||
Ending Balance (in shares) at Oct. 29, 2017 | 1,060 | 917 | |||||
Ending Balance at Oct. 29, 2017 | 9,630 | $ 11 | 7,056 | 18,539 | $ (15,912) | (64) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 3,038 | 3,038 | |||||
Other comprehensive income (loss), net of tax | (64) | (64) | |||||
Dividends | (694) | (694) | |||||
Share-based compensation | 258 | 258 | |||||
Issuance under stock plans, net of a tax benefit, (in shares) | 9 | ||||||
Issuance under stock plans, net of a tax benefit | $ (40) | (40) | |||||
Common stock repurchases, (in shares) | (102) | (102) | (102) | ||||
Common stock repurchases | $ (5,283) | $ (1) | $ (5,282) | ||||
Ending Balance (in shares) at Oct. 28, 2018 | 967 | 1,019 | |||||
Ending Balance at Oct. 28, 2018 | 6,845 | $ 10 | 7,274 | 20,880 | $ (21,194) | (125) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 2,706 | 2,706 | |||||
Other comprehensive income (loss), net of tax | (38) | (38) | |||||
Dividends | (770) | (770) | |||||
Share-based compensation | 263 | 263 | |||||
Issuance under stock plans, net of a tax benefit, (in shares) | 9 | ||||||
Issuance under stock plans, net of a tax benefit | $ 58 | 58 | |||||
Common stock repurchases, (in shares) | (60) | (60) | (60) | ||||
Common stock repurchases | $ (2,403) | $ (1) | $ (2,402) | ||||
Ending Balance (in shares) at Oct. 27, 2019 | 916 | 1,079 | |||||
Ending Balance at Oct. 27, 2019 | $ 8,214 | $ 9 | $ 7,595 | $ 24,386 | $ (23,596) | $ (180) | |
[1] | Retained earnings balance as of October 30, 2016, October 29, 2017 and October 28, 2018 included increases of $196 million, $281 million and $6 million, respectively, related to the adoption of the standard related to revenue recognition. |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Millions | 12 Months Ended |
Oct. 29, 2017USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Tax benefit | $ 55 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 2,706 | $ 3,038 | $ 3,519 |
Adjustments required to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization | 363 | 457 | 407 |
Deferred income taxes | 49 | 71 | (12) |
Other | (19) | 4 | (9) |
Share-based compensation | 263 | 258 | 220 |
Changes in operating assets and liabilities, net of amounts acquired: | |||
Accounts receivable | (207) | 16 | (37) |
Inventories | 248 | (1,014) | (809) |
Other current and non-current assets | (86) | (199) | (156) |
Accounts payable and accrued expenses | (247) | 170 | 371 |
Contract liabilities | 135 | 75 | 133 |
Income taxes payable | 44 | 886 | 121 |
Other liabilities | (2) | 25 | 41 |
Cash provided by operating activities | 3,247 | 3,787 | 3,789 |
Cash flows from investing activities: | |||
Capital expenditures | (441) | (622) | (345) |
Cash paid for acquisitions, net of cash acquired | (28) | (6) | (68) |
Proceeds from sales and maturities of investments | 1,940 | 3,276 | 2,743 |
Purchases of investments | (1,914) | (2,077) | (4,856) |
Cash provided by (used in) investing activities | (443) | 571 | (2,526) |
Cash flows from financing activities: | |||
Debt borrowings, net of issuance costs | 0 | 0 | 2,176 |
Debt repayments | 0 | 0 | (205) |
Proceeds from common stock issuances | 145 | 124 | 97 |
Common stock repurchases | (2,403) | (5,283) | (1,172) |
Tax withholding payments for vested equity awards | (86) | (164) | (125) |
Payments of dividends to stockholders | (771) | (605) | (430) |
Cash provided by (used in) financing activities | (3,115) | (5,928) | 341 |
Increase (decrease) in cash and cash equivalents | (311) | (1,570) | 1,604 |
Cash and cash equivalents - beginning of year | 3,440 | 5,010 | 3,406 |
Cash and cash equivalents - end of year | 3,129 | 3,440 | 5,010 |
Supplemental cash flow information: | |||
Cash payments for income taxes | 522 | 300 | 194 |
Cash refunds from income taxes | 22 | 63 | 61 |
Cash payments for interest | $ 219 | $ 219 | $ 186 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 27, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2019, 2018 and 2017 contained 52 weeks each. Each fiscal quarter of 2019, 2018 and 2017 contained 13 weeks. Certain prior year amounts have been reclassified to conform to current year presentation. At the beginning of the first quarter of fiscal 2019, Applied adopted the new revenue recognition standard using the full retrospective method. All financial statements and disclosures have been recast to comply with this new guidance. See “Recent Accounting Pronouncements - Accounting Standards Adopted” section below for further information. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to standalone selling price (SSP) related to revenue recognition, accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Cash Equivalents All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds. Investments All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are measured and recorded at fair value with changes in fair value recorded in the accompanying Consolidated Statements of Operations. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest and other income, net in the Consolidated Statements of Operations. Equity investments without readily determinable fair value are measured at cost, less impairment, adjusted by observable price changes. Adjustments resulting from impairments and observable prices changes will be recorded in the Consolidated Statements of Operations. Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expenses in the Consolidated Statement of Operations. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. Applied fully writes down inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 5 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term. Intangible Assets Goodwill and indefinite-lived assets 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. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method. Long-Lived Assets Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets or asset group may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets. Revenue Recognition from Contracts with Customers Applied recognizes revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration to which Applied expects to be entitled in exchange for those goods or services. Applied determines revenue recognition through the following five steps; (1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied. Identifying the contract(s) with customers. Applied sells manufacturing equipment, services, and spare parts directly to its customers in the semiconductor, display, and related industries. The Company generally considers written documentation including, but not limited to, signed purchase orders, master agreements, and sales orders as contracts provided that collection is probable. Collectability is assessed based on the customer’s creditworthiness determined by reviewing the customer’s published credit and financial information, historical payment experience, as well as other relevant factors. Identifying the performance obligations. Applied’s performance obligations include delivery of manufacturing equipment, service agreements, spare parts, installation, extended warranty and training. Applied’s service agreements are considered one performance obligation and may include multiple goods and services that Applied provides to the customer to deliver against a performance metric. Judgment is used to determine whether multiple promised goods or services in a contract should be accounted for separately or as a group. Determine the transaction price. The transaction price for Applied’s contracts with customers may include fixed and variable consideration. Applied includes variable consideration in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Allocate the transaction price to the performance obligations . A contract’s transaction price is allocated to each distinct performance obligation identified within the contract. Applied generally estimates the standalone selling price of a distinct performance obligation based on historical cost plus an appropriate margin. For contracts with multiple performance obligations, Applied allocates the contract’s transaction price to each performance obligation using the relative standalone selling price of each distinct good or service in the contract. Recognizing the revenue as performance obligations are satisfied. Applied recognizes revenue from equipment and spares parts at a point in time when Applied has satisfied its performance obligation by transferring control of the goods to the customer which typically occurs at shipment or delivery. Revenue from service agreements is recognized over time as customers receive the benefits of services. The incremental costs to obtain a contract are not material. Payment Terms. Payment terms vary by contract. Generally, the majority of payments are due within a certain number of days from shipment of goods or performance of service. The remainder is typically due upon customer technical acceptance. Applied typically receives deposits on future deliverables from customers in the Display and Adjacent Markets segment and, in certain instances, may also receive deposits from customers in the Applied Global Services segment. Applied’s payment terms do not generally contain a significant financing component. Shipping and Handling Costs Applied accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, amounts billed for shipping and handling costs are recorded as a component of net sales and costs as a component of cost of products sold. Warranty Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied’s warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied’s estimates, revisions to the estimated warranty liability would be required. Applied also sells extended warranty contracts to its customers which provide an extension of the standard warranty coverage period of up to 2 years. Applied receives payment at the inception of the contract and recognizes revenue ratably over the extended warranty coverage period, as the customer simultaneously receives and consumes the benefits of the extended warranty. Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the Consolidated Statements of Operations. Research, Development and Engineering Costs Research, development and engineering costs are expensed as incurred. Income Taxes Applied recognizes a current tax liability for the estimated amount of income tax payable on tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the book and tax bases of assets and liabilities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized. Applied recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are estimated based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Any changes in judgment related to uncertain tax positions are recognized in Applied’s provision for income taxes in the quarter in which such change occurs. Interest and penalties related to uncertain tax positions are recognized in Applied’s provision for income taxes. Derivative Financial Instruments Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 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. In certain cases, Applied also uses interest rate swap or lock agreements to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. The terms of derivative financial instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Foreign Currencies As of October 27, 2019, all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in general and administrative expenses in the Consolidated Statements of Operations as incurred. Concentrations of Credit Risk Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations. In some instances, Applied has entered into security arrangements which require the counterparties to post collateral to further mitigate credit exposure. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Recent Accounting Pronouncements Accounting Standards Adopted Revenue Recognition. I n May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires certain additional disclosures. Applied adopted this authoritative guidance in the first quarter of fiscal 2019 using the full retrospective method, which required restating each prior reporting period presented. Refer to the Impacts to Previously Reported Results section below for the impact of the adoption of the standard to Applied’s consolidated financial statements. For all periods prior to the date of initial adoption of this standard, Applied elected to use the practical expedient pursuant to which Applied excluded disclosures of both transaction prices allocated to remaining performance obligations and when these performance obligations are expected to be recognized as revenue. The most significant impact from the adoption of this standard is fewer constraints on revenue recognition upon shipment of manufacturing equipment. Impacts to Previously Reported Results Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Statement of Operations for each of the fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Adjusted As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Restated (In millions, except per share amounts) Net sales $ 17,253 $ (548) $ — $ 16,705 $ 14,537 $ 161 $ — $ 14,698 Cost of products sold $ 9,436 $ (250) $ 2 $ 9,188 $ 8,005 $ 76 $ 5 $ 8,086 Gross profit $ 7,817 $ (298) $ (2) $ 7,517 $ 6,532 $ 85 $ (5) $ 6,612 Research, development and engineering $ 2,019 $ — $ 3 $ 2,022 $ 1,774 $ — $ 7 $ 1,781 Marketing and selling $ 521 $ — $ — $ 521 $ 456 $ — $ 1 $ 457 General and administrative $ 481 $ — $ 2 $ 483 $ 434 $ — $ 4 $ 438 Interest and other income, net $ 132 $ — $ 7 $ 139 $ 61 $ — $ 17 $ 78 Income before income taxes $ 4,694 $ (298) $ — $ 4,396 $ 3,731 $ 85 $ — $ 3,816 Provision for income taxes $ 1,381 $ (23) $ — $ 1,358 $ 297 $ — $ — $ 297 Net income $ 3,313 $ (275) $ — $ 3,038 $ 3,434 $ 85 $ — $ 3,519 Earnings per share: basic $ 3.27 $ (0.27) $ — $ 3.00 $ 3.20 $ 0.08 $ — $ 3.28 Earnings per share: diluted $ 3.23 $ (0.27) $ — $ 2.96 $ 3.17 $ 0.08 $ — $ 3.25 Adoption of the retirement benefits standard did not have any impact on Applied’s Consolidated Balance Sheet or Consolidated Statement of Cash Flows. Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows: October 28, 2018 As Previously Reported Adjustment As Adjusted (In millions) Accounts receivable, net $ 2,565 $ (242) $ 2,323 Inventories $ 3,722 $ (1) $ 3,721 Other current assets $ 430 $ 100 $ 530 Deferred income taxes and other assets $ 470 $ 3 $ 473 Customer deposits and deferred revenue $ 1,347 $ (1,347) $ — Contract liabilities $ — $ 1,201 $ 1,201 Retained earnings $ 20,874 $ 6 $ 20,880 Adoption of the revenue recognition standard did not impact cash provided by or used in investing or financing activities in Applied’s Consolidated Statement of Cash Flows for each of fiscal years 2018 and 2017 as follows. The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for each of fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Adjustment As Adjusted As Previously Reported Adjustment As Adjusted (In millions) Cash flows from operating activities: Net income $ 3,313 $ (275) $ 3,038 $ 3,434 $ 85 $ 3,519 Adjustments required to reconcile net income to cash provided by operating activities: Deferred income taxes $ 94 $ (23) $ 71 $ (11) $ (1) $ (12) Changes in operating assets and liabilities: Accounts receivables $ (226) $ 242 $ 16 $ (37) $ — $ (37) Inventories $ (792) $ (222) $ (1,014) $ (879) $ 70 $ (809) Other current and non-current assets $ (93) $ (106) $ (199) $ (157) $ 1 $ (156) Accounts payable and accrued expenses $ 179 $ (9) $ 170 $ 370 $ 1 $ 371 Contract liabilities $ (318) $ 393 $ 75 $ 289 $ (156) $ 133 Income Taxes: Intra-Entity Asset Transfers. In October 2016, the FASB issued authoritative guidance that changed the tax accounting for intra-entity transfers of assets other than inventory. After adoption, the income tax effect of intra-entity transfers is realized at the time of the transfer instead of over the life of the asset. Applied adopted this guidance in the first quarter of fiscal 2019 using a modified retrospective approach, resulting in a cumulative effect adjustment to retained earnings. Upon adoption, deferred tax assets increased by $1.6 billion related to the estimated income tax effects of future amortization of intra-entity intangible asset transfers, with an offset to retained earnings. Financial Instruments: Classification and Measurement. In January 2016, the FASB issued authoritative guidance that requires equity investments that do not result in consolidation, and are not accounted for under the equity method, to be measured at fair value, and requires recognition of any changes in fair value in net income unless the investments qualify for a new measurement alternative. For financial liabilities measured at fair value, the change in fair value caused by a change in instrument-specific credit risk will be required to be presented separately in other comprehensive income. Applied adopted this standard in the first quarter of fiscal year 2019. Upon adoption, Applied elected to apply the measurement alternative for equity investments without readily determinable fair value. Under the alternative, Applied measures investments without readily determinable fair value at cost, less impairment, adjusted by observable price changes prospectively to all equity investments that exist as of adoption and will reassess at each reporting period whether an investment qualifies for the alternative. Adopting this standard required Applied to record a cumulative net increase to retained earnings of approximately $21 million with the corresponding $17 million decrease in accumulated other comprehensive income, net of tax, for the unrealized gains and losses associated with equity investments with readily determinable fair values, as the authoritative guidance is required to be adopted prospectively. Going forward, the impact of this new standard could result in volatility in Applied’s Consolidated Statement of Operations. Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued authoritative guidance that eliminates, amends, and adds disclosure requirements for fair value measurements. While the amended and new disclosure requirements primarily relate to Level 3 fair value measurements, the authoritative guidance also eliminates disclosure requirements related to the amount and reasons for transfer between Level 1 and Level 2 of fair value hierarchy, policy for timing of transfer between levels, and the valuation processes for Level 3 fair value measurements. Applied adopted this guidance in the fourth quarter of fiscal 2019 on a retrospective basis for the removal and amendment of certain disclosures, while the new disclosures requirements are to be applied prospectively at the effective date. The adoption of this guidance did not have an impact to Applied's consolidated financial statements. Retirement Benefits. In March 2017, the FASB issued authoritative guidance which requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Applied adopted this guidance in the first quarter of fiscal 2019 on a retrospective basis. The adoption of this guidance resulted in reclassification of other components of net benefit costs outside of income from operations and did not have a significant impact on Applied’s consolidated financial statements. Business Combinations. In January 2017, the FASB issued authoritative guidance that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. Applied adopted this guidance in the first quarter of fiscal 2019 on a prospective basis. The impact of the adoption depends on the facts and circumstances of future acquisition or disposal transactions. Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued authoritative guidance which addresses classification of certain cash receipts and cash payments related to the statement of cash flows. Effective in the first quarter of fiscal 2019, Applied adopted the authoritative guidance retrospectively. The adoption of this guidance did not have a significant impact and only impacts disclosures in Applied' s consolidated statements of cash flow. Accounting Standards Not Yet Adopted Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit and other Postretirement Plans. In August 2018, the FASB issued authoritative guidance that adds, removes, and clarifies disclosure requirements for defined benefit and other postretirement plans. This authoritative guidance will be effective for Applied in fiscal 2021 on a retrospective basis, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Derivatives and Hedging. In August 2017, the FASB issued authoritative guidance that modifies the recognition and presentation of hedge accounting to better align an entity’s risk management strategies and financial reporting for hedging relationships. The authoritative guidance expands the application of hedge accounting for non-financial and financial risk components and eases certain hedge effectiveness assessment requirements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020, with early adoption permitted. While the Company's evaluation of the impact of this new guidance is not complete, it is not currently expected to have a significant impact on Applied’s consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs. In March 2017, the FASB issued authoritative guidance that will shorten the amortization period for certain callable debt securities held at a premium to the earliest call date to more closely align with expectations incorporated in market pricing. This authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 on a modified retrospective basis. While the Company's evaluation of the impact of this new guidance is not complete, it is not currently expected to have a significant impact on Applied’s consolidated financial statements. Goodwill Impairment. In January 2017, the FASB issued authoritative guidance that simplifies the process required to test goodwill for impairment. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied’s consolidated financial statements. Financial Instruments: Credit Losses. In June 2016, the FASB issued authoritative guidance that modifies the impairment model for certain financial assets by requiring use of an expected loss methodology, which will result in more timely recognition of credit losses. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted beginning in the first quarter of fiscal 2020. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Leases. In February 2016, the FASB issued authoritative guidance for lease accounting, which requires lessees to recognize lease assets and liabilities on the balance sheet for certain lease arrangements that are classified as operating leases under the previous standard, and to provide for enhanced disclosures. The authoritative guidance should be applied using a modified retrospective approach. Applied currently anticipates adopting this guidance using the optional transition method by recognizing a cumulative-effect adjustment to the consolidated balance sheet at the beginning of fiscal year 2020 and will not adjust comparative prior periods. While the Company's evaluation of the impact of this new guidance is not complete, Applied currently expects that the primary impact of the new standard will be the recognition of right-of-use assets and lease liabilities of approximately $165 million on the Company's Consolidated Balance Sheets, mainly related to leases classified as operating leases. Applied is currently implementing changes to business processes and controls to support measurement and disclosure requirements under the new standard. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Oct. 27, 2019 | |
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. Fiscal Year 2019 2018 2017 (In millions, except per share amounts) Numerator: Net income $ 2,706 $ 3,038 $ 3,519 Denominator: Weighted average common shares outstanding 937 1,013 1,073 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 8 13 11 Denominator for diluted earnings per share 945 1,026 1,084 Basic earnings per share $ 2.89 $ 3.00 $ 3.28 Diluted earnings per share $ 2.86 $ 2.96 $ 3.25 Potentially dilutive securities 3 — — Potentially dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value are greater than the average market price of Applied common stock, and therefore their inclusion would be anti-dilutive. Prior to the adoption of Accounting Standards Update (ASU) 2016-09 Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting in the first quarter of fiscal 2018, the assumed tax benefits upon the exercise of options and vesting of restricted stock units were also included in this calculation. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 12 Months Ended |
Oct. 27, 2019 | |
