Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables)

6 Months Ended

Apr. 28, 2013

Equity [Abstract]

Components of accumulated other comprehensive loss, after-tax basis

Components of accumulated other comprehensive income (loss), on an after-tax basis where applicable, were as follows:

	April 28, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	23		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	8			1
Pension liability	(92		)	(90		)
Cumulative translation adjustments	7			12
	$	(54	)	$	(61	)

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases for the periods indicated:

	Three Months Ended				Six Months Ended
	April 28, 2013		April 29, 2012		April 28, 2013		April 29, 2012
	(In millions, except per share amounts)
Shares of common stock repurchased	8		16		12		34
Cost of stock repurchased	$	100	$	200	$	148	$	400
Average price paid per share	$	13.41	$	12.33	$	12.58	$	11.60

Total share-based compensation and related tax benefits

Total share-based compensation and related tax benefits were as follows:

	Three Months Ended				Six Months Ended
	April 28, 2013		April 29, 2012		April 28, 2013		April 29, 2012
	(In millions)
Share-based compensation	$	39	$	43	$	81	$	96
Tax benefit recognized	$	11	$	12	$	23	$	27

Effect of share-based compensation on the results of operations

The effect of share-based compensation on the results of operations for the three and six months ended April 28, 2013 and April 29, 2012 was as follows:

	Three Months Ended				Six Months Ended
	April 28, 2013		April 29, 2012		April 28, 2013		April 29, 2012
	(In millions)
Cost of products sold	$	12	$	14	$	24	$	27
Research, development, and engineering	13		13		25		26
Selling, general and administrative	14		16		27		43
Restructuring charge	—		—		5		—
Total	$	39	$	43	$	81	$	96

Stock option activity

Stock option activity for the six months ended April 28, 2013 was as follows:

	Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding at October 28, 2012	21		$	10.53
Granted	—		$	—
Exercised	(6	)	$	8.04
Canceled and forfeited	(4	)	$	18.26
Outstanding at April 28, 2013	11		$	9.35
Exercisable at April 28, 2013	10		$	9.44

Performance-based awards

A summary of the performance-based awards approved by the Committee is presented below:

	Number of Performance-Based Awards Granted
Fiscal Year Granted	Performance Shares/Performance Units	Shares of Restricted Stock	Percent Earned as of April 28, 2013*
	(in millions)
2013	3	—	0%
2012	3	1	0%
2011	2	0.1	100%
2010	2	0.1	82%

___________________

* subject to additional time-based vesting requirements

Restricted stock units and restricted stock activity

A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the six months ended April 28, 2013 is presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 years
Granted	17		$	10.20
Vested	(9	)	$	11.59
Canceled	(4	)	$	11.35
Non-vested restricted stock units, restricted stock, performance shares and performance units at April 28, 2013	40		$	10.97	2.9 years

Underlying assumptions used in ESPP valuation model

Underlying assumptions used in the model are outlined in the following table:

	Three and Six Months Ended
	April 28, 2013	April 29, 2012
ESPP:
Dividend yield	2.94%	2.94%
Expected volatility	24.3%	33.0%
Risk-free interest rate	0.12%	0.12%
Expected life (in years)	0.5	0.5