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Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables)
 9 Months Ended
Jul. 29, 2018
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 (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges
 
Defined and Postretirement Benefit Plans
 
Cumulative Translation Adjustments
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balance as of October 29, 2017
$
53

 
$
(11
)
 
$
(120
)
 
$
14

 
$
(64
)
 Adoption of new accounting standards (a)
5

 
(2
)
 
—

 
—

 
3

 
 
 
 
 
 
 
 
 
 
   Other comprehensive loss before reclassifications
(7
)
 
(4
)
 
—

 
—

 
(11
)
   Amounts reclassified out of AOCI
(12
)
 
9

 
(2
)
 
—

 
(5
)
Other comprehensive loss, net of tax
(19
)
 
5

 
(2
)
 
—

 
(16
)
 
 
 
 
 
 
 
 
 
 
Balance as of July 29, 2018
$
39

 
$
(8
)
 
$
(122
)
 
$
14

 
$
(77
)

(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. See Note 1.
 
Unrealized Gain 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 as of October 30, 2016
$
30

 
$
(18
)
 
$
(141
)
 
$
14

 
$
(115
)
Other comprehensive income before reclassifications
23

 
6

 
—

 
—

 
29

Amounts reclassified out of AOCI
2

 
(5
)
 
(12
)
 
—

 
(15
)
Other comprehensive income (loss), net of tax
25

 
1

 
(12
)
 
—

 
14

Balance as of July 30, 2017
$
55

 
$
(17
)
 
$
(153
)
 
$
14

 
$
(101
)
Summary of stock repurchases
The following table summarizes Applied’s stock repurchases for the three and nine months ended July 29, 2018 and July 30, 2017:
 
Three Months Ended
 
Nine Months Ended
 
July 29,
2018
 
July 30,
2017
 
July 29,
2018
 
July 30,
2017
 
 
 
 
 
 
 
 
 
(in millions, except per share amount)
Shares of common stock repurchased
25

 
9

 
84

 
20

Cost of stock repurchased
$
1,250

 
$
375

 
$
4,532

 
$
787

Average price paid per share
$
49.31

 
$
44.34

 
$
53.72

 
$
39.48
Effect of share-based compensation on the results of operations
The effect of share-based compensation on the results of operations was as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
July 29,
2018
 
July 30,
2017
 
July 29,
2018
 
July 30,
2017
 
 
 
 
 
 
 
 
 
(In millions)
Cost of products sold
$
22

 
$
18

 
$
65

 
$
51

Research, development and engineering
24

 
20

 
72

 
61

Marketing and selling
7

 
7

 
23

 
21

General and administrative
11

 
10

 
33

 
29

Total share-based compensation
$
64

 
$
55

 
$
193

 
$
162
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 29, 2018 is presented below:
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
 
 
 
 
(In millions, except per share amounts)
Outstanding as of October 29, 2017
22

 
$
23.96

Granted
6

 
$
51.63

Vested
(8
)
 
$
22.03

Canceled
(1
)
 
$
29.63

Outstanding as of July 29, 2018
19

 
$
32.45
Employee Stock Purchase Plan Valuation Assumptions
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:
 
 
 
 
 
Nine Months Ended
 
July 29, 2018
 
July 30, 2017
ESPP:
 
 
 
Dividend yield
1.40%
 
1.09%
Expected volatility
35.5%
 
24.9%
Risk-free interest rate
1.83%
 
0.78%
Expected life (in years)
0.5
 
0.5
Weighted average estimated fair value
$14.26
 
$8.08