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: October 27, 2019 Cost Gross Gross Estimated (In millions) Cash $ 1,071 $ — $ — $ 1,071 Cash equivalents: Money market funds 1,677 — — 1,677 U.S. Treasury and agency securities 4 — — 4 Commercial paper, corporate bonds and medium-term notes 377 — — 377 Total Cash equivalents 2,058 — — 2,058 Total Cash and Cash equivalents $ 3,129 $ — $ — $ 3,129 Short-term and long-term investments: U.S. Treasury and agency securities $ 336 $ 1 $ — $ 337 Non-U.S. government securities* 10 — — 10 Municipal securities 402 4 — 406 Commercial paper, corporate bonds and medium-term notes 642 5 — 647 Asset-backed and mortgage-backed securities 631 4 — 635 Total fixed income securities 2,021 14 — 2,035 Publicly traded equity securities 8 40 3 45 Equity investments in privately-held companies 105 10 3 112 Total equity investments 113 50 6 157 Total short-term and long-term investments $ 2,134 $ 64 $ 6 $ 2,192 Total Cash, Cash equivalents and Investments $ 5,263 $ 64 $ 6 $ 5,321 _________________________ * Includes agency debt securities guaranteed by Canada. October 28, 2018 Cost Gross Gross Estimated (In millions) Cash $ 1,489 $ — $ — $ 1,489 Cash equivalents: Money market funds 1,599 — — 1,599 Commercial paper, corporate bonds and medium-term notes 352 — — 352 Total Cash equivalents 1,951 — — 1,951 Total Cash and Cash equivalents $ 3,440 $ — $ — $ 3,440 Short-term and long-term investments: U.S. Treasury and agency securities $ 335 $ — $ 2 $ 333 Non-U.S. government securities* 10 — — 10 Municipal securities 399 — 4 395 Commercial paper, corporate bonds and medium-term notes 705 — 3 702 Asset-backed and mortgage-backed securities 595 — 4 591 Total fixed income securities 2,044 — 13 2,031 Publicly traded equity securities 17 25 4 38 Equity investments in privately-held companies 89 — — 89 Total equity investments 106 25 4 127 Total short-term and long-term investments $ 2,150 $ 25 $ 17 $ 2,158 Total Cash, Cash equivalents and Investments $ 5,590 $ 25 $ 17 $ 5,598 ________________________ * Includes agency debt securities guaranteed by Canada. Maturities of Investments The following table summarizes the contractual maturities of Applied’s investments at October 27, 2019: Cost Estimated (In millions) Due in one year or less $ 419 $ 420 Due after one through five years 971 981 No single maturity date** 744 791 Total $ 2,134 $ 2,192 _________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. Gains and Losses on Investments Gross realized gains and losses on sales of investments for each fiscal year were as follows: 2019 2018 2017 (In millions) Gross realized gains $ 10 $ 29 $ 14 Gross realized losses $ 2 $ 3 $ 1 At October 27, 2019, gross unrealized losses related to Applied’s debt investment portfolio were not material. Applied regularly reviews its debt investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Applied determined that the gross unrealized losses on its marketable fixed income securities at October 27, 2019, October 28, 2018 and October 29, 2017 were temporary in nature and therefore it did not recognize any impairment of its marketable fixed income securities for fiscal 2019, 2018 or 2017. During fiscal 2019, 2018 and 2017, Applied determined that certain of its equity investments were impaired and, accordingly, recognized impairment charges of $1 million, $5 million and $10 million, respectively. These impairment charges are included in interest and other income, net in the Consolidated Statement of Operations. Unrealized gains and losses on investments classified as equity investments are recognized in other income (expense), net in the Consolidated Statement of Operations. Prior to the adoption of Accounting Standards Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019, these unrealized gains and temporary losses were included within accumulated other comprehensive income (loss), net of any related tax effect. The components of gain (loss) on equity investments for fiscal 2019 were as follows: 2019 (In millions) Publicly traded equity securities Unrealized gain $ 28 Unrealized loss (5) Gain on sales 2 Loss on sales — Equity investments in privately-held companies Unrealized gain 13 Unrealized loss (6) Gain on sales 5 Loss on sales or impairment (1) Total gain on equity investments, net $ 36 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 27, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value on a recurring basis, except for equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • 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. As of October 27, 2019, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. Applied’s equity investments with readily determinable values consist of publicly traded equity securities. Upon adoption of ASU 2016-01, these investments are measured at fair value using quoted prices for identical assets in an active market and the changes in fair value of these equity investments are recognized in the Consolidated Statements of Operations. Applied adopted the standard in the first quarter of fiscal 2019 using a modified retrospective transition method and reclassified the unrealized gains on these equity investments of $21 million to retained earnings as a cumulative-effect adjustment on the consolidated balance sheets. Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. Assets Measured at Fair Value on a Recurring Basis Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below: October 27, 2019 October 28, 2018 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Available-for-sale debt security investments Money market funds $ 1,677 $ — $ 1,677 $ 1,599 $ — $ 1,599 U.S. Treasury and agency securities 323 18 341 297 36 333 Non-U.S. government securities — 10 10 — 10 10 Municipal securities — 406 406 — 395 395 Commercial paper, corporate bonds and medium-term notes — 1,024 1,024 — 1,054 1,054 Asset-backed and mortgage-backed securities — 635 635 — 591 591 Total available-for-sale debt security investments $ 2,000 $ 2,093 $ 4,093 $ 1,896 $ 2,086 $ 3,982 Equity investments with readily determinable values Publicly traded equity securities $ 45 $ — $ 45 $ 38 $ — $ 38 Total equity investments with readily determinable values $ 45 $ — $ 45 $ 38 $ — $ 38 Total $ 2,045 $ 2,093 $ 4,138 $ 1,934 $ 2,086 $ 4,020 Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of October 27, 2019 or October 28, 2018. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis Applied’s equity investments without readily determinable values consist of equity investments in privately-held companies. Upon adoption of ASU 2016-01, Applied elected the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes on a prospective basis for certain equity investments without readily determinable fair values and is required to account for any subsequent observable changes in fair value within the statements of operations. Applied adopted the guidance prospectively, effective October 29, 2018, and there was no impact to Applied’s consolidated financial statements. Prior to the adoption of ASU 2016-01, these investments were generally accounted for under the cost method of accounting. These investments are periodically assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. During fiscal 2019, 2018 and 2017, Applied determined that certain of its equity investments were impaired and, accordingly, recognized impairment charges of $1 million, $5 million and $10 million, respectively. 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 October 27, 2019, the aggregate principal amount of long-term debt was $4.8 billion, and estimated fair value was $5.5 billion. At October 28, 2018, the aggregate principal and estimated fair value amounts of long-term debt were both $5.4 billion. The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues. See Note 11 of the Notes to the Consolidated Financial Statements for further detail of existing debt. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Oct. 27, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Derivative Financial Instruments Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel and Taiwanese dollar. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange and interest rate contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI at October 27, 2019 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period were not significant for fiscal years 2019, 2018 and 2017. Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged. The fair values of foreign exchange derivative instruments at October 27, 2019 and October 28, 2018 were not material. The effects of derivative instruments and hedging activities on the Consolidated Statements of Operations were as follows: Effective Portion Ineffective Portion and Amount Derivatives in Cash Flow Hedging Relationships Location of Gain or Gain or Gain or (Loss) Gain or (Loss) (In millions) 2019 Foreign exchange contracts AOCI $ (14) $ — $ — Foreign exchange contracts Cost of products sold — 2 15 Foreign exchange contracts General and administrative — (3) (6) Interest rate contracts Interest expense — (3) — Total $ (14) $ (4) $ 9 2018 Foreign exchange contracts AOCI $ 3 $ — $ — Foreign exchange contracts Cost of products sold — 4 19 Foreign exchange contracts General and administrative — (3) (7) Interest rate contracts Interest expense — (3) — Total $ 3 $ (2) $ 12 2017 Foreign exchange contracts AOCI $ 35 $ — $ — Foreign exchange contracts Cost of products sold — 7 (3) Foreign exchange contracts General and administrative — 7 (2) Interest rate contracts AOCI (14) — — Interest rate contracts Interest expense — (3) — Total $ 21 $ 11 $ (5) Amount of Gain or (Loss) Derivatives Not Designated as Hedging Instruments Location of Gain or 2019 2018 2017 (In millions) Foreign exchange contracts General and administrative $ (8) $ (5) $ 39 Total $ (8) $ (5) $ 39 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 October 27, 2019 and October 28, 2018. Entering into derivative contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Oct. 27, 2019 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied sells its accounts receivable without recourse. Applied, from time to time, also discounts letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. Applied sold $1.5 billion, $1.6 billion and $746 million of accounts receivable during fiscal 2019, 2018 and 2017, respectively. Applied discounted letters of credit issued by customers of $48 million and $37 million in fiscal 2019 and 2018, respectively. There was no discounting of promissory notes in each of fiscal 2019 and 2018. Applied did not discount letters of credit issued by customers or discount promissory notes during fiscal 2017. Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented. Accounts receivable are presented net of allowance for doubtful accounts of $30 million and $33 million at October 27, 2019 and October 28, 2018, respectively. Changes in allowance for doubtful accounts in each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 33 $ 34 $ 51 Provision — — — Deductions 1 (3) (1) (17) Ending balance $ 30 $ 33 $ 34 _____________________________ 1 Fiscal 2019, 2018 and 2017 deductions primarily represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied’s customers and cash collections. Applied sells its products principally to manufacturers within the semiconductor and display industries. While Applied believes that its allowance for doubtful accounts is adequate and represents its best estimate as of October 27, 2019, it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates. |
Contract Balances
Contract Balances | 12 Months Ended |
Oct. 27, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract Balances | Contract Balances Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Applied’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets are generally classified as current and included in Other Current Assets in the Consolidated Balance Sheets. Contract liabilities are classified as current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized. Contract balances at the end of each reporting period were as follows: October 27, 2019 October 28, 2018 (In millions) Contract assets $ 108 $ 99 Contract liabilities $ 1,336 $ 1,201 The increase in contract assets during fiscal 2019, was primarily due to goods transferred to customers where payment was conditional upon technical sign off, offset by the reclassification of contract assets to net accounts receivable upon meeting conditions to the right to payment. During fiscal 2019, Applied recognized revenue of approximately $859 million related to contract liabilities at October 28, 2018. This reduction in contract liabilities was offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of October 27, 2019. There were no impairment losses recognized on Applied’s accounts receivables and contract assets during fiscal 2019. |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Oct. 27, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Detail | Balance Sheet Detail October 27, October 28, (In millions) Inventories Customer service spares $ 1,245 $ 989 Raw materials 802 1,020 Work-in-process 575 505 Finished goods 852 1,207 $ 3,474 $ 3,721 Included in finished goods inventory is $13 million at October 27, 2019 and $19 million at October 28, 2018, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $318 million and $350 million of evaluation inventory at October 27, 2019 and October 28, 2018, respectively. October 27, October 28, (In millions) Other Current Assets Prepaid income taxes and income taxes receivable $ 96 $ 40 Prepaid expenses and other 485 490 $ 581 $ 530 Useful Life October 27, October 28, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 254 $ 245 Buildings and improvements 3-30 1,590 1,448 Demonstration and manufacturing equipment 3-5 1,505 1,282 Furniture, fixtures and other equipment 3-5 602 634 Construction in progress 120 203 Gross property, plant and equipment 4,071 3,812 Accumulated depreciation (2,542) (2,405) $ 1,529 $ 1,407 Depreciation expense was $306 million, $258 million and $214 million for fiscal 2019, 2018 and 2017 respectively. October 27, October 28, (In millions) Deferred Income Taxes and Other Assets Non-current deferred income taxes $ 1,766 $ 225 Income tax receivables and other assets 265 248 $ 2,031 $ 473 October 27, October 28, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 958 $ 996 Compensation and employee benefits 559 639 Warranty 196 208 Dividends payable 192 193 Income taxes payable 160 136 Other accrued taxes 55 112 Interest payable 38 38 Other 353 399 $ 2,511 $ 2,721 October 27, October 28, (In millions) Other Liabilities Defined and postretirement benefit plans $ 212 $ 177 Other 163 126 $ 375 $ 303 |
Business Combinations
Business Combinations | 12 Months Ended |
Oct. 27, 2019 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Kokusai Electric Corporation On June 30, 2019, Applied entered into a Share Purchase Agreement (SPA) to acquire all outstanding shares of Kokusai Electric Corporation (Kokusai Electric) for $2.2 billion in cash, subject to certain post-closing adjustments. Kokusai Electric is a leading company in providing high-productivity batch processing systems and services for memory, foundry and logic customers. These systems complement Applied’s portfolio of single-wafer processing systems. Following the close of the transaction, Kokusai Electric will operate as a business unit of Applied’s Semiconductor Systems segment and continue to be based in Tokyo, with technology and manufacturing centers in Toyama, Japan and Cheonan, Korea. The transaction is subject to regulatory approvals and other customary closing conditions. |
Goodwill, Purchased Technology
Goodwill, Purchased Technology and Other Intangible Assets | 12 Months Ended |
Oct. 27, 2019 | |
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 October 27, 2019, Applied’s reporting units include Semiconductor Products Group and Imaging and Process Control Group, which combine to form the Semiconductor Systems reporting segment, Applied Global Services, and Display and Adjacent Markets. In the fourth quarter of fiscal 2019, Applied performed a qualitative assessment to test goodwill for all of its reporting units for impairment. Applied determined that it was more likely than not that each of its reporting units’ fair values exceeded their respective carrying values and that it was not necessary to perform the two-step goodwill impairment test for any of its reporting units. 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 were as follows: October 27, 2019 October 28, 2018 (In millions) Semiconductor Systems $ 2,182 $ 2,151 Applied Global Services 1,018 1,018 Display and Adjacent Markets 199 199 Carrying amount $ 3,399 $ 3,368 During fiscal 2019, the increase in goodwill was primarily due to acquisitions completed in the second quarter of fiscal 2019, which were not significant to Applied’s results of operations. A summary of Applied’s purchased technology and intangible assets is set forth below: October 27, October 28, (In millions) Purchased technology, net $ 71 $ 109 Intangible assets - finite-lived, net 85 104 $ 156 $ 213 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: October 27, 2019 October 28, 2018 Purchased Other Total Purchased Other Total (In millions) Gross carrying amount: Semiconductor Systems $ 1,449 $ 252 $ 1,701 $ 1,449 $ 252 $ 1,701 Applied Global Services 33 44 77 33 44 77 Display and Adjacent Markets 163 38 201 163 38 201 Corporate and Other — 9 9 — 9 9 Gross carrying amount $ 1,645 $ 343 $ 1,988 $ 1,645 $ 343 $ 1,988 Accumulated amortization: Semiconductor Systems $ (1,400) $ (168) $ (1,568) $ (1,375) $ (150) $ (1,525) Applied Global Services (30) (44) (74) (29) (44) (73) Display and Adjacent Markets (144) (37) (181) (132) (36) (168) Corporate and Other — (9) (9) — (9) (9) Accumulated amortization $ (1,574) $ (258) $ (1,832) $ (1,536) $ (239) $ (1,775) Carrying amount $ 71 $ 85 $ 156 $ 109 $ 104 $ 213 Details of amortization expense for each fiscal year by segment were as follows: 2019 2018 2017 (In millions) Semiconductor Systems $ 43 $ 184 $ 185 Applied Global Services 1 1 1 Display and Adjacent Markets 13 14 7 Total $ 57 $ 199 $ 193 Amortization expense for each fiscal year was charged to the following categories: 2019 2018 2017 (In millions) Cost of products sold $ 38 $ 180 $ 173 Research, development and engineering 1 1 1 Marketing and selling 18 18 19 Total $ 57 $ 199 $ 193 As of October 27, 2019, future estimated amortization expense is expected to be as follows: Amortization (In millions) 2020 $ 52 2021 39 2022 24 2023 11 2024 10 Thereafter 20 Total $ 156 |
Borrowing Facilities and Debt
Borrowing Facilities and Debt | 12 Months Ended |
Oct. 27, 2019 | |
Debt Disclosure [Abstract] | |
Borrowing Facilities and Debt | Borrowing Facilities and Debt Applied has credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement with a group of banks that is scheduled to expire in September 2021. This agreement provides for borrowings in United States dollars at interest rates keyed to one of various benchmark rates selected by Applied for each advance, plus a margin based on Applied’s public debt rating and includes financial and other covenants. Remaining credit facilities in the amount of approximately $74 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. In August 2019, Applied entered into a term loan credit agreement with a group of lenders. Under the agreement, the lenders have committed to make an unsecured term loan to Applied of up to $2.0 billion to finance in part Applied’s planned acquisition of all outstanding shares of Kokusai Electric, to pay related transaction fees and expenses and for general corporate purposes. The commitments of the lenders to make the term loan will terminate if the transactions contemplated by the SPA are not consummated on or before June 30, 2020, which date may be extended by three months on two separate occasions if, on the applicable date, the only remaining conditions to closing relate to required regulatory approvals. The term loan, if advanced, will bear interest at one of two rates selected by Applied, plus an applicable margin, which varies according to Applied’s public debt credit ratings, and must be repaid in full on the third anniversary of the funding date of the term loan. No amounts were outstanding under any of these facilities at both October 27, 2019 and October 28, 2018, and Applied has not utilized these credit facilities. In fiscal 2011, Applied established a short-term commercial paper program of up to $1.5 billion. At October 27, 2019 and October 28, 2018, Applied did not have any commercial paper outstanding. Debt outstanding as of October 27, 2019 and October 28, 2018 was as follows: Principal Amount October 27, October 28, Effective Interest (In millions) Current portion of long-term debt: 2.625% Senior Notes Due 2020 $ 600 $ — 2.640% April 1, October 1 Total current portion of long-term debt 600 — Long-term debt: 2.625% Senior Notes Due 2020 — 600 2.640% April 1, October 1 4.300% Senior Notes Due 2021 750 750 4.326% June 15, December 15 3.900% Senior Notes Due 2025 700 700 3.944% April 1, October 1 3.300% Senior Notes Due 2027 1,200 1,200 3.342% April 1, October 1 5.100% Senior Notes Due 2035 500 500 5.127% April 1, October 1 5.850% Senior Notes Due 2041 600 600 5.879% June 15, December 15 4.350% Senior Notes Due 2047 1,000 1,000 4.361% April 1, October 1 4,750 5,350 Total unamortized discount (10) (11) Total unamortized debt issuance costs (27) (30) Total long-term debt 4,713 5,309 Total debt $ 5,313 $ 5,309 |
Stockholders' Equity, Comprehen
Stockholders' Equity, Comprehensive Income and Share-Based Compensation | 12 Months Ended |
Oct. 27, 2019 | |
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 accumulated other comprehensive income (AOCI), net of tax, were as follows: Unrealized Gain (Loss) on Investments, Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges Defined and Postretirement Benefit Plans Cumulative Translation Adjustments Total (In millions) Balance at October 30, 2016 $ 30 $ (18) $ (141) $ 14 (115) Other comprehensive income (loss) before reclassifications 24 13 29 — 66 Amounts reclassified out of AOCI (1) (6) (8) — (15) Other comprehensive income (loss), net of tax 23 7 21 — 51 Balance at October 29, 2017 $ 53 $ (11) $ (120) $ 14 $ (64) Adoption of new accounting standards (a) 5 (2) — — 3 Other comprehensive income (loss) before reclassifications (66) 5 (23) — (84) Amounts reclassified out of AOCI 15 (1) 6 — 20 Other comprehensive income, net of tax (51) 4 (17) — (64) Balance at October 28, 2018 $ 7 $ (9) $ (137) $ 14 $ (125) Adoption of new accounting standards (b) (17) — — — (17) Other comprehensive income (loss) before reclassifications 22 (10) (57) (1) (46) Amounts reclassified out of AOCI (1) 3 6 — 8 Other comprehensive income (loss), net of tax 21 (7) (51) (1) (38) Balance at October 27, 2019 $ 11 $ (16) $ (188) $ 13 $ (180) (a) - Represents the reclassification adjustment related to the early adoption of Accounting Standards Update (ASU) 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. (b) - Represents the reclassification adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019. See Note 1. The tax effects on net income of amounts reclassified from AOCI for the fiscal years 2019, 2018 and 2017 were not material. Stock Repurchase Programs In February 2018, the Board of Directors approved a common stock repurchase program authorizing up to an aggregate of $6.0 billion in repurchases. At October 27, 2019, $1.9 billion remained available for future stock repurchases under this repurchase program. The following table summarizes Applied’s stock repurchases for each fiscal year: 2019 2018 2017 (In millions, except per share amounts) Shares of common stock repurchased 60 102 28 Cost of stock repurchased $ 2,403 $ 5,283 $ 1,172 Average price paid per share $ 39.86 $ 51.55 $ 42.08 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 During fiscal 2019, Applied's Board of Directors declared one quarterly cash dividend of $0.20 per share and three quarterly cash dividends of $0.21 per share. During fiscal 2018, Applied's Board of Directors declared one quarterly cash dividend of $0.10 per share and three quarterly cash dividends of $0.20 per share. During fiscal 2017, Applied’s Board of Directors declared four quarterly cash dividends in the amount of $0.10 per share. Dividends paid during fiscal 2019, 2018 and 2017 amounted to $771 million, $605 million and $430 million, respectively. Applied currently anticipates that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on Applied’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of Applied’s stockholders. Share-Based Compensation Applied has a stockholder-approved equity plan, the Employee Stock Incentive Plan, which permits grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made under the plan may be subject to accelerated vesting under certain circumstances in the event of a change in control of Applied. Applied also has two Employee Stock Purchase Plans, one generally for United States employees and a second for employees of international subsidiaries (collectively, ESPP), which enable eligible employees to purchase Applied common stock. Applied recognized share-based compensation expense related to equity awards and ESPP shares. The effect of share-based compensation on the results of operations and the related tax benefits for each fiscal year were as follows: 2019 2018 2017 (In millions) Cost of products sold $ 89 $ 87 $ 69 Research, development, and engineering 99 96 83 Marketing and selling 31 31 28 General and administrative 44 44 40 Total share-based compensation $ 263 $ 258 $ 220 Income tax benefits recognized $ 37 $ 45 $ 60 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 October 27, 2019, Applied had $379 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 2.4 years. At October 27, 2019, there were 66 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 13 million shares available for issuance under the ESPP. Stock Options Stock options are rights to purchase, at future dates, shares of Applied common