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

12 Months Ended

Oct. 27, 2013

Equity [Abstract]

Components of accumulated other comprehensive loss, after-tax basis

Components of accumulated other comprehensive loss, on an after-tax basis, were as follows:

	October 27, 2013			October 28, 2012
	(In millions)
Unrealized gain on investments, net	$	25		$	16
Unrealized gain on derivative instruments qualifying as cash flow hedges	2			1
Pension liability	(72		)	(90		)
Cumulative translation adjustments	7			12
	$	(38	)	$	(61	)

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases:

	2013		2012		2011
	(In millions, except per share amounts)
Shares of common stock repurchased	18		126		36
Cost of stock repurchased	$	245	$	1,416	$	468
Average price paid per share	$	13.60	$	11.22	$	12.88

Total share-based compensation and related tax benefits

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

	2013		2012		2011
	(In millions)
Share-based compensation	$	162	$	182	$	146
Tax benefit recognized	$	45	$	52	$	42

Effect of share-based compensation on the results of operations

The effect of share-based compensation on the results of operations for fiscal 2013, 2012, and 2011 was as follows:

	2013		2012		2011
	(In millions)
Cost of products sold	$	50	$	54	$	48
Research, development, and engineering	53		54		46
Marketing and selling	20		22		16
General and administrative	34		52		36
Restructuring charge	5		—		—
Total	$	162	$	182	$	146

Weighted average assumptions used for stock options assumed

he weighted average assumptions used in the model for the stock options granted and assumed are outlined below:

	2013		2012
Stock Options:
Dividend yield	2.7	%	2.6	%
Expected volatility	29.5	%	38.7	%
Risk-free interest rate	1.44	%	0.52	%
Expected life (in years)	4.5		3.3

Information with repsect to stock options

Information with respect to stock options is as follows:

	2013		2012		2011
	(In millions)
Aggregate intrinsic value of outstanding stock options	$	49	$	43	$	58
Total intrinsic value of stock options exercised	$	63	$	21	$	23
Total fair value of stock options vested	$	4	$	41	$	17
Cash received from stock option exercises	$	88	$	33	$	41
Actual tax benefit realized from options exercised	$	19	$	7	$	11

Stock option activity

Stock option activity for fiscal 2013, 2012 and 2011 was as follows:

	2013				2012				2011
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding, beginning of year	21		$	10.53	30		$	13.05	51		$	15.04
Granted and assumed in Varian acquisition	1		$	15.06	5		$	4.85	—		$	—
Exercised	(11	)	$	8.16	(4	)	$	7.30	(5	)	$	9.21
Canceled and forfeited	(5	)	$	17.62	(10	)	$	16.76	(16	)	$	20.28
Outstanding, end of year	6		$	9.12	21		$	10.53	30		$	13.05
Exercisable, end of year	5		$	7.90	20		$	10.71	24		$	14.23

Options outstanding and exercisable

The following table summarizes information with respect to options outstanding and exercisable at October 27, 2013:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In millions)			(In years)	(In millions)		(In millions)			(In millions)
$3.09 — $9.99	5	$	7.23	1.47	$	46	4	$	7.26	$	44
$10.00 — $19.99	1	$	15.00	5.55	3		1	$	14.77	1
	6	$	9.12	2.38	$	49	5	$	7.90	$	45
Options exercisable and expected to become exercisable	6	$	8.95	2.25	$	49

Summary of 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 October 27, 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 fiscal 2013, 2012 and 2011 are presented below:

	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In millions, except per share amounts)
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 31, 2010	18		$	13.33	2.8 years	$	227
Granted	17		$	12.62
Vested	(5	)	$	14.64
Canceled	(2	)	$	13.11
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 30, 2011	28		$	12.64	2.8 years	$	345
Granted	19		$	10.61
Vested	(9	)	$	12.87
Canceled	(2	)	$	12.26
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012	36		$	11.53	2.6 years	$	376
Granted	19		$	10.55
Vested	(11	)	$	11.44
Canceled	(6	)	$	11.28
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2013	38		$	11.11	2.4 years	$	662
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	34		$	10.93	2.4 years	$	594

Significant valuation assumptions in relation to ESPP

Underlying assumptions used in the model for fiscal 2013, 2012 and 2011 are outlined in the following table:

	2013		2012		2011
ESPP:
Dividend yield	2.80	%	3.01	%	2.53	%
Expected volatility	24.8	%	29.6	%	31.1	%
Risk-free interest rate	0.09	%	0.13	%	0.09	%
Expected life (in years)	0.5		0.5		0.5