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

9 Months Ended

Jul. 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:

	July 28, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	19		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	6			1
Pension liability	(92		)	(90		)
Cumulative translation adjustments	6			12
	$	(61	)	$	(61	)

Summary of stock repurchases

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

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions, except per share amounts)
Shares of common stock repurchased	3		47		15		81
Cost of stock repurchased	$	50	$	500	$	198	$	900
Average price paid per share	$	15.33	$	10.71	$	13.18	$	11.09

Total share-based compensation and related tax benefits

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

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Share-based compensation	$	40	$	42	$	121	$	138
Tax benefit recognized	$	11	$	12	$	34	$	39

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 nine months ended July 28, 2013 and July 29, 2012 was as follows:

	Three Months Ended				Nine Months Ended
	July 28, 2013		July 29, 2012		July 28, 2013		July 29, 2012
	(In millions)
Cost of products sold	$	13	$	13	$	37	$	40
Research, development, and engineering	14		14		39		40
Marketing and selling	5		5		15		17
General and administrative	8		10		25		41
Restructuring charge	—		—		5		—
Total	$	40	$	42	$	121	$	138

Stock option activity

Stock option activity for the nine months ended July 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	(10	)	$	8.00
Canceled and forfeited	(5	)	$	17.63
Outstanding at July 28, 2013	6		$	8.69
Exercisable at July 28, 2013	6		$	8.77

Performance-based awards

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

	Number of Performance-Based Awards Granted		Percent of Performance-Based Awards Earned as of July 28, 2013*
Fiscal Year Granted	Performance Shares/Performance Units	Shares of Restricted Stock
	(in millions)
2013	3	—	0%
2012	3	1	14%
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 nine months ended July 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	18		$	10.36
Vested	(11	)	$	11.46
Canceled	(5	)	$	11.33
Non-vested restricted stock units, restricted stock, performance shares and performance units at July 28, 2013	38		$	11.03	2.7 years

Underlying assumptions used in ESPP valuation model

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

	Nine Months Ended
	July 28, 2013	July 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