stock. The exercise price of each stock option equals the fair market value of Applied common stock on the date of grant. Options typically vest over three Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units Restricted stock units are converted into shares of Applied common stock upon vesting on a one-for-one basis. Restricted stock has the same rights as other issued and outstanding shares of Applied common stock except these shares generally have no right to dividends and are held in escrow until the award vests. Performance shares and performance units are awards that result in a payment to a grantee, generally in shares of Applied common stock on a one-for-one basis, if performance goals and/or other vesting criteria established by the Human Resources and Compensation Committee of Applied’s Board of Directors are achieved or the awards otherwise vest. Restricted stock units, restricted stock, performance shares and performance units typically vest over three During fiscal 2017, 2018 and 2019, certain executive officers were granted awards that are subject to the achievement of specified performance goals (performance-based awards). Performance-based awards granted in fiscal 2017 and 2018 Certain awards require the achievement of positive adjusted operating profit and vest ratably over three years. Other awards require the achievement of targeted levels of adjusted operating profit margin and wafer fabrication equipment market share, and the number of shares that may vest in full after three years ranges from 0% to 200% of the target amount. The fair value of these awards is estimated on the date of grant. If the performance goals are achieved as of the end of the performance period, the awards will vest, provided that the grantee remains employed by Applied through each applicable vesting date. If the performance goals are not achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost is based on the awards that are probable to vest and is reflected over the service period and reduced for estimated forfeitures. Performance-based awards granted in fiscal 2019 Certain awards are subject to the achievement of targeted levels of adjusted operating margin and total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Index. Each metric will be weighted 50% and will be measured over a three three The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant. If the performance goals are not achieved as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost is based on the awards that are probable to vest and is reflected over the service period and reduced for estimated forfeitures. The fair value of the portion of the awards subject to targeted levels of TSR is estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upon the assumption of 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeitures. A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans is presented below: Shares Weighted Weighted Aggregate (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2016 25 $ 18.28 2.3 years $ 718 Granted 8 $ 31.79 Vested (10) $ 16.50 Canceled (1) $ 21.25 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 29, 2017 22 $ 23.96 2.2 years $ 1,239 Granted 6 $ 50.62 Vested (9) $ 22.15 Canceled (1) $ 30.19 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2018 18 $ 32.64 2.0 years $ 600 Granted 8 $ 36.00 Vested (7) $ 28.41 Canceled (1) $ 34.59 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2019 18 $ 35.78 2.1 years $ 985 Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest 17 $ 35.31 1.9 years $ 934 At October 27, 2019, 1.6 million additional performance-based awards could be earned based upon achievement of certain levels of specified performance goals. Employee Stock Purchase Plans Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Applied issued 4 million shares in fiscal 2019 and 3 million shares in each of fiscal 2018 and 2017, under the ESPP. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table: 2019 2018 2017 ESPP: Dividend yield 1.99 % 1.68 % 0.99 % Expected volatility 35.5 % 34.4 % 26.3 % Risk-free interest rate 2.21 % 2.09 % 0.92 % Expected life (in years) 0.5 0.5 0.5 Weighted average estimated fair value $10.61 $12.02 $9.14 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Oct. 27, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Employee Bonus Plans Applied has various employee bonus plans. A discretionary bonus plan provides for the distribution of a percentage of pre-tax income to Applied employees who are not participants in other performance-based incentive plans, up to a maximum percentage of eligible compensation. Other plans provide for bonuses to Applied’s executives and other key contributors based on the achievement of profitability and/or other specified performance criteria. Charges under these plans for fiscal 2019, 2018 and 2017 were $292 million, $382 million and $449 million, respectively. Employee Savings and Retirement Plan Applied’s Employee Savings and Retirement Plan (the 401(k) Plan) is qualified under Sections 401(a) and (k) of the Internal Revenue Code (the Code). Eligible employees may make salary deferral and catch-up contributions under the 401(k) Plan on a pre-tax basis and on a Roth basis, subject to an annual dollar limit established by the Code. Applied matches 100% of participant salary and/or Roth deferral contributions up to the first 3% of eligible contribution and then 50% of every dollar between 4% and 6% of eligible contribution. Applied does not make matching contributions on any catch-up contributions made by participants. Plan participants who were employed by Applied or any of its affiliates became 100% vested in their Applied matching contribution account balances. Applied’s matching contributions under the 401(k) Plan were approximately $49 million for fiscal 2019, $45 million for fiscal 2018 and $38 million for fiscal 2017. Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits Several of Applied’s foreign subsidiaries have defined benefit pension plans covering substantially all of their eligible employees. Benefits under these plans are typically based on years of service and final average compensation levels. The plans are managed in accordance with applicable local statutes and practices. Applied deposits funds for certain of these plans with insurance companies, pension trustees, government-managed accounts, and/or accrues the expense for the unfunded portion of the benefit obligation on its Consolidated Financial Statements. Applied’s practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements as established by applicable local governmental oversight and taxing authorities. Depending on the design of the plan, local custom and market circumstances, the liabilities of a plan may exceed the qualified plan assets. The differences between the aggregate projected benefit obligations and aggregate plan assets of these plans have been recorded as liabilities by Applied and are included in other liabilities and accrued expenses in the Consolidated Balance Sheets. Through December 31, 2017, Applied also sponsored a U.S. post-retirement plan that provided covered medical and vision benefits to certain eligible retirees. An eligible retiree also could elect coverage for an eligible spouse or domestic partner who was not eligible for Medicare. Coverage ended entirely for all participants when the plan terminated on December 31, 2017. In addition, Applied also has a post-retirement benefit plan as a result of the acquisition of Varian. Applied’s liability under these post-retirement plans, which was included in other liabilities in the Consolidated Balance Sheets, were immaterial at each of October 27, 2019 and October 28, 2018. A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for each fiscal year is presented below: 2019 2018 2017 (In millions, except percentages) Change in projected benefit obligation Beginning projected benefit obligation $ 524 $ 506 $ 495 Service cost 11 12 13 Interest cost 10 11 10 Plan participants’ contributions 1 1 2 Actuarial (gain) loss 84 24 (35) Curtailments, settlements and special termination benefits (1) (1) (1) Foreign currency exchange rate changes (5) (16) 34 Benefits paid (8) (12) (12) Plan amendments and business combinations 1 (1) — Ending projected benefit obligation $ 617 $ 524 $ 506 Ending accumulated benefit obligation $ 578 $ 490 $ 472 Range of assumptions to determine benefit obligations Discount rate 0.5% - 3.1% 0.6% - 3.1% 0.5% - 3.4% Rate of compensation increase 2.3% - 3.6% 2.4% - 3.5% 2.2% - 3.5% Change in plan assets Beginning fair value of plan assets $ 365 $ 361 $ 310 Return on plan assets 30 17 18 Employer contributions 27 11 16 Plan participants’ contributions 1 1 2 Foreign currency exchange rate changes (5) (12) 28 Divestitures, settlements and business combinations (1) (1) (1) Benefits paid (8) (12) (12) Ending fair value of plan assets $ 409 $ 365 $ 361 Funded status $ (208) $ (159) $ (145) Amounts recognized in the consolidated balance sheets Noncurrent asset $ 5 $ 19 $ 17 Current liability (1) (1) (1) Noncurrent liability (212) (177) (161) Total $ (208) $ (159) $ (145) Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period Actuarial loss $ 12 $ 8 $ 6 Prior service credit — (1) (4) Total $ 12 $ 7 $ 2 Amounts recognized in accumulated other comprehensive loss Net actuarial loss $ 226 $ 161 $ 141 Prior service credit — (2) (4) Total $ 226 $ 159 $ 137 Plans with projected benefit obligations in excess of plan assets Projected benefit obligation $ 424 $ 365 $ 326 Fair value of plan assets $ 211 $ 186 $ 142 Plans with accumulated benefit obligations in excess of plan assets Accumulated benefit obligation $ 385 $ 331 $ 293 Fair value of plan assets $ 211 $ 186 $ 142 2019 2018 Plan assets — allocation Equity securities 36 % 47 % Debt securities 45 % 32 % Insurance contracts 9 % 10 % Other investments 10 % 10 % Cash — % 1 % The following table presents a summary of the ending fair value of the plan assets: October 27, 2019 October 28, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In millions) Equity securities $ 90 $ — $ — $ 90 $ 86 $ — $ — $ 86 Debt securities 70 — — 70 19 — — 19 Insurance contracts — — 36 36 — — 36 36 Other investments — 14 — 14 — 14 — 14 Cash — — — — 2 — — 2 Total assets at fair value $ 160 $ 14 $ 36 210 $ 107 $ 14 $ 36 157 Assets measured at net asset value 199 208 Total $ 409 $ 365 The following table presents the activity in Level 3 instruments for each fiscal year: 2019 2018 (In millions) Balance, beginning of year $ 36 $ 38 Actual return on plan assets: Relating to assets still held at reporting date (3) (1) Purchases, sales, settlements, net 4 — Currency impact (1) (1) Balance, end of year $ 36 $ 36 Applied’s investment strategy for its defined benefit plans is to invest plan assets in a prudent manner, maintaining well-diversified portfolios with the long-term objective of meeting the obligations of the plans as they come due. Asset allocation decisions are typically made by plan fiduciaries with input from Applied’s international pension committee. Applied’s asset allocation strategy incorporates a sufficient equity exposure in order for the plans to benefit from the expected better long-term performance of equities relative to the plans’ liabilities. Applied retains investment managers, where appropriate, to manage the assets of the plans. Performance of investment managers is monitored by plan fiduciaries with the assistance of local investment consultants. The investment managers make investment decisions within the guidelines set forth by plan fiduciaries. Risk management practices include diversification across asset classes and investment styles, and periodic rebalancing toward target asset allocation ranges. Investment managers may use derivative instruments for efficient portfolio management purposes. Plan assets do not include any of Applied’s own equity or debt securities. A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost calculations for each fiscal year is presented below: 2019 2018 2017 (In millions, except percentages) Components of net periodic benefit cost Service cost $ 11 $ 12 $ 13 Interest cost 10 11 10 Expected return on plan assets (20) (20) (18) Amortization of actuarial loss and prior service credit 7 3 (10) Settlement and curtailment loss — — — Net periodic benefit cost (income) $ 8 $ 6 $ (5) Weighted average assumptions Discount rate 1.98 % 2.16 % 1.88 % Expected long-term return on assets 5.40 % 5.41 % 5.38 % Rate of compensation increase 2.74 % 2.66 % 2.69 % Asset return assumptions are derived based on actuarial and statistical methodologies, from analysis of long-term historical data relevant to the country in which each plan is in effect and the investments applicable to the corresponding plan. The discount rate for each plan was derived by reference to appropriate benchmark yields on high quality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark yields. Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows: Benefit Payments (In millions) 2020 $ 12 2021 11 2022 12 2023 12 2024 12 2025-2029 83 $ 142 Company contributions to these plans for fiscal 2020 are expected to be approximately $10 million. Executive Deferred Compensation Plans Applied sponsors two unfunded deferred compensation plans, the Executive Deferred Compensation Plan (Predecessor EDCP) and the 2016 Deferred Compensation Plan (2016 DCP) (formerly known as the 2005 Executive Deferred Compensation Plan), under which certain employees may elect to defer a portion of their following year’s eligible earnings. The Predecessor EDCP was frozen as of December 31, 2004 such that no new deferrals could be made under the plan after that date and the plan would qualify for “grandfather” relief under Section 409A of the Code. The Predecessor EDCP participant accounts continue to be maintained under the plan and credited with deemed interest. The 2016 DCP was originally implemented by Applied effective as of January 1, 2005, and amended and restated as of October 12, 2015, and is intended to comply with the requirements of Section 409A of the Code. In addition, Applied also sponsors a non-qualified deferred compensation plan as a result of the acquisition of Varian. Amounts payable for all plans, including accrued deemed interest, totaled $123 million and $92 million at October 27, 2019 and October 28, 2018, respectively, which were included in other liabilities in the Consolidated Balance Sheets. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 27, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income before income taxes for each fiscal year were as follows: 2019 2018 2017 (In millions) U.S. $ 363 $ 389 $ 510 Foreign 2,906 4,007 3,306 $ 3,269 $ 4,396 $ 3,816 The components of the provision for income taxes for each fiscal year were as follows: 2019 2018 2017 (In millions) Current: U.S. $ 240 $ 1,021 $ 64 Foreign 260 117 236 State 12 22 9 512 1,160 309 Deferred: U.S. 8 151 (11) Foreign 46 57 (7) State (3) (10) 6 51 198 (12) $ 563 $ 1,358 $ 297 A reconciliation between the statutory U.S. federal income tax rate and Applied’s actual effective income tax rate for each fiscal year is presented below: 2019 2018 2017 Tax provision at U.S. statutory rate 21.0 % 23.4 % 35.0 % Changes in U.S. tax law — 25.3 — Effect of foreign operations taxed at various rates (5.9) (15.6) (25.3) Changes in prior years' unrecognized tax benefits 2.6 (0.9) 0.1 Resolutions of prior years' income tax filings (0.1) 0.2 (1.8) Research and other tax credits (1.1) (0.8) (0.7) Other 0.7 (0.7) 0.5 17.2 % 30.9 % 7.8 % On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries payable over eight years. U.S. deferred tax assets and liabilities were subject to remeasurement due to the reduction of the U.S. federal corporate tax rate. The U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, which provided guidance on accounting for the income tax effects of the Tax Act and a measurement period for companies to complete this accounting. Applied completed the accounting for the Tax Act during the measurement period, which ended one year after the enactment date of the Tax Act. Accounting for the remeasurement of deferred tax assets was completed in the fourth quarter of fiscal 2018, and the accounting for the transition tax was completed in the first quarter of fiscal 2019. The Tax Act also includes provisions that impact Applied starting in fiscal 2019, including a provision designed to tax global intangible low-taxed income (GILTI). On June 14, 2019, the U.S. government released regulations that significantly affect how the GILTI provision of the Tax Act is interpreted. As a result, Applied reversed a tax benefit of $96 million in the third quarter of fiscal 2019 that had been realized in the first half of fiscal 2019. An accounting policy may be selected to treat GILTI temporary differences in taxable income either as a current-period expense when incurred (period cost method) or factor such amounts into the measurement of deferred taxes (deferred method). Applied has chosen the period cost method. Before the Tax Act, U.S. income tax had not been provided for certain unrepatriated earnings that were considered indefinitely reinvested. Income tax is now provided for all unrepatriated earnings. The effective tax rate for fiscal 2019 was lower than fiscal 2018 primarily due to tax expense of $1.1 billion in fiscal 2018 for the transition tax and remeasurement of deferred tax assets as a result of the Tax Act. Excluding the tax expense of $1.1 billion, the effective tax rate for fiscal 2019 was higher than fiscal 2018 primarily due to certain provisions in the Tax Act becoming effective in fiscal 2019, tax expense of $87 million in fiscal 2019 related to changes in uncertain tax positions and the excess tax benefit from share-based compensation in fiscal 2019 being $42 million less than the prior fiscal year. The effective tax rate for fiscal 2018 was higher than fiscal 2017 primarily due to tax expense of $1.1 billion for the transition tax and remeasurement of deferred tax assets as a result of the Tax Act, partially offset by changes in the geographical composition of income, tax benefits from the lower U.S. federal corporate tax rate, adoption of authoritative guidance for share-based compensation, and the resolution of tax liabilities for uncertain tax positions. In addition, fiscal 2017 included tax benefits from the recognition of previously unrecognized foreign tax credits. In the reconciliation between the statutory U.S. federal income tax rate and the effective income tax rate, the effect of foreign operations taxed at various rates represents the difference between an income tax provision at the U.S. federal statutory income tax rate and the recorded income tax provision, with the difference expressed as a percentage of worldwide income before income taxes. This effect is substantially related to the tax effect of pre-tax income in jurisdictions with lower statutory tax rates. The foreign operations with the most significant effective tax rate impact are in Singapore. The statutory tax rate for fiscal 2018 for Singapore is 17%. Applied has been granted conditional reduced tax rates that expire in fiscal 2025, excluding potential renewal and subject to certain conditions with which Applied expects to comply. The tax benefit arising from these tax rates was $167 million for fiscal 2019 or $0.18 per diluted share. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the book and tax bases of assets and liabilities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized. The components of deferred income tax assets and liabilities were as follows: October 27, October 28, (In millions) Deferred tax assets: Allowance for doubtful accounts $ 8 $ 8 Inventory reserves and basis difference 117 117 Installation and warranty reserves 11 7 Intangible assets 1,472 — Accrued liabilities 15 20 Deferred revenue 36 12 Tax credits 264 236 Deferred compensation 98 79 Share-based compensation 36 37 Other 58 45 Gross deferred tax assets 2,115 561 Valuation allowance (257) (230) Total deferred tax assets 1,858 331 Deferred tax liabilities: Fixed assets (65) (48) Intangible assets — (38) Undistributed foreign earnings (38) (32) Total deferred tax liabilities (103) (118) Net deferred tax assets $ 1,755 $ 213 The following table presents a summary of non-current deferred tax assets and liabilities: October 27, October 28, (In millions) Non-current deferred tax asset $ 1,766 $ 225 Non-current deferred tax liability (11) (12) $ 1,755 $ 213 A valuation allowance is recorded to reflect the estimated amount of net deferred tax assets that may not be realized. Changes in the valuation allowance in each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 230 $ 227 $ 207 Increases 27 8 20 Decreases — (5) — Ending balance $ 257 $ 230 $ 227 At October 27, 2019, Applied has state research and development tax credit carryforwards of $264 million, including $252 million of credits that are carried over until exhausted and $11 million that are carried over for 15 years and begin to expire in fiscal 2029. It is more likely than not that all tax credit carryforwards, net of valuation allowance, will be utilized. Applied maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored based on the best information available. Gross unrecognized tax benefits are classified as non-current income taxes payable or as a reduction in deferred tax assets. A reconciliation of the beginning and ending balances of gross unrecognized tax benefits in each fiscal year is as follows: 2019 2018 2017 (In millions) Beginning balance of gross unrecognized tax benefits $ 374 $ 391 $ 320 Settlements with tax authorities (1) (152) (42) Lapses of statutes of limitation (2) (37) (15) Increases in tax positions for current year 33 91 95 Increases in tax positions for prior years 441 83 33 Decreases in tax positions for prior years — (2) — Ending balance of gross unrecognized tax benefits $ 845 $ 374 $ 391 The increases in tax positions for prior years of $441 million for fiscal 2019 include the effect of adoption of Accounting Standard Update 2016-16 Income Tax (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (See Note 1). Tax expense for interest and penalties on unrecognized tax benefits for fiscal 2019, 2018 and 2017 was $24 million, $12 million and $17 million, respectively. The income tax liability for interest and penalties for fiscal 2019, 2018 and 2017 was $50 million, $26 million and $46 million, respectively, and was classified as non-current income taxes payable. Included in the balance of unrecognized tax benefits for fiscal 2019, 2018 and 2017 are $758 million, $294 million, and $284 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. In fiscal 2019, Applied paid an immaterial amount as a result of settlements with tax authorities. In fiscal 2018, Applied paid $158 million, including interest and penalties, as a result of a settlement in Israel for fiscal 2011 through fiscal 2015 resulting in the recognition of a tax expense of $6 million. In fiscal 2017, Applied paid $29 million, including interest and penalties, as a result of a settlement in Italy for fiscal 2011 resulting in the recognition of a tax expense of $6 million. Applied’s tax returns remain subject to examination by taxing authorities. These include U.S. returns for fiscal 2015 and later years, and foreign tax returns for fiscal 2010 and later years. The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be part of the settlement process, is highly uncertain. This could cause fluctuations in Applied’s financial condition and results of operations. Applied continues to have ongoing negotiations with various taxing authorities throughout the year. |
Warranty, Guarantees, Commitmen
Warranty, Guarantees, Commitments and Contingencies | 12 Months Ended |
Oct. 27, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty, Guarantees, Commitments and Contingencies | Warranty, Guarantees, Commitments and Contingencies Leases Applied leases some of its facilities and equipment under non-cancelable operating leases and has options to renew most leases, with rentals to be negotiated. Total rent expense for fiscal 2019, 2018 and 2017, was $51 million, $50 million and $34 million, respectively. As of October 27, 2019, future minimum lease payments are expected to be as follows: Lease Payments Fiscal (In millions) 2020 $ 45 2021 34 2022 24 2023 21 2024 17 Thereafter 30 $ 171 Warranty Changes in the warranty reserves during each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 208 $ 206 $ 153 Provisions for warranty 148 175 173 Changes in reserves related to preexisting warranty 7 3 1 Consumption of reserves (167) (176) (121) Ending balance $ 196 $ 208 $ 206 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 October 27, 2019, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $76 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 October 27, 2019, Applied has provided parent guarantees to banks for approximately $151 million to cover these arrangements. Legal Matters From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material effect on its consolidated financial condition or results of operations. |
Industry Segment Operations
Industry Segment Operations | 12 Months Ended |
Oct. 27, 2019 | |
Segment Reporting [Abstract] | |
