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

6 Months Ended

Apr. 27, 2014

Equity [Abstract]

Components of accumulated other comprehensive loss, after-tax basis

Changes in the components of AOCI, net of tax, were as follows:

	Unrealized Gain on Investments, Net			Unrealized Gain on Derivative Instruments Qualifying as Cash Flow Hedges			Pension Liability			Cumulative Translation Adjustments			Total
	(in millions)
Balance at October 27, 2013	$	25		$	2		$	(72	)	$	7		$	(38	)
Other comprehensive income (loss) before reclassifications	5			3			—			(1		)	7
Amounts reclassified out of AOCI	(5		)	(5		)	—			—			(10		)
Other comprehensive loss, net of tax	—			(2		)	—			(1		)	(3		)
Balance at April 27, 2014	$	25		$	—		$	(72	)	$	6		$	(41	)

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases for the three and six months ended April 28, 2013:

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

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 27, 2014		April 28, 2013		April 27, 2014		April 28, 2013
	(In millions)
Share-based compensation	$	42	$	39	$	88	$	81
Tax benefit recognized	$	12	$	11	$	25	$	23

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 27, 2014 and April 28, 2013 was as follows:

	Three Months Ended				Six Months Ended
	April 27, 2014		April 28, 2013		April 27, 2014		April 28, 2013
	(In millions)
Cost of products sold	$	13	$	12	$	27	$	24
Research, development, and engineering	16		13		33		25
Marketing and selling	5		5		11		10
General and administrative	8		9		17		17
Restructuring charge	—		—		—		5
Total	$	42	$	39	$	88	$	81

Stock option activity

Stock option activity for the six months ended April 27, 2014 was as follows:

	Shares		Weighted Average Exercise Price
	(In millions, except per share amounts)
Outstanding at October 27, 2013	6		$	9.12
Exercised	(3	)	$	7.98
Canceled and forfeited	(1	)	$	15.40
Outstanding at April 27, 2014	2		$	10.34
Exercisable at April 27, 2014	1		$	5.84

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 April 27, 2014*
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%

___________________

* 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 27, 2014 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 27, 2013	38		$	11.11	2.4 years
Granted	9		$	16.34
Vested	(11	)	$	11.03
Canceled	(2	)	$	11.43
Non-vested restricted stock units, restricted stock, performance shares and performance units at April 27, 2014	34		$	12.27	2.7 years

Significant valuation assumptions in relation to ESPP

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

	Three and Six Months Ended
	April 27, 2014	April 28, 2013
ESPP:
Dividend yield	2.14%	2.94%
Expected volatility	25.3%	24.3%
Risk-free interest rate	0.08%	0.12%
Expected life (in years)	0.5	0.5