Industry Segment Operations | Industry Segment Operations Applied’s three reportable segments are: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. As defined under the accounting literature, Applied’s chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of October 27, 2019 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments. The Semiconductor Systems reportable segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, certain remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products. The Display and Adjacent Markets segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), equipment upgrades and flexible coating systems and other display technologies for TVs, personal computers, smart phones, and other consumer-oriented devices. Each operating segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker. The chief operating decision-maker does not evaluate operating segments using total asset information. Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Corporate and Other category includes revenues from products, as well as costs of products sold, for fabricating solar photovoltaic cells and modules, and certain operating expenses that are not allocated to its reportable segments and are managed separately at the corporate level. These operating expenses include costs related to share-based compensation; certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income also excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments. Information for each reportable segment for and as of the end of each fiscal year were as follows: Net Sales Operating Depreciation/ Capital Accounts Receivable Inventories (In millions) 2019: Semiconductor Systems $ 9,027 $ 2,464 $ 202 $ 168 $ 1,543 $ 1,703 Applied Global Services 3,854 1,101 25 47 790 1,535 Display and Adjacent Markets 1,651 294 22 43 246 214 Corporate and Other 76 (509) 114 183 (46) 22 Total $ 14,608 $ 3,350 $ 363 $ 441 $ 2,533 $ 3,474 2018: Semiconductor Systems $ 10,577 $ 3,441 $ 303 $ 168 $ 1,597 $ 2,215 Applied Global Services 3,754 1,102 21 33 630 1,243 Display and Adjacent Markets 2,298 574 20 39 142 246 Corporate and Other 76 (626) 113 382 (46) 17 Total $ 16,705 $ 4,491 $ 457 $ 622 $ 2,323 $ 3,721 2017: Semiconductor Systems $ 9,544 $ 3,177 $ 286 $ 150 $ 1,626 $ 1,638 Applied Global Services 3,014 817 15 21 564 762 Display and Adjacent Markets 2,042 585 12 17 190 279 Corporate and Other 98 (643) 94 157 (42) 28 Total $ 14,698 $ 3,936 $ 407 $ 345 $ 2,338 $ 2,707 Net sales for Semiconductor Systems by end use application for the periods indicated were as follows: 2019 2018 2017 Foundry, logic and other 52 % 36 % 51 % Dynamic random-access memory (DRAM) 22 % 27 % 15 % Flash memory 26 % 37 % 34 % 100 % 100 % 100 % The reconciling items included in Corporate and Other were as follows: 2019 2018 2017 (In millions) Unallocated net sales $ 76 $ 76 $ 98 Unallocated cost of products sold and expenses (322) (444) (521) Share-based compensation (263) (258) (220) Total $ (509) $ (626) $ (643) For geographical reporting, revenue by geographic location is determined by the location of customers’ facilities to which products were shipped. Long-lived assets consist primarily of property, plant and equipment and are attributed to the geographic location in which they are located. Net sales and long-lived assets by geographic region for and as of each fiscal year were as follows: 2019 2018 2017 (In millions) Net sales: United States $ 1,871 $ 1,413 $ 1,512 China 4,277 5,047 2,758 Korea 1,929 3,539 4,087 Taiwan 2,965 2,504 3,369 Japan 2,198 2,396 1,519 Europe 820 1,009 828 Southeast Asia 548 797 625 Total outside United States 12,737 15,292 13,186 Consolidated total $ 14,608 $ 16,705 $ 14,698 October 27, October 28, (In millions) Long-lived assets: United States $ 1,539 $ 1,414 China 20 13 Korea 24 21 Taiwan 56 29 Japan 16 9 Europe 28 50 Southeast Asia 23 25 Total outside United States 167 147 Consolidated total $ 1,706 $ 1,561 The following customers accounted for at least 10 percent of Applied’s net sales in each fiscal year, which were for products and services in multiple reportable segments: 2019 2018 2017 Samsung Electronics Co., Ltd. * 13 % 23 % Taiwan Semiconductor Manufacturing Company Limited 14 % * 16 % Intel Corporation 12 % 11 % * ______________________________ * Less than 10% |
Unaudited Quarterly Consolidate
Unaudited Quarterly Consolidated Financial Data | 12 Months Ended |
Oct. 27, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Consolidated Financial Data | Unaudited Quarterly Consolidated Financial Data Fiscal Quarter First Second Third Fourth Fiscal Year (In millions, except per share amounts) 2019: Net sales $ 3,753 $ 3,539 $ 3,562 $ 3,754 $ 14,608 Gross profit $ 1,665 $ 1,530 $ 1,557 $ 1,634 $ 6,386 Net income $ 771 $ 666 $ 571 $ 698 $ 2,706 Earnings per diluted share $ 0.80 $ 0.70 $ 0.61 $ 0.75 $ 2.86 2018: Net sales $ 4,205 $ 4,579 $ 4,162 $ 3,759 $ 16,705 Gross profit $ 1,940 $ 2,056 $ 1,864 $ 1,657 $ 7,517 Net income $ 165 $ 1,100 $ 1,016 $ 757 $ 3,038 Earnings per diluted share $ 0.15 $ 1.06 $ 1.01 $ 0.77 $ 2.96 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 27, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2019, 2018 and 2017 contained 52 weeks each. Each fiscal quarter of 2019, 2018 and 2017 contained 13 weeks. Certain prior year amounts have been reclassified to conform to current year presentation. At the beginning of the first quarter of fiscal 2019, Applied adopted the new revenue recognition standard using the full retrospective method. All financial statements and disclosures have been recast to comply with this new guidance. See “Recent Accounting Pronouncements - Accounting Standards Adopted” section below for further information. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to standalone selling price (SSP) related to revenue recognition, accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. |
Cash Equivalents | Cash Equivalents All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds. |
Investments | Investments All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are measured and recorded at fair value with changes in fair value recorded in the accompanying Consolidated Statements of Operations. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest and other income, net in the Consolidated Statements of Operations. Equity investments without readily determinable fair value are measured at cost, less impairment, adjusted by observable price changes. Adjustments resulting from impairments and observable prices changes will be recorded in the Consolidated Statements of Operations. |
Allowances for Doubtful Accounts | Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expenses in the Consolidated Statement of Operations. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. Applied fully writes down inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 5 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term. |
Intangible Assets | Intangible Assets Goodwill and indefinite-lived assets 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. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method. |
Long-Lived Assets | Long-Lived Assets Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets or asset group may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets. |
Revenue from Contract with Customer | Revenue Recognition from Contracts with Customers Applied recognizes revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration to which Applied expects to be entitled in exchange for those goods or services. Applied determines revenue recognition through the following five steps; (1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied. Identifying the contract(s) with customers. Applied sells manufacturing equipment, services, and spare parts directly to its customers in the semiconductor, display, and related industries. The Company generally considers written documentation including, but not limited to, signed purchase orders, master agreements, and sales orders as contracts provided that collection is probable. Collectability is assessed based on the customer’s creditworthiness determined by reviewing the customer’s published credit and financial information, historical payment experience, as well as other relevant factors. Identifying the performance obligations. Applied’s performance obligations include delivery of manufacturing equipment, service agreements, spare parts, installation, extended warranty and training. Applied’s service agreements are considered one performance obligation and may include multiple goods and services that Applied provides to the customer to deliver against a performance metric. Judgment is used to determine whether multiple promised goods or services in a contract should be accounted for separately or as a group. Determine the transaction price. The transaction price for Applied’s contracts with customers may include fixed and variable consideration. Applied includes variable consideration in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Allocate the transaction price to the performance obligations . A contract’s transaction price is allocated to each distinct performance obligation identified within the contract. Applied generally estimates the standalone selling price of a distinct performance obligation based on historical cost plus an appropriate margin. For contracts with multiple performance obligations, Applied allocates the contract’s transaction price to each performance obligation using the relative standalone selling price of each distinct good or service in the contract. Recognizing the revenue as performance obligations are satisfied. Applied recognizes revenue from equipment and spares parts at a point in time when Applied has satisfied its performance obligation by transferring control of the goods to the customer which typically occurs at shipment or delivery. Revenue from service agreements is recognized over time as customers receive the benefits of services. The incremental costs to obtain a contract are not material. Payment Terms. Payment terms vary by contract. Generally, the majority of payments are due within a certain number of days from shipment of goods or performance of service. The remainder is typically due upon customer technical acceptance. Applied typically receives deposits on future deliverables from customers in the Display and Adjacent Markets segment and, in certain instances, may also receive deposits from customers in the Applied Global Services segment. Applied’s payment terms do not generally contain a significant financing component. |
Shipping and Handling Costs | Shipping and Handling Costs Applied accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, amounts billed for shipping and handling costs are recorded as a component of net sales and costs as a component of cost of products sold. |
Warranty | Warranty Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied’s warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied’s estimates, revisions to the estimated warranty liability would be required. Applied also sells extended warranty contracts to its customers which provide an extension of the standard warranty coverage period of up to 2 years. Applied receives payment at the inception of the contract and recognizes revenue ratably over the extended warranty coverage period, as the customer simultaneously receives and consumes the benefits of the extended warranty. |
Sales and Value Added Taxes | Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the Consolidated Statements of Operations. |
Research, Development and Engineering Costs | Research, Development and Engineering Costs Research, development and engineering costs are expensed as incurred. |
Income Taxes | Income Taxes Applied recognizes a current tax liability for the estimated amount of income tax payable on tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the book and tax bases of assets and liabilities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets are offset by a valuation allowance to the extent it is more likely than not that they are not expected to be realized. Applied recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are estimated based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Any changes in judgment related to uncertain tax positions are recognized in Applied’s provision for income taxes in the quarter in which such change occurs. Interest and penalties related to uncertain tax positions are recognized in Applied’s provision for income taxes. |
Derivative Financial Instruments | Derivative Financial Instruments Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 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. In certain cases, Applied also uses interest rate swap or lock agreements to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. The terms of derivative financial instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. |
Foreign Currencies | Foreign Currencies As of October 27, 2019, all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in general and administrative expenses in the Consolidated Statements of Operations as incurred. |
Concentrations of Credit Risk | Concentrations of Credit RiskFinancial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations. In some instances, Applied has entered into security arrangements which require the counterparties to post collateral to further mitigate credit exposure. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted Revenue Recognition. I n May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires certain additional disclosures. Applied adopted this authoritative guidance in the first quarter of fiscal 2019 using the full retrospective method, which required restating each prior reporting period presented. Refer to the Impacts to Previously Reported Results section below for the impact of the adoption of the standard to Applied’s consolidated financial statements. For all periods prior to the date of initial adoption of this standard, Applied elected to use the practical expedient pursuant to which Applied excluded disclosures of both transaction prices allocated to remaining performance obligations and when these performance obligations are expected to be recognized as revenue. The most significant impact from the adoption of this standard is fewer constraints on revenue recognition upon shipment of manufacturing equipment. Impacts to Previously Reported Results Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Statement of Operations for each of the fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Adjusted As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Restated (In millions, except per share amounts) Net sales $ 17,253 $ (548) $ — $ 16,705 $ 14,537 $ 161 $ — $ 14,698 Cost of products sold $ 9,436 $ (250) $ 2 $ 9,188 $ 8,005 $ 76 $ 5 $ 8,086 Gross profit $ 7,817 $ (298) $ (2) $ 7,517 $ 6,532 $ 85 $ (5) $ 6,612 Research, development and engineering $ 2,019 $ — $ 3 $ 2,022 $ 1,774 $ — $ 7 $ 1,781 Marketing and selling $ 521 $ — $ — $ 521 $ 456 $ — $ 1 $ 457 General and administrative $ 481 $ — $ 2 $ 483 $ 434 $ — $ 4 $ 438 Interest and other income, net $ 132 $ — $ 7 $ 139 $ 61 $ — $ 17 $ 78 Income before income taxes $ 4,694 $ (298) $ — $ 4,396 $ 3,731 $ 85 $ — $ 3,816 Provision for income taxes $ 1,381 $ (23) $ — $ 1,358 $ 297 $ — $ — $ 297 Net income $ 3,313 $ (275) $ — $ 3,038 $ 3,434 $ 85 $ — $ 3,519 Earnings per share: basic $ 3.27 $ (0.27) $ — $ 3.00 $ 3.20 $ 0.08 $ — $ 3.28 Earnings per share: diluted $ 3.23 $ (0.27) $ — $ 2.96 $ 3.17 $ 0.08 $ — $ 3.25 Adoption of the retirement benefits standard did not have any impact on Applied’s Consolidated Balance Sheet or Consolidated Statement of Cash Flows. Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows: October 28, 2018 As Previously Reported Adjustment As Adjusted (In millions) Accounts receivable, net $ 2,565 $ (242) $ 2,323 Inventories $ 3,722 $ (1) $ 3,721 Other current assets $ 430 $ 100 $ 530 Deferred income taxes and other assets $ 470 $ 3 $ 473 Customer deposits and deferred revenue $ 1,347 $ (1,347) $ — Contract liabilities $ — $ 1,201 $ 1,201 Retained earnings $ 20,874 $ 6 $ 20,880 Adoption of the revenue recognition standard did not impact cash provided by or used in investing or financing activities in Applied’s Consolidated Statement of Cash Flows for each of fiscal years 2018 and 2017 as follows. The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for each of fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Adjustment As Adjusted As Previously Reported Adjustment As Adjusted (In millions) Cash flows from operating activities: Net income $ 3,313 $ (275) $ 3,038 $ 3,434 $ 85 $ 3,519 Adjustments required to reconcile net income to cash provided by operating activities: Deferred income taxes $ 94 $ (23) $ 71 $ (11) $ (1) $ (12) Changes in operating assets and liabilities: Accounts receivables $ (226) $ 242 $ 16 $ (37) $ — $ (37) Inventories $ (792) $ (222) $ (1,014) $ (879) $ 70 $ (809) Other current and non-current assets $ (93) $ (106) $ (199) $ (157) $ 1 $ (156) Accounts payable and accrued expenses $ 179 $ (9) $ 170 $ 370 $ 1 $ 371 Contract liabilities $ (318) $ 393 $ 75 $ 289 $ (156) $ 133 Income Taxes: Intra-Entity Asset Transfers. In October 2016, the FASB issued authoritative guidance that changed the tax accounting for intra-entity transfers of assets other than inventory. After adoption, the income tax effect of intra-entity transfers is realized at the time of the transfer instead of over the life of the asset. Applied adopted this guidance in the first quarter of fiscal 2019 using a modified retrospective approach, resulting in a cumulative effect adjustment to retained earnings. Upon adoption, deferred tax assets increased by $1.6 billion related to the estimated income tax effects of future amortization of intra-entity intangible asset transfers, with an offset to retained earnings. Financial Instruments: Classification and Measurement. In January 2016, the FASB issued authoritative guidance that requires equity investments that do not result in consolidation, and are not accounted for under the equity method, to be measured at fair value, and requires recognition of any changes in fair value in net income unless the investments qualify for a new measurement alternative. For financial liabilities measured at fair value, the change in fair value caused by a change in instrument-specific credit risk will be required to be presented separately in other comprehensive income. Applied adopted this standard in the first quarter of fiscal year 2019. Upon adoption, Applied elected to apply the measurement alternative for equity investments without readily determinable fair value. Under the alternative, Applied measures investments without readily determinable fair value at cost, less impairment, adjusted by observable price changes prospectively to all equity investments that exist as of adoption and will reassess at each reporting period whether an investment qualifies for the alternative. Adopting this standard required Applied to record a cumulative net increase to retained earnings of approximately $21 million with the corresponding $17 million decrease in accumulated other comprehensive income, net of tax, for the unrealized gains and losses associated with equity investments with readily determinable fair values, as the authoritative guidance is required to be adopted prospectively. Going forward, the impact of this new standard could result in volatility in Applied’s Consolidated Statement of Operations. Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued authoritative guidance that eliminates, amends, and adds disclosure requirements for fair value measurements. While the amended and new disclosure requirements primarily relate to Level 3 fair value measurements, the authoritative guidance also eliminates disclosure requirements related to the amount and reasons for transfer between Level 1 and Level 2 of fair value hierarchy, policy for timing of transfer between levels, and the valuation processes for Level 3 fair value measurements. Applied adopted this guidance in the fourth quarter of fiscal 2019 on a retrospective basis for the removal and amendment of certain disclosures, while the new disclosures requirements are to be applied prospectively at the effective date. The adoption of this guidance did not have an impact to Applied's consolidated financial statements. Retirement Benefits. In March 2017, the FASB issued authoritative guidance which requires companies to present the service cost component of net benefit cost in the same line items in which they report compensation cost. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Applied adopted this guidance in the first quarter of fiscal 2019 on a retrospective basis. The adoption of this guidance resulted in reclassification of other components of net benefit costs outside of income from operations and did not have a significant impact on Applied’s consolidated financial statements. Business Combinations. In January 2017, the FASB issued authoritative guidance that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. Applied adopted this guidance in the first quarter of fiscal 2019 on a prospective basis. The impact of the adoption depends on the facts and circumstances of future acquisition or disposal transactions. Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued authoritative guidance which addresses classification of certain cash receipts and cash payments related to the statement of cash flows. Effective in the first quarter of fiscal 2019, Applied adopted the authoritative guidance retrospectively. The adoption of this guidance did not have a significant impact and only impacts disclosures in Applied' s consolidated statements of cash flow. Accounting Standards Not Yet Adopted Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit and other Postretirement Plans. In August 2018, the FASB issued authoritative guidance that adds, removes, and clarifies disclosure requirements for defined benefit and other postretirement plans. This authoritative guidance will be effective for Applied in fiscal 2021 on a retrospective basis, with early adoption permitted. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Derivatives and Hedging. In August 2017, the FASB issued authoritative guidance that modifies the recognition and presentation of hedge accounting to better align an entity’s risk management strategies and financial reporting for hedging relationships. The authoritative guidance expands the application of hedge accounting for non-financial and financial risk components and eases certain hedge effectiveness assessment requirements. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2020, with early adoption permitted. While the Company's evaluation of the impact of this new guidance is not complete, it is not currently expected to have a significant impact on Applied’s consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs. In March 2017, the FASB issued authoritative guidance that will shorten the amortization period for certain callable debt securities held at a premium to the earliest call date to more closely align with expectations incorporated in market pricing. This authoritative guidance will be effective for Applied in the first quarter of fiscal 2020 on a modified retrospective basis. While the Company's evaluation of the impact of this new guidance is not complete, it is not currently expected to have a significant impact on Applied’s consolidated financial statements. Goodwill Impairment. In January 2017, the FASB issued authoritative guidance that simplifies the process required to test goodwill for impairment. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied’s consolidated financial statements. Financial Instruments: Credit Losses. In June 2016, the FASB issued authoritative guidance that modifies the impairment model for certain financial assets by requiring use of an expected loss methodology, which will result in more timely recognition of credit losses. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2021. Early adoption is permitted beginning in the first quarter of fiscal 2020. Applied is currently evaluating the effect of this new guidance on Applied’s consolidated financial statements. Leases. In February 2016, the FASB issued authoritative guidance for lease accounting, which requires lessees to recognize lease assets and liabilities on the balance sheet for certain lease arrangements that are classified as operating leases under the previous standard, and to provide for enhanced disclosures. The authoritative guidance should be applied using a modified retrospective approach. Applied currently anticipates adopting this guidance using the optional transition method by recognizing a cumulative-effect adjustment to the consolidated balance sheet at the beginning of fiscal year 2020 and will not adjust comparative prior periods. While the Company's evaluation of the impact of this new guidance is not complete, Applied currently expects that the primary impact of the new standard will be the recognition of right-of-use assets and lease liabilities of approximately $165 million on the Company's Consolidated Balance Sheets, mainly related to leases classified as operating leases. Applied is currently implementing changes to business processes and controls to support measurement and disclosure requirements under the new standard. |
Investment Impairment | Applied regularly reviews its debt investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. |
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value on a recurring basis, except for equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • 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. As of October 27, 2019, substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. Applied’s equity investments with readily determinable values consist of publicly traded equity securities. Upon adoption of ASU 2016-01, these investments are measured at fair value using quoted prices for identical assets in an active market and the changes in fair value of these equity investments are recognized in the Consolidated Statements of Operations. Applied adopted the standard in the first quarter of fiscal 2019 using a modified retrospective transition method and reclassified the unrealized gains on these equity investments of $21 million to retained earnings as a cumulative-effect adjustment on the consolidated balance sheets. |
Equity Securities without Readily Determinable Fair Value | Assets and Liabilities Measured at Fair Value on a Non-recurring Basis Applied’s equity investments without readily determinable values consist of equity investments in privately-held companies. Upon adoption of ASU 2016-01, Applied elected the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes on a prospective basis for certain equity investments without readily determinable fair values and is required to account for any subsequent observable changes in fair value within the statements of operations. Applied adopted the guidance prospectively, effective October 29, 2018, and there was no impact to Applied’s consolidated financial statements. Prior to the adoption of ASU 2016-01, these investments were generally accounted for under the cost method of accounting. These investments are periodically assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. |
Derivative Financial Instruments | Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel and Taiwanese dollar. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange and interest rate contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI at October 27, 2019 is expected to be reclassified into earnings within 12 months. Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period were not significant for fiscal years 2019, 2018 and 2017. |
Contract Assets and Liabilities | Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Applied’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. |
Goodwill and Purchased 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. |
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 Compensation | The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards 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 | Performance-based awards granted in fiscal 2017 and 2018 Certain awards require the achievement of positive adjusted operating profit and vest ratably over three years. Other awards require the achievement of targeted levels of adjusted operating profit margin and wafer fabrication equipment market share, and the number of shares that may vest in full after three years ranges from 0% to 200% of the target amount. The fair value of these awards is estimated on the date of grant. If the performance goals are achieved as of the end of the performance period, the awards will vest, provided that the grantee remains employed by Applied through each applicable vesting date. If the performance goals are not achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost is based on the awards that are probable to vest and is reflected over the service period and reduced for estimated forfeitures. Performance-based awards granted in fiscal 2019 Certain awards are subject to the achievement of targeted levels of adjusted operating margin and total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Index. Each metric will be weighted 50% and will be measured over a three three The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant. If the performance goals are not achieved as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost is based on the awards that are probable to vest and is reflected over the service period and reduced for estimated forfeitures. The fair value of the portion of the awards subject to targeted levels of TSR is estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upon the assumption of 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeitures. |
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. |
Intangible Assets, Goodwill and
Intangible Assets, Goodwill and Other (Policies) | 12 Months Ended |
Oct. 27, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Purchased 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. |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Adoption of the standards related to revenue recognition and retirement benefits impacted Applied’s Consolidated Statement of Operations for each of the fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Adjusted As Previously Reported Revenue Recognition Adjustment Retirement Benefit Adjustment As Restated (In millions, except per share amounts) Net sales $ 17,253 $ (548) $ — $ 16,705 $ 14,537 $ 161 $ — $ 14,698 Cost of products sold $ 9,436 $ (250) $ 2 $ 9,188 $ 8,005 $ 76 $ 5 $ 8,086 Gross profit $ 7,817 $ (298) $ (2) $ 7,517 $ 6,532 $ 85 $ (5) $ 6,612 Research, development and engineering $ 2,019 $ — $ 3 $ 2,022 $ 1,774 $ — $ 7 $ 1,781 Marketing and selling $ 521 $ — $ — $ 521 $ 456 $ — $ 1 $ 457 General and administrative $ 481 $ — $ 2 $ 483 $ 434 $ — $ 4 $ 438 Interest and other income, net $ 132 $ — $ 7 $ 139 $ 61 $ — $ 17 $ 78 Income before income taxes $ 4,694 $ (298) $ — $ 4,396 $ 3,731 $ 85 $ — $ 3,816 Provision for income taxes $ 1,381 $ (23) $ — $ 1,358 $ 297 $ — $ — $ 297 Net income $ 3,313 $ (275) $ — $ 3,038 $ 3,434 $ 85 $ — $ 3,519 Earnings per share: basic $ 3.27 $ (0.27) $ — $ 3.00 $ 3.20 $ 0.08 $ — $ 3.28 Earnings per share: diluted $ 3.23 $ (0.27) $ — $ 2.96 $ 3.17 $ 0.08 $ — $ 3.25 Adoption of the retirement benefits standard did not have any impact on Applied’s Consolidated Balance Sheet or Consolidated Statement of Cash Flows. Adoption of the standard related to revenue recognition impacted Applied’s Consolidated Balance Sheet at October 28, 2018 as follows: October 28, 2018 As Previously Reported Adjustment As Adjusted (In millions) Accounts receivable, net $ 2,565 $ (242) $ 2,323 Inventories $ 3,722 $ (1) $ 3,721 Other current assets $ 430 $ 100 $ 530 Deferred income taxes and other assets $ 470 $ 3 $ 473 Customer deposits and deferred revenue $ 1,347 $ (1,347) $ — Contract liabilities $ — $ 1,201 $ 1,201 Retained earnings $ 20,874 $ 6 $ 20,880 Adoption of the revenue recognition standard did not impact cash provided by or used in investing or financing activities in Applied’s Consolidated Statement of Cash Flows for each of fiscal years 2018 and 2017 as follows. The adoption did not impact total cash provided by operating activities, however it impacted individual components of cash provided by operating activities for each of fiscal years 2018 and 2017 as follows: 2018 2017 As Previously Reported Adjustment As Adjusted As Previously Reported Adjustment As Adjusted (In millions) Cash flows from operating activities: Net income $ 3,313 $ (275) $ 3,038 $ 3,434 $ 85 $ 3,519 Adjustments required to reconcile net income to cash provided by operating activities: Deferred income taxes $ 94 $ (23) $ 71 $ (11) $ (1) $ (12) Changes in operating assets and liabilities: Accounts receivables $ (226) $ 242 $ 16 $ (37) $ — $ (37) Inventories $ (792) $ (222) $ (1,014) $ (879) $ 70 $ (809) Other current and non-current assets $ (93) $ (106) $ (199) $ (157) $ 1 $ (156) Accounts payable and accrued expenses $ 179 $ (9) $ 170 $ 370 $ 1 $ 371 Contract liabilities $ (318) $ 393 $ 75 $ 289 $ (156) $ 133 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Earnings Per Share [Abstract] | |
Elements used in computing both basic and diluted net earnings per share | Fiscal Year 2019 2018 2017 (In millions, except per share amounts) Numerator: Net income $ 2,706 $ 3,038 $ 3,519 Denominator: Weighted average common shares outstanding 937 1,013 1,073 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 8 13 11 Denominator for diluted earnings per share 945 1,026 1,084 Basic earnings per share $ 2.89 $ 3.00 $ 3.28 Diluted earnings per share $ 2.86 $ 2.96 $ 3.25 Potentially dilutive securities 3 — — |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Summary of cash, cash equivalents and investments | The following tables summarize Applied’s cash, cash equivalents and investments by security type: October 27, 2019 Cost Gross Gross Estimated (In millions) Cash $ 1,071 $ — $ — $ 1,071 Cash equivalents: Money market funds 1,677 — — 1,677 U.S. Treasury and agency securities 4 — — 4 Commercial paper, corporate bonds and medium-term notes 377 — — 377 Total Cash equivalents 2,058 — — 2,058 Total Cash and Cash equivalents $ 3,129 $ — $ — $ 3,129 Short-term and long-term investments: U.S. Treasury and agency securities $ 336 $ 1 $ — $ 337 Non-U.S. government securities* 10 — — 10 Municipal securities 402 4 — 406 Commercial paper, corporate bonds and medium-term notes 642 5 — 647 Asset-backed and mortgage-backed securities 631 4 — 635 Total fixed income securities 2,021 14 — 2,035 Publicly traded equity securities 8 40 3 45 Equity investments in privately-held companies 105 10 3 112 Total equity investments 113 50 6 157 Total short-term and long-term investments $ 2,134 $ 64 $ 6 $ 2,192 Total Cash, Cash equivalents and Investments $ 5,263 $ 64 $ 6 $ 5,321 _________________________ * Includes agency debt securities guaranteed by Canada. October 28, 2018 Cost Gross Gross Estimated (In millions) Cash $ 1,489 $ — $ — $ 1,489 Cash equivalents: Money market funds 1,599 — — 1,599 Commercial paper, corporate bonds and medium-term notes 352 — — 352 Total Cash equivalents 1,951 — — 1,951 Total Cash and Cash equivalents $ 3,440 $ — $ — $ 3,440 Short-term and long-term investments: U.S. Treasury and agency securities $ 335 $ — $ 2 $ 333 Non-U.S. government securities* 10 — — 10 Municipal securities 399 — 4 395 Commercial paper, corporate bonds and medium-term notes 705 — 3 702 Asset-backed and mortgage-backed securities 595 — 4 591 Total fixed income securities 2,044 — 13 2,031 Publicly traded equity securities 17 25 4 38 Equity investments in privately-held companies 89 — — 89 Total equity investments 106 25 4 127 Total short-term and long-term investments $ 2,150 $ 25 $ 17 $ 2,158 Total Cash, Cash equivalents and Investments $ 5,590 $ 25 $ 17 $ 5,598 ________________________ * Includes agency debt securities guaranteed by Canada. |
Contractual maturities of investments | The following table summarizes the contractual maturities of Applied’s investments at October 27, 2019: Cost Estimated (In millions) Due in one year or less $ 419 $ 420 Due after one through five years 971 981 No single maturity date** 744 791 Total $ 2,134 $ 2,192 _________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. |
Schedule of gross realized gains and losses on sales of investments | Gross realized gains and losses on sales of investments for each fiscal year were as follows: 2019 2018 2017 (In millions) Gross realized gains $ 10 $ 29 $ 14 Gross realized losses $ 2 $ 3 $ 1 |
Components of gain (loss) on equity investment | The components of gain (loss) on equity investments for fiscal 2019 were as follows: 2019 (In millions) Publicly traded equity securities Unrealized gain $ 28 Unrealized loss (5) Gain on sales 2 Loss on sales — Equity investments in privately-held companies Unrealized gain 13 Unrealized loss (6) Gain on sales 5 Loss on sales or impairment (1) Total gain on equity investments, net $ 36 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial assets/liabilities measured at fair value on a recurring basis | Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below: October 27, 2019 October 28, 2018 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Available-for-sale debt security investments Money market funds $ 1,677 $ — $ 1,677 $ 1,599 $ — $ 1,599 U.S. Treasury and agency securities 323 18 341 297 36 333 Non-U.S. government securities — 10 10 — 10 10 Municipal securities — 406 406 — 395 395 Commercial paper, corporate bonds and medium-term notes — 1,024 1,024 — 1,054 1,054 Asset-backed and mortgage-backed securities — 635 635 — 591 591 Total available-for-sale debt security investments $ 2,000 $ 2,093 $ 4,093 $ 1,896 $ 2,086 $ 3,982 Equity investments with readily determinable values Publicly traded equity securities $ 45 $ — $ 45 $ 38 $ — $ 38 Total equity investments with readily determinable values $ 45 $ — $ 45 $ 38 $ — $ 38 Total $ 2,045 $ 2,093 $ 4,138 $ 1,934 $ 2,086 $ 4,020 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative instruments on the consolidated statement of operations | The effects of derivative instruments and hedging activities on the Consolidated Statements of Operations were as follows: Effective Portion Ineffective Portion and Amount Derivatives in Cash Flow Hedging Relationships Location of Gain or Gain or Gain or (Loss) Gain or (Loss) (In millions) 2019 Foreign exchange contracts AOCI $ (14) $ — $ — Foreign exchange contracts Cost of products sold — 2 15 Foreign exchange contracts General and administrative — (3) (6) Interest rate contracts Interest expense — (3) — Total $ (14) $ (4) $ 9 2018 Foreign exchange contracts AOCI $ 3 $ — $ — Foreign exchange contracts Cost of products sold — 4 19 Foreign exchange contracts General and administrative — (3) (7) Interest rate contracts Interest expense — (3) — Total $ 3 $ (2) $ 12 2017 Foreign exchange contracts AOCI $ 35 $ — $ — Foreign exchange contracts Cost of products sold — 7 (3) Foreign exchange contracts General and administrative — 7 (2) Interest rate contracts AOCI (14) — — Interest rate contracts Interest expense — (3) — Total $ 21 $ 11 $ (5) |
Derivatives not designated as hedging instruments in statement of operations | Amount of Gain or (Loss) Derivatives Not Designated as Hedging Instruments Location of Gain or 2019 2018 2017 (In millions) Foreign exchange contracts General and administrative $ (8) $ (5) $ 39 Total $ (8) $ (5) $ 39 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Receivables [Abstract] | |
Changes in allowance for doubtful accounts | Changes in allowance for doubtful accounts in each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 33 $ 34 $ 51 Provision — — — Deductions 1 (3) (1) (17) Ending balance $ 30 $ 33 $ 34 _____________________________ 1 Fiscal 2019, 2018 and 2017 deductions primarily represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied’s customers and cash collections. |
Contract Balances (Tables)
Contract Balances (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability | Contract balances at the end of each reporting period were as follows: October 27, 2019 October 28, 2018 (In millions) Contract assets $ 108 $ 99 Contract liabilities $ 1,336 $ 1,201 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories | October 27, October 28, (In millions) Inventories Customer service spares $ 1,245 $ 989 Raw materials 802 1,020 Work-in-process 575 505 Finished goods 852 1,207 $ 3,474 $ 3,721 |
Other current assets | October 27, October 28, (In millions) Other Current Assets Prepaid income taxes and income taxes receivable $ 96 $ 40 Prepaid expenses and other 485 490 $ 581 $ 530 |
Property, plant and equipment, net | Useful Life October 27, October 28, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 254 $ 245 Buildings and improvements 3-30 1,590 1,448 Demonstration and manufacturing equipment 3-5 1,505 1,282 Furniture, fixtures and other equipment 3-5 602 634 Construction in progress 120 203 Gross property, plant and equipment 4,071 3,812 Accumulated depreciation (2,542) (2,405) $ 1,529 $ 1,407 |
Deferred income taxes and other assets | October 27, October 28, (In millions) Deferred Income Taxes and Other Assets Non-current deferred income taxes $ 1,766 $ 225 Income tax receivables and other assets 265 248 $ 2,031 $ 473 |
Accounts payable and accrued expenses | October 27, October 28, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 958 $ 996 Compensation and employee benefits 559 639 Warranty 196 208 Dividends payable 192 193 Income taxes payable 160 136 Other accrued taxes 55 112 Interest payable 38 38 Other 353 399 $ 2,511 $ 2,721 |
Other liabilities | October 27, October 28, (In millions) Other Liabilities Defined and postretirement benefit plans $ 212 $ 177 Other 163 126 $ 375 $ 303 |
Goodwill, Purchased Technolog_2
Goodwill, Purchased Technology and Other Intangible Assets (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Details of goodwill were as follows: October 27, 2019 October 28, 2018 (In millions) Semiconductor Systems $ 2,182 $ 2,151 Applied Global Services 1,018 1,018 Display and Adjacent Markets 199 199 Carrying amount $ 3,399 $ 3,368 |
Summary of purchased technology and intangible assets | A summary of Applied’s purchased technology and intangible assets is set forth below: October 27, October 28, (In millions) Purchased technology, net $ 71 $ 109 Intangible assets - finite-lived, net 85 104 $ 156 $ 213 |
Finite-lived intangible assets | Details of finite-lived intangible assets were as follows: October 27, 2019 October 28, 2018 Purchased Other Total Purchased Other Total (In millions) Gross carrying amount: Semiconductor Systems $ 1,449 $ 252 $ 1,701 $ 1,449 $ 252 $ 1,701 Applied Global Services 33 44 77 33 44 77 Display and Adjacent Markets 163 38 201 163 38 201 Corporate and Other — 9 9 — 9 9 Gross carrying amount $ 1,645 $ 343 $ 1,988 $ 1,645 $ 343 $ 1,988 Accumulated amortization: Semiconductor Systems $ (1,400) $ (168) $ (1,568) $ (1,375) $ (150) $ (1,525) Applied Global Services (30) (44) (74) (29) (44) (73) Display and Adjacent Markets (144) (37) (181) (132) (36) (168) Corporate and Other — (9) (9) — (9) (9) Accumulated amortization $ (1,574) $ (258) $ (1,832) $ (1,536) $ (239) $ (1,775) Carrying amount $ 71 $ 85 $ 156 $ 109 $ 104 $ 213 |
Summary of amortization expense | Details of amortization expense for each fiscal year by segment were as follows: 2019 2018 2017 (In millions) Semiconductor Systems $ 43 $ 184 $ 185 Applied Global Services 1 1 1 Display and Adjacent Markets 13 14 7 Total $ 57 $ 199 $ 193 |
Schedule of categories amortization expense was charged to | Amortization expense for each fiscal year was charged to the following categories: 2019 2018 2017 (In millions) Cost of products sold $ 38 $ 180 $ 173 Research, development and engineering 1 1 1 Marketing and selling 18 18 19 Total $ 57 $ 199 $ 193 |
Future estimated amortization expense | As of October 27, 2019, future estimated amortization expense is expected to be as follows: Amortization (In millions) 2020 $ 52 2021 39 2022 24 2023 11 2024 10 Thereafter 20 Total $ 156 |
Borrowing Facilities and Debt (
Borrowing Facilities and Debt (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Debt Disclosure [Abstract] | |
Debt Outstanding | Debt outstanding as of October 27, 2019 and October 28, 2018 was as follows: Principal Amount October 27, October 28, Effective Interest (In millions) Current portion of long-term debt: 2.625% Senior Notes Due 2020 $ 600 $ — 2.640% April 1, October 1 Total current portion of long-term debt 600 — Long-term debt: 2.625% Senior Notes Due 2020 — 600 2.640% April 1, October 1 4.300% Senior Notes Due 2021 750 750 4.326% June 15, December 15 3.900% Senior Notes Due 2025 700 700 3.944% April 1, October 1 3.300% Senior Notes Due 2027 1,200 1,200 3.342% April 1, October 1 5.100% Senior Notes Due 2035 500 500 5.127% April 1, October 1 5.850% Senior Notes Due 2041 600 600 5.879% June 15, December 15 4.350% Senior Notes Due 2047 1,000 1,000 4.361% April 1, October 1 4,750 5,350 Total unamortized discount (10) (11) Total unamortized debt issuance costs (27) (30) Total long-term debt 4,713 5,309 Total debt $ 5,313 $ 5,309 |
Stockholders' Equity, Compreh_2
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Equity [Abstract] | |
Components of accumulated other comprehensive income, net of tax | Changes in the components of accumulated other comprehensive income (AOCI), net of tax, were as follows: Unrealized Gain (Loss) on Investments, Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges Defined and Postretirement Benefit Plans Cumulative Translation Adjustments Total (In millions) Balance at October 30, 2016 $ 30 $ (18) $ (141) $ 14 (115) Other comprehensive income (loss) before reclassifications 24 13 29 — 66 Amounts reclassified out of AOCI (1) (6) (8) — (15) Other comprehensive income (loss), net of tax 23 7 21 — 51 Balance at October 29, 2017 $ 53 $ (11) $ (120) $ 14 $ (64) Adoption of new accounting standards (a) 5 (2) — — 3 Other comprehensive income (loss) before reclassifications (66) 5 (23) — (84) Amounts reclassified out of AOCI 15 (1) 6 — 20 Other comprehensive income, net of tax (51) 4 (17) — (64) Balance at October 28, 2018 $ 7 $ (9) $ (137) $ 14 $ (125) Adoption of new accounting standards (b) (17) — — — (17) Other comprehensive income (loss) before reclassifications 22 (10) (57) (1) (46) Amounts reclassified out of AOCI (1) 3 6 — 8 Other comprehensive income (loss), net of tax 21 (7) (51) (1) (38) Balance at October 27, 2019 $ 11 $ (16) $ (188) $ 13 $ (180) (a) - Represents the reclassification adjustment related to the early adoption of Accounting Standards Update (ASU) 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. (b) - Represents the reclassification adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019. See Note 1. |
Summary of stock repurchases | The following table summarizes Applied’s stock repurchases for each fiscal year: 2019 2018 2017 (In millions, except per share amounts) Shares of common stock repurchased 60 102 28 Cost of stock repurchased $ 2,403 $ 5,283 $ 1,172 Average price paid per share $ 39.86 $ 51.55 $ 42.08 |
Effect of share-based compensation on the results of operations by expense type | Applied recognized share-based compensation expense related to equity awards and ESPP shares. The effect of share-based compensation on the results of operations and the related tax benefits for each fiscal year were as follows: 2019 2018 2017 (In millions) Cost of products sold $ 89 $ 87 $ 69 Research, development, and engineering 99 96 83 Marketing and selling 31 31 28 General and administrative 44 44 40 Total share-based compensation $ 263 $ 258 $ 220 Income tax benefits recognized $ 37 $ 45 $ 60 |
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 is presented below: Shares Weighted Weighted Aggregate (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2016 25 $ 18.28 2.3 years $ 718 Granted 8 $ 31.79 Vested (10) $ 16.50 Canceled (1) $ 21.25 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 29, 2017 22 $ 23.96 2.2 years $ 1,239 Granted 6 $ 50.62 Vested (9) $ 22.15 Canceled (1) $ 30.19 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2018 18 $ 32.64 2.0 years $ 600 Granted 8 $ 36.00 Vested (7) $ 28.41 Canceled (1) $ 34.59 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2019 18 $ 35.78 2.1 years $ 985 Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest 17 $ 35.31 1.9 years $ 934 |
Significant valuation assumptions in relation to ESPP | Underlying assumptions used in the model are outlined in the following table: 2019 2018 2017 ESPP: Dividend yield 1.99 % 1.68 % 0.99 % Expected volatility 35.5 % 34.4 % 26.3 % Risk-free interest rate 2.21 % 2.09 % 0.92 % Expected life (in years) 0.5 0.5 0.5 Weighted average estimated fair value $10.61 $12.02 $9.14 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Retirement Benefits [Abstract] | |
Changes in benefit obligations and plan assets including post-retirement benefits | A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for each fiscal year is presented below: 2019 2018 2017 (In millions, except percentages) Change in projected benefit obligation Beginning projected benefit obligation $ 524 $ 506 $ 495 Service cost 11 12 13 Interest cost 10 11 10 Plan participants’ contributions 1 1 2 Actuarial (gain) loss 84 24 (35) Curtailments, settlements and special termination benefits (1) (1) (1) Foreign currency exchange rate changes (5) (16) 34 Benefits paid (8) (12) (12) Plan amendments and business combinations 1 (1) — Ending projected benefit obligation $ 617 $ 524 $ 506 Ending accumulated benefit obligation $ 578 $ 490 $ 472 Range of assumptions to determine benefit obligations Discount rate 0.5% - 3.1% 0.6% - 3.1% 0.5% - 3.4% Rate of compensation increase 2.3% - 3.6% 2.4% - 3.5% 2.2% - 3.5% Change in plan assets Beginning fair value of plan assets $ 365 $ 361 $ 310 Return on plan assets 30 17 18 Employer contributions 27 11 16 Plan participants’ contributions 1 1 2 Foreign currency exchange rate changes (5) (12) 28 Divestitures, settlements and business combinations (1) (1) (1) Benefits paid (8) (12) (12) Ending fair value of plan assets $ 409 $ 365 $ 361 Funded status $ (208) $ (159) $ (145) Amounts recognized in the consolidated balance sheets Noncurrent asset $ 5 $ 19 $ 17 Current liability (1) (1) (1) Noncurrent liability (212) (177) (161) Total $ (208) $ (159) $ (145) Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period Actuarial loss $ 12 $ 8 $ 6 Prior service credit — (1) (4) Total $ 12 $ 7 $ 2 Amounts recognized in accumulated other comprehensive loss Net actuarial loss $ 226 $ 161 $ 141 Prior service credit — (2) (4) Total $ 226 $ 159 $ 137 Plans with projected benefit obligations in excess of plan assets Projected benefit obligation $ 424 $ 365 $ 326 Fair value of plan assets $ 211 $ 186 $ 142 Plans with accumulated benefit obligations in excess of plan assets Accumulated benefit obligation $ 385 $ 331 $ 293 Fair value of plan assets $ 211 $ 186 $ 142 2019 2018 Plan assets — allocation Equity securities 36 % 47 % Debt securities 45 % 32 % Insurance contracts 9 % 10 % Other investments 10 % 10 % Cash — % 1 % |
Summary of ending fair value of the plan assets | The following table presents a summary of the ending fair value of the plan assets: October 27, 2019 October 28, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In millions) Equity securities $ 90 $ — $ — $ 90 $ 86 $ — $ — $ 86 Debt securities 70 — — 70 19 — — 19 Insurance contracts — — 36 36 — — 36 36 Other investments — 14 — 14 — 14 — 14 Cash — — — — 2 — — 2 Total assets at fair value $ 160 $ 14 $ 36 210 $ 107 $ 14 $ 36 157 Assets measured at net asset value 199 208 Total $ 409 $ 365 |
Activity in Level 3 instruments | The following table presents the activity in Level 3 instruments for each fiscal year: 2019 2018 (In millions) Balance, beginning of year $ 36 $ 38 Actual return on plan assets: Relating to assets still held at reporting date (3) (1) Purchases, sales, settlements, net 4 — Currency impact (1) (1) Balance, end of year $ 36 $ 36 |
Schedule of net benefit costs and weighted average assumptions used | A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost calculations for each fiscal year is presented below: 2019 2018 2017 (In millions, except percentages) Components of net periodic benefit cost Service cost $ 11 $ 12 $ 13 Interest cost 10 11 10 Expected return on plan assets (20) (20) (18) Amortization of actuarial loss and prior service credit 7 3 (10) Settlement and curtailment loss — — — Net periodic benefit cost (income) $ 8 $ 6 $ (5) Weighted average assumptions Discount rate 1.98 % 2.16 % 1.88 % Expected long-term return on assets 5.40 % 5.41 % 5.38 % Rate of compensation increase 2.74 % 2.66 % 2.69 % |
Schedule of expected benefit payments | Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows: Benefit Payments (In millions) 2020 $ 12 2021 11 2022 12 2023 12 2024 12 2025-2029 83 $ 142 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of income from operations before income taxes | The components of income before income taxes for each fiscal year were as follows: 2019 2018 2017 (In millions) U.S. $ 363 $ 389 $ 510 Foreign 2,906 4,007 3,306 $ 3,269 $ 4,396 $ 3,816 |
Components of the provision for income taxes | The components of the provision for income taxes for each fiscal year were as follows: 2019 2018 2017 (In millions) Current: U.S. $ 240 $ 1,021 $ 64 Foreign 260 117 236 State 12 22 9 512 1,160 309 Deferred: U.S. 8 151 (11) Foreign 46 57 (7) State (3) (10) 6 51 198 (12) $ 563 $ 1,358 $ 297 |
Effective income tax rate continuing operations tax rate reconciliation | A reconciliation between the statutory U.S. federal income tax rate and Applied’s actual effective income tax rate for each fiscal year is presented below: 2019 2018 2017 Tax provision at U.S. statutory rate 21.0 % 23.4 % 35.0 % Changes in U.S. tax law — 25.3 — Effect of foreign operations taxed at various rates (5.9) (15.6) (25.3) Changes in prior years' unrecognized tax benefits 2.6 (0.9) 0.1 Resolutions of prior years' income tax filings (0.1) 0.2 (1.8) Research and other tax credits (1.1) (0.8) (0.7) Other 0.7 (0.7) 0.5 17.2 % 30.9 % 7.8 % |
Components of deferred income tax assets and liabilities | The components of deferred income tax assets and liabilities were as follows: October 27, October 28, (In millions) Deferred tax assets: Allowance for doubtful accounts $ 8 $ 8 Inventory reserves and basis difference 117 117 Installation and warranty reserves 11 7 Intangible assets 1,472 — Accrued liabilities 15 20 Deferred revenue 36 12 Tax credits 264 236 Deferred compensation 98 79 Share-based compensation 36 37 Other 58 45 Gross deferred tax assets 2,115 561 Valuation allowance (257) (230) Total deferred tax assets 1,858 331 Deferred tax liabilities: Fixed assets (65) (48) Intangible assets — (38) Undistributed foreign earnings (38) (32) Total deferred tax liabilities (103) (118) Net deferred tax assets $ 1,755 $ 213 The following table presents a summary of non-current deferred tax assets and liabilities: October 27, October 28, (In millions) Non-current deferred tax asset $ 1,766 $ 225 Non-current deferred tax liability (11) (12) $ 1,755 $ 213 |
Summary of valuation allowance | Changes in the valuation allowance in each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 230 $ 227 $ 207 Increases 27 8 20 Decreases — (5) — Ending balance $ 257 $ 230 $ 227 |
A reconciliation of gross unrecognized tax benefits | A reconciliation of the beginning and ending balances of gross unrecognized tax benefits in each fiscal year is as follows: 2019 2018 2017 (In millions) Beginning balance of gross unrecognized tax benefits $ 374 $ 391 $ 320 Settlements with tax authorities (1) (152) (42) Lapses of statutes of limitation (2) (37) (15) Increases in tax positions for current year 33 91 95 Increases in tax positions for prior years 441 83 33 Decreases in tax positions for prior years — (2) — Ending balance of gross unrecognized tax benefits $ 845 $ 374 $ 391 |
Warranty, Guarantees, Commitm_2
Warranty, Guarantees, Commitments and Contingencies (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payments | As of October 27, 2019, future minimum lease payments are expected to be as follows: Lease Payments Fiscal (In millions) 2020 $ 45 2021 34 2022 24 2023 21 2024 17 Thereafter 30 $ 171 |
Changes in the warranty reserves | Changes in the warranty reserves during each fiscal year were as follows: 2019 2018 2017 (In millions) Beginning balance $ 208 $ 206 $ 153 Provisions for warranty 148 175 173 Changes in reserves related to preexisting warranty 7 3 1 Consumption of reserves (167) (176) (121) Ending balance $ 196 $ 208 $ 206 |
Industry Segment Operations (Ta
Industry Segment Operations (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting | Information for each reportable segment for and as of the end of each fiscal year were as follows: Net Sales Operating Depreciation/ Capital Accounts Receivable Inventories (In millions) 2019: Semiconductor Systems $ 9,027 $ 2,464 $ 202 $ 168 $ 1,543 $ 1,703 Applied Global Services 3,854 1,101 25 47 790 1,535 Display and Adjacent Markets 1,651 294 22 43 246 214 Corporate and Other 76 (509) 114 183 (46) 22 Total $ 14,608 $ 3,350 $ 363 $ 441 $ 2,533 $ 3,474 2018: Semiconductor Systems $ 10,577 $ 3,441 $ 303 $ 168 $ 1,597 $ 2,215 Applied Global Services 3,754 1,102 21 33 630 1,243 Display and Adjacent Markets 2,298 574 20 39 142 246 Corporate and Other 76 (626) 113 382 (46) 17 Total $ 16,705 $ 4,491 $ 457 $ 622 $ 2,323 $ 3,721 2017: Semiconductor Systems $ 9,544 $ 3,177 $ 286 $ 150 $ 1,626 $ 1,638 Applied Global Services 3,014 817 15 21 564 762 Display and Adjacent Markets 2,042 585 12 17 190 279 Corporate and Other 98 (643) 94 157 (42) 28 Total $ 14,698 $ 3,936 $ 407 $ 345 $ 2,338 $ 2,707 |
Disaggregation of revenue | Net sales for Semiconductor Systems by end use application for the periods indicated were as follows: 2019 2018 2017 Foundry, logic and other 52 % 36 % 51 % Dynamic random-access memory (DRAM) 22 % 27 % 15 % Flash memory 26 % 37 % 34 % 100 % 100 % 100 % |
Segment reconciling items in corporate and other | The reconciling items included in Corporate and Other were as follows: 2019 2018 2017 (In millions) Unallocated net sales $ 76 $ 76 $ 98 Unallocated cost of products sold and expenses (322) (444) (521) Share-based compensation (263) (258) (220) Total $ (509) $ (626) $ (643) |
Net sales and long-lived assets by geographic region | Net sales and long-lived assets by geographic region for and as of each fiscal year were as follows: 2019 2018 2017 (In millions) Net sales: United States $ 1,871 $ 1,413 $ 1,512 China 4,277 5,047 2,758 Korea 1,929 3,539 4,087 Taiwan 2,965 2,504 3,369 Japan 2,198 2,396 1,519 Europe 820 1,009 828 Southeast Asia 548 797 625 Total outside United States 12,737 15,292 13,186 Consolidated total $ 14,608 $ 16,705 $ 14,698 October 27, October 28, (In millions) Long-lived assets: United States $ 1,539 $ 1,414 China 20 13 Korea 24 21 Taiwan 56 29 Japan 16 9 Europe 28 50 Southeast Asia 23 25 Total outside United States 167 147 Consolidated total $ 1,706 $ 1,561 |
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 in each fiscal year, which were for products and services in multiple reportable segments: 2019 2018 2017 Samsung Electronics Co., Ltd. * 13 % 23 % Taiwan Semiconductor Manufacturing Company Limited 14 % * 16 % Intel Corporation 12 % 11 % * ______________________________ * Less than 10% |
Unaudited Quarterly Consolida_2
Unaudited Quarterly Consolidated Financial Data (Tables) | 12 Months Ended |
Oct. 27, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Consolidated Financial Data | Unaudited Quarterly Consolidated Financial Data Fiscal Quarter First Second Third Fourth Fiscal Year (In millions, except per share amounts) 2019: Net sales $ 3,753 $ 3,539 $ 3,562 $ 3,754 $ 14,608 Gross profit $ 1,665 $ 1,530 $ 1,557 $ 1,634 $ 6,386 Net income $ 771 $ 666 $ 571 $ 698 $ 2,706 Earnings per diluted share $ 0.80 $ 0.70 $ 0.61 $ 0.75 $ 2.86 2018: Net sales $ 4,205 $ 4,579 $ 4,162 $ 3,759 $ 16,705 Gross profit $ 1,940 $ 2,056 $ 1,864 $ 1,657 $ 7,517 Net income $ 165 $ 1,100 $ 1,016 $ 757 $ 3,038 Earnings per diluted share $ 0.15 $ 1.06 $ 1.01 $ 0.77 $ 2.96 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Property Plant and Equipment Useful Life) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 30 years |
Demonstration and manufacturing equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Demonstration and manufacturing equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Furniture, fixtures and other equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Furniture, fixtures and other equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Land improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Term of amortization | 15 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Term of amortization | 5 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Intangible Assets) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets estimated useful lives | 15 years |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets estimated useful lives | 1 year |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Warranty) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Accounting Policies [Abstract] | |
Extended Product Warranty Period | 2 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Derivative Financial Instruments) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Accounting Policies [Abstract] | |
Time period for hedging of foreign currency transactions | 24 months |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - (Recent Accounting Pronouncements) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2019 | Oct. 29, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Retained earnings | $ 24,386 | $ 20,880 | $ 24,386 | $ 20,880 | |||||||||
Accumulated other comprehensive loss | (180) | (125) | (180) | (125) | |||||||||
Income Statement [Abstract] | |||||||||||||
Net sales | 3,754 | $ 3,562 | $ 3,539 | $ 3,753 | 3,759 | $ 4,162 | $ 4,579 | $ 4,205 | 14,608 | 16,705 | $ 14,698 | ||
Cost of products sold | 8,222 | 9,188 | 8,086 | ||||||||||
Gross profit | 1,634 | 1,557 | 1,530 | 1,665 | 1,657 | 1,864 | 2,056 | 1,940 | 6,386 | 7,517 | 6,612 | ||
Research, development and engineering | 2,054 | 2,022 | 1,781 | ||||||||||
Marketing and selling | 521 | 457 | |||||||||||
General and administrative | 483 | 438 | |||||||||||
Interest and other income, net | 139 | 78 | |||||||||||
Income before income taxes | 3,269 | 4,396 | 3,816 | ||||||||||
Provision for income taxes | 563 | 1,358 | 297 | ||||||||||
Net income | $ 698 | $ 571 | $ 666 | $ 771 | $ 757 | $ 1,016 | $ 1,100 | $ 165 | $ 2,706 | $ 3,038 | $ 3,519 | ||
Earnings per share: basic (in dollars per share) | $ 2.89 | $ 3 | $ 3.28 | ||||||||||
Earnings per share: diluted (in dollars per share) | $ 0.75 | $ 0.61 | $ 0.70 | $ 0.80 | $ 0.77 | $ 1.01 | $ 1.06 | $ 0.15 | $ 2.86 | $ 2.96 | $ 3.25 | ||
Balance Sheet | |||||||||||||
Accounts receivable, net | $ 2,533 | $ 2,323 | $ 2,533 | $ 2,323 | $ 2,338 | ||||||||
Inventories | 3,474 | 3,721 | 3,474 | 3,721 | 2,707 | ||||||||
Other current assets | 581 | 530 | 581 | 530 | |||||||||
Deferred income taxes and other assets | 2,031 | 473 | 2,031 | 473 | |||||||||
Customer deposits and deferred revenue | 0 | 0 | |||||||||||
Contract liabilities | 1,336 | 1,201 | 1,336 | 1,201 | |||||||||
Retained earnings | $ 24,386 | 20,880 | 24,386 | 20,880 | |||||||||
Statement of Cash Flows | |||||||||||||
Deferred income taxes | 49 | 71 | (12) | ||||||||||
Accounts receivable | (207) | 16 | (37) | ||||||||||
Inventories | 248 | (1,014) | (809) | ||||||||||
Other current and non-current assets | (199) | (156) | |||||||||||
Accounts payable and accrued expenses | (247) | 170 | 371 | ||||||||||
Contract liabilities | $ 135 | 75 | 133 | ||||||||||
As Previously Reported | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Retained earnings | 20,874 | 20,874 | |||||||||||
Income Statement [Abstract] | |||||||||||||
Net sales | 17,253 | 14,537 | |||||||||||
Cost of products sold | 9,436 | 8,005 | |||||||||||
Gross profit | 7,817 | 6,532 | |||||||||||
Research, development and engineering | 2,019 | 1,774 | |||||||||||
Marketing and selling | 521 | 456 | |||||||||||
General and administrative | 481 | 434 | |||||||||||
Interest and other income, net | 132 | 61 | |||||||||||
Income before income taxes | 4,694 | 3,731 | |||||||||||
Provision for income taxes | 1,381 | 297 | |||||||||||
Net income | $ 3,313 | $ 3,434 | |||||||||||
Earnings per share: basic (in dollars per share) | $ 3.27 | $ 3.20 | |||||||||||
Earnings per share: diluted (in dollars per share) | $ 3.23 | $ 3.17 | |||||||||||
Balance Sheet | |||||||||||||
Accounts receivable, net | 2,565 | $ 2,565 | |||||||||||
Inventories | 3,722 | 3,722 | |||||||||||
Other current assets | 430 | 430 | |||||||||||
Deferred income taxes and other assets | 470 | 470 | |||||||||||
Customer deposits and deferred revenue | 1,347 | 1,347 | |||||||||||
Contract liabilities | 0 | 0 | |||||||||||
Retained earnings | 20,874 | 20,874 | |||||||||||
Statement of Cash Flows | |||||||||||||
Deferred income taxes | 94 | $ (11) | |||||||||||
Accounts receivable | (226) | (37) | |||||||||||
Inventories | (792) | (879) | |||||||||||
Other current and non-current assets | (93) | (157) | |||||||||||
Accounts payable and accrued expenses | 179 | 370 | |||||||||||
Contract liabilities | (318) | 289 | |||||||||||
Accounting Standards Update 2014-09 | Adjustment | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Retained earnings | 6 | 6 | |||||||||||
Income Statement [Abstract] | |||||||||||||
Net sales | (548) | 161 | |||||||||||
Cost of products sold | (250) | 76 | |||||||||||
Gross profit | (298) | 85 | |||||||||||
Research, development and engineering | 0 | 0 | |||||||||||
Marketing and selling | 0 | 0 | |||||||||||
General and administrative | 0 | 0 | |||||||||||
Interest and other income, net | 0 | 0 | |||||||||||
Income before income taxes | (298) | 85 | |||||||||||
Provision for income taxes | (23) | 0 | |||||||||||
Net income | $ (275) | $ 85 | |||||||||||
Earnings per share: basic (in dollars per share) | $ (0.27) | $ 0.08 | |||||||||||
Earnings per share: diluted (in dollars per share) | $ (0.27) | $ 0.08 | |||||||||||
Balance Sheet | |||||||||||||
Accounts receivable, net | (242) | $ (242) | |||||||||||
Inventories | (1) | (1) | |||||||||||
Other current assets | 100 | 100 | |||||||||||
Deferred income taxes and other assets | 3 | 3 | |||||||||||
Customer deposits and deferred revenue | (1,347) | (1,347) | |||||||||||
Contract liabilities | 1,201 | 1,201 | |||||||||||
Retained earnings | $ 6 | 6 | |||||||||||
Statement of Cash Flows | |||||||||||||
Deferred income taxes | (23) | $ (1) | |||||||||||
Accounts receivable | 242 | 0 | |||||||||||
Inventories | (222) | 70 | |||||||||||
Other current and non-current assets | (106) | 1 | |||||||||||
Accounts payable and accrued expenses | (9) | 1 | |||||||||||
Contract liabilities | 393 | (156) | |||||||||||
Accounting Standards Update 2017-07 | Adjustment | |||||||||||||
Income Statement [Abstract] | |||||||||||||
Net sales | 0 | 0 | |||||||||||
Cost of products sold | 2 | 5 | |||||||||||
Gross profit | (2) | (5) | |||||||||||
Research, development and engineering | 3 | 7 | |||||||||||
Marketing and selling | 0 | 1 | |||||||||||
General and administrative | 2 | 4 | |||||||||||
Interest and other income, net | 7 | 17 | |||||||||||
Income before income taxes | 0 | 0 | |||||||||||
Provision for income taxes | 0 | 0 | |||||||||||
Net income | $ 0 | $ 0 | |||||||||||
Earnings per share: basic (in dollars per share) | $ 0 | $ 0 | |||||||||||
Earnings per share: diluted (in dollars per share) | $ 0 | $ 0 | |||||||||||
Accounting Standards Update 2016-16 | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Deferred tax asset | $ 1,600 | ||||||||||||
Retained earnings | 1,600 | ||||||||||||
Balance Sheet | |||||||||||||
Retained earnings | 1,600 | ||||||||||||
Accounting Standards Update 2016-01 | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Retained earnings | 21 | ||||||||||||
Accumulated other comprehensive loss | (17) | ||||||||||||
Balance Sheet | |||||||||||||
Retained earnings | $ 21 | ||||||||||||
Accounting Standards Update 2016-02 | Scenario, Forecast | Subsequent Event | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Operating lease right-of-use asset | $ 165 | ||||||||||||
Operating lease liability | $ 165 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Numerator: | |||||||||||
Net income | $ 698 | $ 571 | $ 666 | $ 771 | $ 757 | $ 1,016 | $ 1,100 | $ 165 | $ 2,706 | $ 3,038 | $ 3,519 |
Denominator: | |||||||||||
Weighted average common shares outstanding (in shares) | 937 | 1,013 | 1,073 | ||||||||
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares (in shares) | 8 | 13 | 11 | ||||||||
Denominator for diluted earnings per share (in shares) | 945 | 1,026 | 1,084 | ||||||||
Earnings per share: basic (in dollars per share) | $ 2.89 | $ 3 | $ 3.28 | ||||||||
Diluted earnings per share (in dollars per share) | $ 0.75 | $ 0.61 | $ 0.70 | $ 0.80 | $ 0.77 | $ 1.01 | $ 1.06 | $ 0.15 | $ 2.86 | $ 2.96 | $ 3.25 |
Potentially dilutive securities (in shares) | 3 | 0 | 0 |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Cash, Cash Equivalents and Investments by Security Type) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cash | $ 1,071 | $ 1,489 |
Total Cash equivalents | 2,058 | 1,951 |
Total Cash and Cash equivalents | 3,129 | 3,440 |
Estimated fair value of fixed income securities | 4,093 | 3,982 |
Total equity investments, cost | 113 | 106 |
Gross unrealized gains on publicly traded equity securities | 50 | 25 |
Gross unrealized losses on publicly traded equity securities | 6 | 4 |
Total equity securities, fair value | 157 | 127 |
Equity investments in privately-held companies | 89 | |
Cost of short-term and long-term investments | 2,134 | 2,150 |
Gross unrealized gains on short-term and long-term investments | 25 | |
Gross unrealized losses on short-term and long-term investments | 17 | |
Estimated fair value of short-term and long-term investments | 2,192 | 2,158 |
Total short-term and long-term investments, cost | 2,134 | |
Total short-term and long-term investments, gross unrealized gains | 64 | |
Total short-term and long-term investments, gross unrealized losses | 6 | |
Total short-term and long-term investments | 2,192 | |
Cash, cash equivalents and investments, cost | 5,263 | 5,590 |
Cash, cash equivalents and investments, gross unrealized gains | 64 | 25 |
Cash, cash equivalents and investments, gross unrealized losses | 6 | 17 |
Cash, cash equivalents and investments, estimated fair value | 5,321 | 5,598 |
Fixed income securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 2,021 | 2,044 |
Gross unrealized gains on fixed income securities | 14 | 0 |
Gross unrealized losses on fixed income securities | 0 | 13 |
Estimated fair value of fixed income securities | 2,035 | 2,031 |
U.S. Treasury and agency securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 336 | 335 |
Gross unrealized gains on fixed income securities | 1 | 0 |
Gross unrealized losses on fixed income securities | 0 | 2 |
Estimated fair value of fixed income securities | 337 | 333 |
Municipal securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 402 | 399 |
Gross unrealized gains on fixed income securities | 4 | 0 |
Gross unrealized losses on fixed income securities | 0 | 4 |
Estimated fair value of fixed income securities | 406 | 395 |
Commercial paper, corporate bonds and medium-term notes | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 642 | 705 |
Gross unrealized gains on fixed income securities | 5 | 0 |
Gross unrealized losses on fixed income securities | 0 | 3 |
Estimated fair value of fixed income securities | 647 | 702 |
Asset-backed and mortgage-backed securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 631 | 595 |
Gross unrealized gains on fixed income securities | 4 | 0 |
Gross unrealized losses on fixed income securities | 0 | 4 |
Estimated fair value of fixed income securities | 635 | 591 |
Publicly Traded Equity Securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Equity investments, cost | 8 | |
Publicly traded equity securities, gross unrealized gains | 40 | |
Publicly traded equity securities, gross unrealized losses | 3 | |
Equity investments, fair value | 45 | |
Cost of publicly traded equity securities | 17 | |
Gross unrealized gains on publicly traded equity securities | 25 | |
Gross unrealized losses on publicly traded equity securities | 4 | |
Estimated fair value of publicly traded equity securities | 38 | |
Equity investments in privately-held companies | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Equity investments, cost | 105 | |
Publicly traded equity securities, gross unrealized gains | 10 | |
Publicly traded equity securities, gross unrealized losses | 3 | |
Equity investments, fair value | 112 | |
Money market funds | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Total Cash equivalents | 1,677 | 1,599 |
U.S. Treasury and agency securities | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Total Cash equivalents | 4 | |
Commercial paper, corporate bonds and medium-term notes | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Total Cash equivalents | 377 | 352 |
Canada | Non-U.S. government securities* | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Cost of fixed income securities | 10 | 10 |
Gross unrealized gains on fixed income securities | 0 | 0 |
Gross unrealized losses on fixed income securities | 0 | 0 |
Estimated fair value of fixed income securities | $ 10 | $ 10 |
Cash, Cash Equivalents and In_4
Cash, Cash Equivalents and Investments (Contractual Maturities) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Cash and Cash Equivalents [Abstract] | ||
Due in one year or less, cost | $ 419 | |
Due after one through five years, cost | 971 | |
No single maturity date, cost | 744 | |
Cost of short-term and long-term investments | 2,134 | $ 2,150 |
Due in one year or less, estimated fair value | 420 | |
Due after one through five years, estimated fair value | 981 | |
No single maturity date, estimated fair value | 791 | |
Estimated fair value of short-term and long-term investments | $ 2,192 | $ 2,158 |
Cash, Cash Equivalents and In_5
Cash, Cash Equivalents and Investments (Gains and Losses on Investments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Gains and Losses on Investments | |||
Gross realized gains | $ 10 | $ 29 | $ 14 |
Gross realized losses | $ 2 | $ 3 | $ 1 |
Cash, Cash Equivalents and In_6
Cash, Cash Equivalents and Investments (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Fixed income securities | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Impairments of investments | $ 0 | $ 0 | $ 0 |
Equity investments in privately-held companies | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Impairments of investments | $ 1,000,000 | $ 5,000,000 | $ 10,000,000 |
Cash and Cash Equivalents (Gain
Cash and Cash Equivalents (Gain (Loss) on Equity Investments) (Details) $ in Millions | 12 Months Ended |
Oct. 27, 2019USD ($) | |
Debt and Equity Securities, FV-NI [Line Items] | |
Total gain on equity investments, net | $ 36 |
Publicly traded equity securities | |
Debt and Equity Securities, FV-NI [Line Items] | |
Unrealized gain | 28 |
Unrealized loss | (5) |
Gain on sales | 2 |
Loss on sales or impairment | 0 |
Equity investments in privately-held companies | |
Debt and Equity Securities, FV-NI [Line Items] | |
Unrealized gain | 13 |
Unrealized loss | (6) |
Gain on sales | 5 |
Loss on sales or impairment | $ (1) |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 29, 2018 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Retained earnings | $ 24,386 | $ 20,880 | ||
Long-term debt principal amount | 4,800 | 5,400 | ||
Accounting Standards Update 2016-01 | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Retained earnings | $ 21 | |||
Equity investments in privately-held companies | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Impairments of investments | 1 | 5 | $ 10 | |
Estimate of Fair Value Measurement | Level 2 | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Long-term debt fair value | $ 5,500 | $ 5,400 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | $ 4,093 | $ 3,982 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments, fair value | 45 | 38 |
Assets, fair value disclosure | 4,138 | 4,020 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 2,000 | 1,896 |
Equity investments, fair value | 45 | 38 |
Assets, fair value disclosure | 2,045 | 1,934 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 2,093 | 2,086 |
Equity investments, fair value | 0 | 0 |
Assets, fair value disclosure | 2,093 | 2,086 |
Fair Value, Measurements, Recurring | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 1,677 | 1,599 |
Fair Value, Measurements, Recurring | Money market funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 1,677 | 1,599 |
Fair Value, Measurements, Recurring | Money market funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 0 | 0 |
Fair Value, Measurements, Recurring | U.S. Treasury and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 341 | 333 |
Fair Value, Measurements, Recurring | U.S. Treasury and agency securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 323 | 297 |
Fair Value, Measurements, Recurring | U.S. Treasury and agency securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 18 | 36 |
Fair Value, Measurements, Recurring | Non-U.S. government securities* | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 10 | 10 |
Fair Value, Measurements, Recurring | Non-U.S. government securities* | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 0 | 0 |
Fair Value, Measurements, Recurring | Non-U.S. government securities* | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 10 | 10 |
Fair Value, Measurements, Recurring | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 406 | 395 |
Fair Value, Measurements, Recurring | Municipal securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 0 | 0 |
Fair Value, Measurements, Recurring | Municipal securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 406 | 395 |
Fair Value, Measurements, Recurring | Commercial paper, corporate bonds and medium-term notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 1,024 | 1,054 |
Fair Value, Measurements, Recurring | Commercial paper, corporate bonds and medium-term notes | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 0 | 0 |
Fair Value, Measurements, Recurring | Commercial paper, corporate bonds and medium-term notes | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 1,024 | 1,054 |
Fair Value, Measurements, Recurring | Asset-backed and mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 635 | 591 |
Fair Value, Measurements, Recurring | Asset-backed and mortgage-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 0 | 0 |
Fair Value, Measurements, Recurring | Asset-backed and mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair value of fixed income securities | 635 | 591 |
Fair Value, Measurements, Recurring | Publicly Traded Equity Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments, fair value | 45 | 38 |
Fair Value, Measurements, Recurring | Publicly Traded Equity Securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments, fair value | 45 | 38 |
Fair Value, Measurements, Recurring | Publicly Traded Equity Securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments, fair value | $ 0 | $ 0 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Narrative) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Time period for hedging of foreign currency transactions | 24 months |
Amortization period for the loss on settlement of interest rate swap agreement | 12 months |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities (Derivatives in Cash Flow Hedging Relationships) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | $ (14) | $ 3 | $ 21 |
Gain or (Loss) Reclassified from AOCI into Income | (4) | (2) | 11 |
Gain or (Loss) Recognized in Income | 9 | 12 | (5) |
Foreign exchange contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | (14) | 3 | 35 |
Gain or (Loss) Reclassified from AOCI into Income | 0 | 0 | 0 |
Gain or (Loss) Recognized in Income | 0 | 0 | 0 |
Foreign exchange contracts | Cost of products sold | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | 0 | 0 | 0 |
Gain or (Loss) Reclassified from AOCI into Income | 2 | 4 | 7 |
Gain or (Loss) Recognized in Income | 15 | 19 | (3) |
Foreign exchange contracts | General and administrative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | 0 | 0 | 0 |
Gain or (Loss) Reclassified from AOCI into Income | (3) | (3) | 7 |
Gain or (Loss) Recognized in Income | (6) | (7) | (2) |
Interest rate contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | (14) | ||
Gain or (Loss) Reclassified from AOCI into Income | 0 | ||
Gain or (Loss) Recognized in Income | 0 | ||
Interest rate contracts | Interest expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) | 0 | 0 | 0 |
Gain or (Loss) Reclassified from AOCI into Income | (3) | (3) | (3) |
Gain or (Loss) Recognized in Income | $ 0 | $ 0 | $ 0 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities (Derivatives Not Designated as Hedging Instruments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain or (Loss) Recognized in Income | $ (8) | $ (5) | $ 39 |
Foreign exchange contracts | General and administrative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of Gain or (Loss) Recognized in Income | $ (8) | $ (5) | $ 39 |
Accounts Receivable, Net (Narra
Accounts Receivable, Net (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 30, 2016 | |
Receivables [Abstract] | ||||
Accounts receivable sold | $ 1,500,000,000 | $ 1,600,000,000 | $ 746,000,000 | |
Discount letters of credit issued during period | 48,000,000 | 37,000,000 | 0 | |
Discount applied to promissory notes | 0 | 0 | 0 | |
Allowance for doubtful accounts | $ 30,000,000 | $ 33,000,000 | $ 34,000,000 | $ 51,000,000 |
Accounts Receivable, Net (Net o
Accounts Receivable, Net (Net of Allowance for Doubtful Accounts) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Changes in allowance for doubtful accounts | |||
Beginning balance | $ 33 | $ 34 | $ 51 |
Provision | 0 | 0 | 0 |
Deductions | (3) | (1) | (17) |
Ending balance | $ 30 | $ 33 | $ 34 |
Contract Balances - Schedule of
Contract Balances - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 108 | $ 99 |
Contract liabilities | $ 1,336 | $ 1,201 |
Contract Balances - Narrative (
Contract Balances - Narrative (Details) | 12 Months Ended |
Oct. 27, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognized | $ 859,000,000 |
Impairment loss on accounts receivable and contract assets | 0 |
Long-term Contract with Customer | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 868,000,000 |
Long-term Contract with Customer | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-28 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percent of performance obligation recognized | 42.00% |
Performance obligation period | 24 months |
Balance Sheet Detail (Inventory
Balance Sheet Detail (Inventory) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 |
Inventories | |||
Customer service spares | $ 1,245 | $ 989 | |
Raw materials | 802 | 1,020 | |
Work-in-process | 575 | 505 | |
Finished goods | 852 | 1,207 | |
Total Inventories | 3,474 | 3,721 | $ 2,707 |
Inventory at customer locations included in finished goods | 13 | 19 | |
Evaluation inventory | $ 318 | $ 350 |
Balance Sheet Detail (Other Cur
Balance Sheet Detail (Other Current Assets) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Other Current Assets | ||
Prepaid income taxes and income taxes receivable | $ 96 | $ 40 |
Prepaid expenses and other | 485 | 490 |
Total other current assets | $ 581 | $ 530 |
Balance Sheet Detail (Property,
Balance Sheet Detail (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 4,071 | $ 3,812 | |
Accumulated depreciation | (2,542) | (2,405) | |
Net property, plant and equipment | 1,529 | 1,407 | |
Depreciation | 306 | 258 | $ 214 |
Land and improvements | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | 254 | 245 | |
Buildings and improvements | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 1,590 | 1,448 | |
Buildings and improvements | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Buildings and improvements | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 30 years | ||
Demonstration and manufacturing equipment | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 1,505 | 1,282 | |
Demonstration and manufacturing equipment | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Demonstration and manufacturing equipment | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 5 years | ||
Furniture, fixtures and other equipment | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 602 | 634 | |
Furniture, fixtures and other equipment | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Furniture, fixtures and other equipment | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 5 years | ||
Construction in progress | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 120 | $ 203 |
Balance Sheet Detail (Deferred
Balance Sheet Detail (Deferred Income Taxes and Other Assets) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Non-current deferred income taxes | $ 1,766 | $ 225 |
Income tax receivables and other assets | 265 | 248 |
Deferred Income Taxes and Other Assets | $ 2,031 | $ 473 |
Balance Sheet Detail (Accounts
Balance Sheet Detail (Accounts Payable and Accrued Expenses) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 958 | $ 996 |
Compensation and employee benefits | 559 | 639 |
Warranty | 196 | 208 |
Dividends payable | 192 | 193 |
Income taxes payable | 160 | 136 |
Other accrued taxes | 55 | 112 |
Interest payable | 38 | 38 |
Other | 353 | 399 |
Accounts payable and accrued expenses | $ 2,511 | $ 2,721 |
Balance Sheet Detail (Other Lia
Balance Sheet Detail (Other Liabilities) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Other Liabilities | ||
Defined and postretirement benefit plans | $ 212 | $ 177 |
Other | 163 | 126 |
Other liabilities | $ 375 | $ 303 |
Business Combinations (Details)
Business Combinations (Details) $ in Billions | Jun. 30, 2019USD ($) |
Kokusai Electric | |
Business Acquisition [Line Items] | |
Purchase price | $ 2.2 |
Goodwill, Purchased Technolog_3
Goodwill, Purchased Technology and Other Intangible Assets (Goodwill) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Goodwill [Line Items] | ||
Goodwill | $ 3,399 | $ 3,368 |
Semiconductor Systems | ||
Goodwill [Line Items] | ||
Goodwill | 2,182 | 2,151 |
Applied Global Services | ||
Goodwill [Line Items] | ||
Goodwill | 1,018 | 1,018 |
Display and Adjacent Markets | ||
Goodwill [Line Items] | ||
Goodwill | $ 199 | $ 199 |
Goodwill, Purchased Technolog_4
Goodwill, Purchased Technology and Other Intangible Assets (Purchased Technology and Intangible Assets) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Purchased technology and intangible assets | $ 156 | $ 213 |
Purchased technology, net | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Purchased technology and intangible assets | 71 | 109 |
Intangible Assets | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Purchased technology and intangible assets | $ 85 | $ 104 |
Goodwill, Purchased Technolog_5
Goodwill, Purchased Technology and Other Intangible Assets (Narrative) (Details) | 12 Months Ended |
Oct. 27, 2019 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Life | 1 year |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Life | 15 years |
Goodwill, Purchased Technolog_6
Goodwill, Purchased Technology and Other Intangible Assets (Finite-lived Intangible Assets) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Amortized intangible assets | ||
Gross carrying amount | $ 1,988 | $ 1,988 |
Accumulated amortization | (1,832) | (1,775) |
Carrying amount | 156 | 213 |
Purchased technology, net | ||
Amortized intangible assets | ||
Gross carrying amount | 1,645 | 1,645 |
Accumulated amortization | (1,574) | (1,536) |
Carrying amount | 71 | 109 |
Other Intangible Assets | ||
Amortized intangible assets | ||
Gross carrying amount | 343 | 343 |
Accumulated amortization | (258) | (239) |
Carrying amount | 85 | 104 |
Operating Segments | Semiconductor Systems | ||
Amortized intangible assets | ||
Gross carrying amount | 1,701 | 1,701 |
Accumulated amortization | (1,568) | (1,525) |
Operating Segments | Semiconductor Systems | Purchased technology, net | ||
Amortized intangible assets | ||
Gross carrying amount | 1,449 | 1,449 |
Accumulated amortization | (1,400) | (1,375) |
Operating Segments | Semiconductor Systems | Other Intangible Assets | ||
Amortized intangible assets | ||
Gross carrying amount | 252 | 252 |
Accumulated amortization | (168) | (150) |
Operating Segments | Applied Global Services | ||
Amortized intangible assets | ||
Gross carrying amount | 77 | 77 |
Accumulated amortization | (74) | (73) |
Operating Segments | Applied Global Services | Purchased technology, net | ||
Amortized intangible assets | ||
Gross carrying amount | 33 | 33 |
Accumulated amortization | (30) | (29) |
Operating Segments | Applied Global Services | Other Intangible Assets | ||
Amortized intangible assets | ||
Gross carrying amount | 44 | 44 |
Accumulated amortization | (44) | (44) |
Operating Segments | Display and Adjacent Markets | ||
Amortized intangible assets | ||
Gross carrying amount | 201 | 201 |
Accumulated amortization | (181) | (168) |
Operating Segments | Display and Adjacent Markets | Purchased technology, net | ||
Amortized intangible assets | ||
Gross carrying amount | 163 | 163 |
Accumulated amortization | (144) | (132) |
Operating Segments | Display and Adjacent Markets | Other Intangible Assets | ||
Amortized intangible assets | ||
Gross carrying amount | 38 | 38 |
Accumulated amortization | (37) | (36) |
Corporate and Other | ||
Amortized intangible assets | ||
Gross carrying amount | 9 | 9 |
Accumulated amortization | (9) | (9) |
Corporate and Other | Purchased technology, net | ||
Amortized intangible assets | ||
Gross carrying amount | 0 | 0 |
Accumulated amortization | 0 | 0 |
Corporate and Other | Other Intangible Assets | ||
Amortized intangible assets | ||
Gross carrying amount | 9 | 9 |
Accumulated amortization | $ (9) | $ (9) |
Goodwill, Purchased Technolog_7
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 57 | $ 199 | $ 193 |
Cost of products sold | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 38 | 180 | 173 |
Research, development, and engineering | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 1 | 1 | 1 |
Marketing and selling | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 18 | 18 | 19 |
Operating Segments | Semiconductor Systems | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 43 | 184 | 185 |
Operating Segments | Applied Global Services | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 1 | 1 | 1 |
Operating Segments | Display and Adjacent Markets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 13 | $ 14 | $ 7 |
Goodwill, Purchased Technolog_8
Goodwill, Purchased Technology and Other Intangible Assets (Future Estimated Amortization Expense) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Future estimated amortization expense | ||
2020 | $ 52 | |
2021 | 39 | |
2022 | 24 | |
2023 | 11 | |
2024 | 10 | |
Thereafter | 20 | |
Carrying amount | $ 156 | $ 213 |
Borrowing Facilities and Debt_2
Borrowing Facilities and Debt (Narrative) (Details) | 12 Months Ended | |||
Oct. 27, 2019USD ($)extensioninterest_rate | Aug. 31, 2019USD ($) | Oct. 28, 2018USD ($) | Oct. 30, 2011USD ($) | |
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | $ 1,600,000,000 | |||
Amount outstanding | 0 | $ 0 | ||
Commercial paper program amount | $ 1,500,000,000 | |||
Current portion of long-term debt | 600,000,000 | 0 | ||
Commercial paper, corporate bonds and medium-term notes | ||||
Line of Credit Facility [Line Items] | ||||
Current portion of long-term debt | 0 | $ 0 | ||
Revolving Credit | ||||
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | 1,500,000,000 | |||
Foreign Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | $ 74,000,000 | |||
Line of Credit | Unsecured Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Available revolving credit agreement | $ 2,000,000,000 | |||
Extension period | 3 months | |||
Number of term extensions | extension | 2 | |||
Number of interest rates | interest_rate | 2 |
Borrowing Facilities and Debt_3
Borrowing Facilities and Debt (Debt Outstanding) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 |
Schedule of debt | ||
Current portion of long-term debt | $ 600 | $ 0 |
Long-term debt principal amount | 4,800 | 5,400 |
Long-term debt | 4,713 | 5,309 |
Total long-term debt | 5,313 | 5,309 |
Senior Notes | ||
Schedule of debt | ||
Long-term debt principal amount | 4,750 | 5,350 |
Total unamortized discount | (10) | (11) |
Total unamortized debt issuance costs | $ (27) | (30) |
Senior Notes | 2.625% Senior Notes Due 2020 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.625% | |
Schedule of debt | ||
Current portion of long-term debt | $ 600 | 0 |
Long-term debt principal amount | $ 0 | 600 |
Effective interest rate | 2.64% | |
Senior Notes | 4.300% Senior Notes Due 2021 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.30% | |
Schedule of debt | ||
Long-term debt principal amount | $ 750 | 750 |
Effective interest rate | 4.326% | |
Senior Notes | 3.900% Senior Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.90% | |
Schedule of debt | ||
Long-term debt principal amount | $ 700 | 700 |
Effective interest rate | 3.944% | |
Senior Notes | 3.300% Senior Notes Due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.30% | |
Schedule of debt | ||
Long-term debt principal amount | $ 1,200 | 1,200 |
Effective interest rate | 3.342% | |
Senior Notes | 5.100% Senior Notes Due 2035 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.10% | |
Schedule of debt | ||
Long-term debt principal amount | $ 500 | 500 |
Effective interest rate | 5.127% | |
Senior Notes | 5.850% Senior Notes Due 2041 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.85% | |
Schedule of debt | ||
Long-term debt principal amount | $ 600 | 600 |
Effective interest rate | 5.879% | |
Senior Notes | 4.350% Senior Notes Due 2047 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.35% | |
Schedule of debt | ||
Long-term debt principal amount | $ 1,000 | $ 1,000 |
Effective interest rate | 4.361% |
Stockholders' Equity, Compreh_3
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 29, 2017 | Jul. 30, 2017 | Apr. 30, 2017 | Jan. 29, 2017 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 29, 2018 | Oct. 30, 2017 | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | $ 6,845 | $ 9,630 | $ 7,413 | $ 6,845 | $ 9,630 | $ 7,413 | |||||||||||||
Adoption of new accounting standard | $ 1,553 | [1] | $ 0 | [2] | |||||||||||||||
Other comprehensive income (loss) before reclassifications | (46) | (84) | 66 | ||||||||||||||||
Amounts reclassified out of AOCI | 8 | 20 | (15) | ||||||||||||||||
Other comprehensive income (loss), net of tax | (38) | (64) | 51 | ||||||||||||||||
Ending Balance | $ 8,214 | $ 6,845 | $ 9,630 | 8,214 | 6,845 | 9,630 | |||||||||||||
Quarterly cash dividend declared (usd per share) | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | |||||||
Unrealized Gain (Loss) on Investments, Net | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | $ 7 | $ 53 | $ 30 | 7 | 53 | 30 | |||||||||||||
Adoption of new accounting standard | (17) | 5 | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | 22 | (66) | 24 | ||||||||||||||||
Amounts reclassified out of AOCI | (1) | 15 | (1) | ||||||||||||||||
Other comprehensive income (loss), net of tax | 21 | (51) | 23 | ||||||||||||||||
Ending Balance | $ 11 | $ 7 | $ 53 | 11 | 7 | 53 | |||||||||||||
Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | (9) | (11) | (18) | (9) | (11) | (18) | |||||||||||||
Adoption of new accounting standard | 0 | (2) | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | (10) | 5 | 13 | ||||||||||||||||
Amounts reclassified out of AOCI | 3 | (1) | (6) | ||||||||||||||||
Other comprehensive income (loss), net of tax | (7) | 4 | 7 | ||||||||||||||||
Ending Balance | (16) | (9) | (11) | (16) | (9) | (11) | |||||||||||||
Defined and Postretirement Benefit Plans | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | (137) | (120) | (141) | (137) | (120) | (141) | |||||||||||||
Adoption of new accounting standard | 0 | 0 | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | (57) | (23) | 29 | ||||||||||||||||
Amounts reclassified out of AOCI | 6 | 6 | (8) | ||||||||||||||||
Other comprehensive income (loss), net of tax | (51) | (17) | 21 | ||||||||||||||||
Ending Balance | (188) | (137) | (120) | (188) | (137) | (120) | |||||||||||||
Cumulative Translation Adjustments | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||
Adoption of new accounting standard | 0 | 0 | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | (1) | 0 | 0 | ||||||||||||||||
Amounts reclassified out of AOCI | 0 | 0 | 0 | ||||||||||||||||
Other comprehensive income (loss), net of tax | (1) | 0 | 0 | ||||||||||||||||
Ending Balance | 13 | 14 | 14 | 13 | 14 | 14 | |||||||||||||
AOCI Attributable to Parent | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||||||||||||||||||
Beginning Balance | $ (125) | $ (64) | $ (115) | (125) | (64) | (115) | |||||||||||||
Adoption of new accounting standard | $ (17) | [1] | $ 3 | [2] | |||||||||||||||
Other comprehensive income (loss), net of tax | (38) | (64) | 51 | ||||||||||||||||
Ending Balance | $ (180) | $ (125) | $ (64) | $ (180) | $ (125) | $ (64) | |||||||||||||
[1] | Represents the adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2016-16 Income Tax (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . See Note 1. | ||||||||||||||||||
[2] | Represents the reclassification adjustment related to the early adoption of Accounting Standards Update (ASU) 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. |
Stockholders' Equity, Compreh_4
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||||||||||||||
Oct. 27, 2019USD ($)$ / sharesshares | Jul. 28, 2019$ / shares | Apr. 28, 2019$ / shares | Jan. 27, 2019$ / shares | Oct. 28, 2018$ / shares | Jul. 29, 2018$ / shares | Apr. 29, 2018$ / shares | Jan. 28, 2018$ / shares | Oct. 29, 2017$ / shares | Jul. 30, 2017$ / shares | Apr. 30, 2017$ / shares | Jan. 29, 2017$ / shares | Oct. 27, 2019USD ($)employee_stock_purchase_planshares | Oct. 28, 2018USD ($)shares | Oct. 29, 2017USD ($)shares | Feb. 28, 2018USD ($) | |
Stock Repurchase Program | ||||||||||||||||
Authorized amount | $ | $ 6,000,000,000 | |||||||||||||||
Remaining authorized repurchase amount | $ | $ 1,900,000,000 | $ 1,900,000,000 | ||||||||||||||
Dividends | ||||||||||||||||
Quarterly cash dividend declared (usd per share) | $ / shares | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | ||||
Payments of dividends | $ | $ 771,000,000 | $ 605,000,000 | $ 430,000,000 | |||||||||||||
Employee Stock Purchase Plan | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 2 | |||||||||||||||
Employee Stock Purchase Plans | ||||||||||||||||
Purchase period | 6 months | |||||||||||||||
Number of shares issued under the ESPP (in shares) | 4,000,000 | 3,000,000 | 3,000,000 | |||||||||||||
Employee Stock | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Total unrecognized compensation expense | $ | $ 379,000,000 | $ 379,000,000 | ||||||||||||||
Weighted average period for unrecognized compensation expense to be recognized | 2 years 4 months 24 days | |||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Achievement of TSR goal (as a percent) | 100.00% | |||||||||||||||
Employee Stock | Employee Stock Purchase Plan | ||||||||||||||||
Employee Stock Purchase Plans | ||||||||||||||||
Purchase price of common stock, percent | 85.00% | |||||||||||||||
Stock Options | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Stock options scheduled to expire | 7 years | |||||||||||||||
Options granted (in shares) | 0 | 0 | 0 | |||||||||||||
Stock Options | Employee Stock Incentive Plan | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Number of shares available for grant | 66,000,000 | 66,000,000 | ||||||||||||||
Stock Options | Employee Stock Purchase Plan | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Number of shares available for grant | 13,000,000 | 13,000,000 | ||||||||||||||
Stock Options | Minimum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Stock options scheduled to be vested | 3 years | |||||||||||||||
Stock Options | Maximum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Stock options scheduled to be vested | 4 years | |||||||||||||||
Performance Shares/Performance Units | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Award measurement period | 3 years | |||||||||||||||
Weight of metric (as a percent) | 50.00% | |||||||||||||||
Additional performance-based awards to be earned upon certain levels of achievement (in shares) | 1,600,000 | 1,600,000 | ||||||||||||||
Performance Shares/Performance Units | Minimum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Award vesting rights as percentage of target amount | 0.00% | |||||||||||||||
Performance Shares/Performance Units | Maximum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Award vesting rights as percentage of target amount | 200.00% | |||||||||||||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | Minimum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Stock options scheduled to be vested | 3 years | |||||||||||||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | Maximum | ||||||||||||||||
Stock Options, Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||||||||||||
Stock options scheduled to be vested | 4 years | |||||||||||||||
United States | Employee Stock Purchase Plan | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 1 | |||||||||||||||
Non-US | Employee Stock Purchase Plan | ||||||||||||||||
Share-based Compensation | ||||||||||||||||
Number of employee stock purchase plans | employee_stock_purchase_plan | 1 |
Stockholders' Equity, Compreh_5
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Repurchases) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Equity [Abstract] | |||
Shares of common stock repurchased (in shares) | 60 | 102 | 28 |
Common stock repurchases | $ (2,403) | $ (5,283) | $ (1,172) |
Average price paid per share (in dollars per share) | $ 39.86 | $ 51.55 | $ 42.08 |
Stockholders' Equity, Compreh_6
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Share-based Compensation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Total share-based compensation and related tax benefits | |||
Total share-based compensation | $ 263 | $ 258 | $ 220 |
Income tax benefits recognized | $ 37 | $ 45 | $ 60 |
Stockholders' Equity, Compreh_7
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Effect of Share-based Compensation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | $ 263 | $ 258 | $ 220 |
Cost of products sold | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 89 | 87 | 69 |
Research, development, and engineering | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 99 | 96 | 83 |
Marketing and selling | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 31 | 31 | 28 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | $ 44 | $ 44 | $ 40 |
Stockholders' Equity, Compreh_8
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 - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | |||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 30, 2016 | |
Shares | ||||
Beginning Balance (shares) | 18 | 22 | 25 | |
Granted (shares) | 8 | 6 | 8 | |
Vested (shares) | (7) | (9) | (10) | |
Canceled (shares) | (1) | (1) | (1) | |
Ending Balance (shares) | 18 | 18 | 22 | 25 |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest (in shares) | 17 | |||
Weighted Average Grant Date Fair Value | ||||
Beginning of Period (in dollars per share) | $ 32.64 | $ 23.96 | $ 18.28 | |
Granted (in dollars per share) | 36 | 50.62 | 31.79 | |
Vested (in dollars per share) | 28.41 | 22.15 | 16.50 | |
Canceled (in dollars per share) | 34.59 | 30.19 | 21.25 | |
Ending Balance (in dollars per share) | 35.78 | $ 32.64 | $ 23.96 | $ 18.28 |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest (in dollars per share) | $ 35.31 | |||
Weighted Average Remaining Contractual Term | ||||
Weighted average remaining contractual term | 2 years 1 month 6 days | 2 years | 2 years 2 months 12 days | 2 years 3 months 18 days |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Weighted Average Remaining Contractual Term | 1 year 10 months 24 days | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value | $ 985 | $ 600 | $ 1,239 | $ 718 |
Expected to vest, Aggregate Intrinsic Value | $ 934 |
Stockholders' Equity, Compreh_9
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (ESPP Fair Value Assumptions) (Details) - Employee Stock Purchase Plan - $ / shares | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Weighted Average Assumptions Used for ESPP Granted | |||
Dividend yield | 1.99% | 1.68% | 0.99% |
Expected volatility | 35.50% | 34.40% | 26.30% |
Risk-free interest rate | 2.21% | 2.09% | 0.92% |
Expected life (in years) | 6 months | 6 months | 6 months |
Weighted average estimated fair value (in dollars per share) | $ 10.61 | $ 12.02 | $ 9.14 |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019USD ($)Plan | Oct. 28, 2018USD ($) | Oct. 29, 2017USD ($) | |
Employee Bonus Plans | |||
Charges to expense under Employee bonus plans | $ 292 | $ 382 | $ 449 |
Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits | |||
Company contributions expected for next fiscal year | $ 10 | ||
Executive Deferred Compensation Plans | |||
Number of unfunded plans | Plan | 2 | ||
Executive Deferred Compensation Plans | |||
Executive Deferred Compensation Plans | |||
Amounts payable under EDCP | $ 123 | 92 | |
Savings and Retirement Plan | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of match | 100.00% | ||
Employer matching contribution, percent of employees' gross pay | 3.00% | ||
Employer matching contribution, percent of match, second tier | 50.00% | ||
Percentage vested in matching contribution account | 100.00% | ||
401(K) Matching contributions | $ 49 | $ 45 | $ 38 |
Savings and Retirement Plan | Minimum | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of employees' gross pay, second tier | 4.00% | ||
Savings and Retirement Plan | Maximum | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of employees' gross pay, second tier | 6.00% |
Employee Benefit Plans (Benefit
Employee Benefit Plans (Benefit Obligations and Plan Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Change in projected benefit obligation | |||
Beginning projected benefit obligation | $ 524 | $ 506 | $ 495 |
Service cost | 11 | 12 | 13 |
Interest cost | 10 | 11 | 10 |
Plan participants’ contributions | 1 | 1 | 2 |
Actuarial (gain) loss | 84 | 24 | (35) |
Curtailments, settlements and special termination benefits | (1) | (1) | (1) |
Foreign currency exchange rate changes | (5) | (16) | 34 |
Benefits paid | (8) | (12) | (12) |
Plan amendments and business combinations | 1 | (1) | 0 |
Ending projected benefit obligation | 617 | 524 | 506 |
Ending accumulated benefit obligation | 578 | 490 | 472 |
Change in plan assets | |||
Beginning fair value of plan assets | 365 | 361 | 310 |
Return on plan assets | 30 | 17 | 18 |
Employer contributions | 27 | 11 | 16 |
Plan participants’ contributions | 1 | 1 | 2 |
Foreign currency exchange rate changes | (5) | (12) | 28 |
Divestitures, settlements and business combinations | (1) | (1) | (1) |
Benefits paid | (8) | (12) | (12) |
Ending fair value of plan assets | 409 | 365 | 361 |
Funded status | (208) | (159) | (145) |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 5 | 19 | 17 |
Current liability | (1) | (1) | (1) |
Noncurrent liability | (212) | (177) | (161) |
Total | (208) | (159) | (145) |
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period | |||
Actuarial loss | 12 | 8 | 6 |
Prior service credit | 0 | (1) | (4) |
Total | 12 | 7 | 2 |
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss | 226 | 161 | 141 |
Prior service credit | 0 | (2) | (4) |
Total | 226 | 159 | 137 |
Plans with projected benefit obligations in excess of plan assets | |||
Projected benefit obligation | 424 | 365 | 326 |
Fair value of plan assets | 211 | 186 | 142 |
Plans with accumulated benefit obligations in excess of plan assets | |||
Accumulated benefit obligation | 385 | 331 | 293 |
Fair value of plan assets | $ 211 | $ 186 | $ 142 |
Minimum | |||
Range of assumptions to determine benefit obligations | |||
Discount rate | 0.50% | 0.60% | 0.50% |
Rate of compensation increase | 2.30% | 2.40% | 2.20% |
Maximum | |||
Range of assumptions to determine benefit obligations | |||
Discount rate | 3.10% | 3.10% | 3.40% |
Rate of compensation increase | 3.60% | 3.50% | 3.50% |
Employee Benefit Plans (Plan As
Employee Benefit Plans (Plan Assets Allocation) (Details) | Oct. 27, 2019 | Oct. 28, 2018 |
Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 36.00% | 47.00% |
Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 45.00% | 32.00% |
Insurance contracts | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 9.00% | 10.00% |
Other investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 10.00% | 10.00% |
Cash | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 0.00% | 1.00% |
Employee Benefit Plans (Fair Va
Employee Benefit Plans (Fair Value of Plan Assets) (Details) - USD ($) $ in Millions | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 30, 2016 |
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | $ 409 | $ 365 | $ 361 | $ 310 |
Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 160 | 107 | ||
Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 14 | 14 | ||
Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 36 | 36 | $ 38 | |
Assets measured at net asset value | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 199 | 208 | ||
Total assets at fair value | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 210 | 157 | ||
Equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 90 | 86 | ||
Equity securities | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 90 | 86 | ||
Equity securities | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Equity securities | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 70 | 19 | ||
Debt securities | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 70 | 19 | ||
Debt securities | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Debt securities | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 36 | 36 | ||
Insurance contracts | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 36 | 36 | ||
Other investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 14 | 14 | ||
Other investments | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Other investments | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 14 | 14 | ||
Other investments | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Cash | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 2 | ||
Cash | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 2 | ||
Cash | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Cash | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | $ 0 | $ 0 |
Employee Benefit Plans (Level 3
Employee Benefit Plans (Level 3 Instruments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Change in plan assets | |||
Beginning fair value of plan assets | $ 365 | $ 361 | $ 310 |
Actual return on plan assets: | |||
Currency impact | 5 | 12 | (28) |
Ending fair value of plan assets | 409 | 365 | 361 |
Level 3 | |||
Change in plan assets | |||
Beginning fair value of plan assets | 36 | 38 | |
Actual return on plan assets: | |||
Relating to assets still held at reporting date | (3) | (1) | |
Purchases, sales, settlements, net | 4 | 0 | |
Currency impact | (1) | (1) | |
Ending fair value of plan assets | $ 36 | $ 36 | $ 38 |
Employee Benefit Plans (Net Per
Employee Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Components of net periodic benefit cost | |||
Service cost | $ 11 | $ 12 | $ 13 |
Interest cost | 10 | 11 | 10 |
Expected return on plan assets | (20) | (20) | (18) |
Amortization of actuarial loss and prior service credit | 7 | 3 | (10) |
Settlement and curtailment loss | 0 | 0 | 0 |
Net periodic benefit cost (income) | $ 8 | $ 6 | $ (5) |
Weighted average assumptions | |||
Discount rate | 1.98% | 2.16% | 1.88% |
Expected long-term return on assets | 5.40% | 5.41% | 5.38% |
Rate of compensation increase | 2.74% | 2.66% | 2.69% |
Employee Benefit Plans (Future
Employee Benefit Plans (Future Expected Benefit Payments) (Details) $ in Millions | Oct. 27, 2019USD ($) |
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | |
2020 | $ 12 |
2021 | 11 |
2022 | 12 |
2023 | 12 |
2024 | 12 |
2025-2029 | 83 |
Total | $ 142 |
Income Taxes (Components of Inc
Income Taxes (Components of Income Taxes) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Components of income from operations before income taxes | |||
U.S. | $ 363 | $ 389 | $ 510 |
Foreign | 2,906 | 4,007 | 3,306 |
Income before income taxes | 3,269 | 4,396 | 3,816 |
Current: | |||
U.S. | 240 | 1,021 | 64 |
Foreign | 260 | 117 | 236 |
State | 12 | 22 | 9 |
Total current provision for income taxes | 512 | 1,160 | 309 |
Deferred: | |||
U.S. | 8 | 151 | (11) |
Foreign | 46 | 57 | (7) |
State | (3) | (10) | 6 |
Total deferred provision (benefit) for income taxes | 51 | 198 | (12) |
Provision for income taxes | $ 563 | $ 1,358 | $ 297 |
Reconciliation between the statutory U.S.federal income tax rate to actual effective income tax rate | |||
Tax provision at U.S. statutory rate | 21.00% | 23.40% | 35.00% |
Changes in U.S. tax law | 0.00% | 25.30% | 0.00% |
Effect of foreign operations taxed at various rates | (5.90%) | (15.60%) | (25.30%) |
Changes in prior years' unrecognized tax benefits | 2.60% | (0.90%) | 0.10% |
Resolutions of prior years' income tax filings | (0.10%) | 0.20% | (1.80%) |
Research and other tax credits | (1.10%) | (0.80%) | (0.70%) |
Other | 0.70% | (0.70%) | 0.50% |
Effective income tax rate | 17.20% | 30.90% | 7.80% |
Deferred tax assets: | |||
Allowance for doubtful accounts | $ 8 | $ 8 | |
Inventory reserves and basis difference | 117 | 117 | |
Installation and warranty reserves | 11 | 7 | |
Intangible assets | 1,472 | 0 | |
Accrued liabilities | 15 | 20 | |
Deferred revenue | 36 | 12 | |
Tax credits | 264 | 236 | |
Deferred compensation | 98 | 79 | |
Share-based compensation | 36 | 37 | |
Other | 58 | 45 | |
Gross deferred tax assets | 2,115 | 561 | |
Valuation allowance | (257) | (230) | |
Total deferred tax assets | 1,858 | 331 | |
Deferred tax liabilities: | |||
Fixed assets | (65) | (48) | |
Intangible assets | 0 | (38) | |
Undistributed foreign earnings | (38) | (32) | |
Total deferred tax liabilities | (103) | (118) | |
Net deferred tax assets | 1,755 | 213 | |
Breakdown between current and non-current net deferred tax assets and liabilities | |||
Non-current deferred tax asset | 1,766 | 225 | |
Non-current deferred tax liability | (11) | (12) | |
Net deferred tax assets | 1,755 | 213 | |
Reconciliation of gross unrecognized tax benefits | |||
Beginning balance of gross unrecognized tax benefits | 374 | 391 | $ 320 |
Settlements with tax authorities | (1) | (152) | (42) |
Lapses of statutes of limitation | (2) | (37) | (15) |
Increases in tax positions for current year | 33 | 91 | 95 |
Increases in tax positions for prior years | 441 | 83 | 33 |
Decreases in tax positions for prior years | 0 | (2) | 0 |
Ending balance of gross unrecognized tax benefits | $ 845 | $ 374 | $ 391 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||
Jul. 28, 2019 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Income Tax Examination [Line Items] | ||||
GILTI benefit reversed | $ 96 | |||
Tax expense for transition tax and remeasurement of deferred tax assets | $ 1,100 | |||
Tax expense related to changes in uncertain tax positions | $ 87 | |||
Excess tax benefit | 42 | |||
Tax holiday benefit | $ 167 | |||
Tax holiday benefit per diluted share (in dollars per share) | $ 0.18 | |||
Increases in tax positions for prior years | $ 441 | 83 | $ 33 | |
Income tax penalties and interest expense (benefit) | 24 | 12 | 17 | |
Unrecognized tax benefits that would impact effective tax rate | 758 | 294 | 284 | |
Noncurrent Liabilities | ||||
Income Tax Examination [Line Items] | ||||
Interest and penalties related to uncertain tax positions | 50 | $ 26 | 46 | |
Research and development tax credit carryforwards | State and Local Jurisdiction | ||||
Income Tax Examination [Line Items] | ||||
Tax credit carryforwards | 264 | |||
Carried over until exhausted | State and Local Jurisdiction | ||||
Income Tax Examination [Line Items] | ||||
Tax credit carryforwards | 252 | |||
Carried over the next fifteen years | State and Local Jurisdiction | ||||
Income Tax Examination [Line Items] | ||||
Tax credit carryforwards | $ 11 | |||
Tax credit carryforward, term | 15 years | |||
SINGAPORE | ||||
Income Tax Examination [Line Items] | ||||
Foreign statutory income tax rate | 17.00% | |||
ISRAEL | Foreign Tax Authority | ||||
Income Tax Examination [Line Items] | ||||
Income tax paid or accrued | $ 158 | |||
Income tax expense from settlement with tax authorities | $ 6 | |||
ITALY | Foreign Tax Authority | ||||
Income Tax Examination [Line Items] | ||||
Income tax paid or accrued | 29 | |||
Income tax expense from settlement with tax authorities | $ 6 |
Income Taxes (Valuation Allowan
Income Taxes (Valuation Allowance) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Changes in allowance for doubtful accounts | |||
Increases | $ 0 | $ 0 | $ 0 |
Decreases | (3) | (1) | (17) |
Valuation Allowance of Deferred Tax Assets | |||
Changes in allowance for doubtful accounts | |||
Beginning balance | 230 | 227 | 207 |
Increases | 27 | 8 | 20 |
Decreases | 0 | (5) | 0 |
Ending balance | $ 257 | $ 230 | $ 227 |
Warranty, Guarantees, Commitm_3
Warranty, Guarantees, Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Total rent expense | $ 51 | $ 50 | $ 34 |
Products warranty period | 12 months | ||
Maximum potential amount of future payments for letters of credit or other guarantee instruments | $ 76 | ||
Parent guarantees to banks | $ 151 |
Warranty, Guarantees, Commitm_4
Warranty, Guarantees, Commitments and Contingencies (Future Minimum Lease Payments) (Details) $ in Millions | Oct. 27, 2019USD ($) |
Fiscal | |
2020 | $ 45 |
2021 | 34 |
2022 | 24 |
2023 | 21 |
2024 | 17 |
Thereafter | 30 |
Total | $ 171 |
Warranty, Guarantees, Commitm_5
Warranty, Guarantees, Commitments and Contingencies (Warranty Reserves) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Changes in the warranty reserves | |||
Beginning balance | $ 208 | $ 206 | $ 153 |
Provisions for warranty | 148 | 175 | 173 |
Changes in reserves related to preexisting warranty | 7 | 3 | 1 |
Consumption of reserves | (167) | (176) | (121) |
Ending balance | $ 196 | $ 208 | $ 206 |
Industry Segment Operations (Na
Industry Segment Operations (Narrative) (Details) | 12 Months Ended |
Oct. 27, 2019segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Industry Segment Operations (Re
Industry Segment Operations (Reportable Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Segment Reporting Information [Line Items] | |||||||||||
Net Sales | $ 3,754 | $ 3,562 | $ 3,539 | $ 3,753 | $ 3,759 | $ 4,162 | $ 4,579 | $ 4,205 | $ 14,608 | $ 16,705 | $ 14,698 |
Operating Income (Loss) | 3,350 | 4,491 | 3,936 | ||||||||
Deprecation/Amortization | 363 | 457 | 407 | ||||||||
Capital Expenditures | 441 | 622 | 345 | ||||||||
Accounts Receivable | 2,533 | 2,323 | 2,533 | 2,323 | 2,338 | ||||||
Inventories | 3,474 | 3,721 | 3,474 | 3,721 | 2,707 | ||||||
Operating Segments | Semiconductor Systems | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net Sales | 9,027 | 10,577 | 9,544 | ||||||||
Operating Income (Loss) | 2,464 | 3,441 | 3,177 | ||||||||
Deprecation/Amortization | 202 | 303 | 286 | ||||||||
Capital Expenditures | 168 | 168 | 150 | ||||||||
Accounts Receivable | 1,543 | 1,597 | 1,543 | 1,597 | 1,626 | ||||||
Inventories | 1,703 | 2,215 | 1,703 | 2,215 | 1,638 | ||||||
Operating Segments | Applied Global Services | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net Sales | 3,854 | 3,754 | 3,014 | ||||||||
Operating Income (Loss) | 1,101 | 1,102 | 817 | ||||||||
Deprecation/Amortization | 25 | 21 | 15 | ||||||||
Capital Expenditures | 47 | 33 | 21 | ||||||||
Accounts Receivable | 790 | 630 | 790 | 630 | 564 | ||||||
Inventories | 1,535 | 1,243 | 1,535 | 1,243 | 762 | ||||||
Operating Segments | Display and Adjacent Markets | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net Sales | 1,651 | 2,298 | 2,042 | ||||||||
Operating Income (Loss) | 294 | 574 | 585 | ||||||||
Deprecation/Amortization | 22 | 20 | 12 | ||||||||
Capital Expenditures | 43 | 39 | 17 | ||||||||
Accounts Receivable | 246 | 142 | 246 | 142 | 190 | ||||||
Inventories | 214 | 246 | 214 | 246 | 279 | ||||||
Corporate and Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net Sales | 76 | 76 | 98 | ||||||||
Operating Income (Loss) | (509) | (626) | (643) | ||||||||
Deprecation/Amortization | 114 | 113 | 94 | ||||||||
Capital Expenditures | 183 | 382 | 157 | ||||||||
Accounts Receivable | (46) | (46) | (46) | (46) | (42) | ||||||
Inventories | $ 22 | $ 17 | $ 22 | $ 17 | $ 28 |
Industry Segment Operations (Ne
Industry Segment Operations (Net Sales and Operating Income (Loss)) (Details) - Semiconductor Systems - Net sales | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Segment Reporting Information [Line Items] | |||
Percentage of net sales | 100.00% | 100.00% | 100.00% |
Foundry, logic and other | |||
Segment Reporting Information [Line Items] | |||
Percentage of net sales | 52.00% | 36.00% | 51.00% |
Dynamic random-access memory (DRAM) | |||
Segment Reporting Information [Line Items] | |||
Percentage of net sales | 22.00% | 27.00% | 15.00% |
Flash memory | |||
Segment Reporting Information [Line Items] | |||
Percentage of net sales | 26.00% | 37.00% | 34.00% |
Industry Segment Operations (Se
Industry Segment Operations (Segment Reconciling Items) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||||||||
Net Sales | $ 3,754 | $ 3,562 | $ 3,539 | $ 3,753 | $ 3,759 | $ 4,162 | $ 4,579 | $ 4,205 | $ 14,608 | $ 16,705 | $ 14,698 |
Share-based compensation | (263) | (258) | (220) | ||||||||
Income from operations | 3,350 | 4,491 | 3,936 | ||||||||
Corporate and Other | |||||||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||||||||
Net Sales | 76 | 76 | 98 | ||||||||
Unallocated cost of products sold and expenses | (322) | (444) | (521) | ||||||||
Share-based compensation | (263) | (258) | (220) | ||||||||
Income from operations | $ (509) | $ (626) | $ (643) |
Industry Segment Operations (_2
Industry Segment Operations (Net Sales and Long-lived Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | $ 3,754 | $ 3,562 | $ 3,539 | $ 3,753 | $ 3,759 | $ 4,162 | $ 4,579 | $ 4,205 | $ 14,608 | $ 16,705 | $ 14,698 |
Long-lived assets | 1,706 | 1,561 | 1,706 | 1,561 | |||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,871 | 1,413 | 1,512 | ||||||||
Long-lived assets | 1,539 | 1,414 | 1,539 | 1,414 | |||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 4,277 | 5,047 | 2,758 | ||||||||
Long-lived assets | 20 | 13 | 20 | 13 | |||||||
Korea | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,929 | 3,539 | 4,087 | ||||||||
Long-lived assets | 24 | 21 | 24 | 21 | |||||||
Taiwan | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 2,965 | 2,504 | 3,369 | ||||||||
Long-lived assets | 56 | 29 | 56 | 29 | |||||||
Japan | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 2,198 | 2,396 | 1,519 | ||||||||
Long-lived assets | 16 | 9 | 16 | 9 | |||||||
Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 820 | 1,009 | 828 | ||||||||
Long-lived assets | 28 | 50 | 28 | 50 | |||||||
Southeast Asia | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 548 | 797 | 625 | ||||||||
Long-lived assets | 23 | 25 | 23 | 25 | |||||||
Total outside United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 12,737 | 15,292 | $ 13,186 | ||||||||
Long-lived assets | $ 167 | $ 147 | $ 167 | $ 147 |
Industry Segment Operations (Pe
Industry Segment Operations (Percentage by Customer) (Details) - Net sales - Customer Concentration Risk | 12 Months Ended | ||
Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Samsung Electronics Co., Ltd. | |||
Entity-Wide Revenue, Major Customer [Line Items] | |||
Percentage of net sales | 13.00% | 23.00% | |
Taiwan Semiconductor Manufacturing Company Limited | |||
Entity-Wide Revenue, Major Customer [Line Items] | |||
Percentage of net sales | 14.00% | 16.00% | |
Intel Corporation | |||
Entity-Wide Revenue, Major Customer [Line Items] | |||
Percentage of net sales | 12.00% | 11.00% |
Unaudited Quarterly Consolida_3
Unaudited Quarterly Consolidated Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2019 | Jul. 28, 2019 | Apr. 28, 2019 | Jan. 27, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Jan. 28, 2018 | Oct. 27, 2019 | Oct. 28, 2018 | Oct. 29, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 3,754 | $ 3,562 | $ 3,539 | $ 3,753 | $ 3,759 | $ 4,162 | $ 4,579 | $ 4,205 | $ 14,608 | $ 16,705 | $ 14,698 |
Gross profit | 1,634 | 1,557 | 1,530 | 1,665 | 1,657 | 1,864 | 2,056 | 1,940 | 6,386 | 7,517 | 6,612 |
Net income | $ 698 | $ 571 | $ 666 | $ 771 | $ 757 | $ 1,016 | $ 1,100 | $ 165 | $ 2,706 | $ 3,038 | $ 3,519 |
Earnings per share: diluted (in dollars per share) | $ 0.75 | $ 0.61 | $ 0.70 | $ 0.80 | $ 0.77 | $ 1.01 | $ 1.06 | $ 0.15 | $ 2.86 | $ 2.96 | $ 3.25 |
Uncategorized Items - amat-2019
Label | Element | Value | [2] |
Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (3,000,000) | [1] |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,570,000,000 | [3] |
[1] | Represents the reclassification adjustment related to the early adoption of Accounting Standards Update (ASU) 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. | ||
[2] | Retained earnings balance as of October 30, 2016, October 29, 2017 and October 28, 2018 included increases of $196 million, $281 million and $6 million, respectively, related to the adoption of the standard related to revenue recognition. | ||
[3] | Represents the adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2016-16 Income Tax (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . See Note 1. |