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

12 Months Ended

Oct. 27, 2019

Components of accumulated other comprehensive income, net of tax

Changes in the components of accumulated other comprehensive income (AOCI), net of tax, were as follows:


	Unrealized Gain (Loss) 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 at October 30, 2016	$	30	$	(18)	$	(141)	$	14	(115)
Other comprehensive income (loss) before reclassifications	24		13		29		—		66
Amounts reclassified out of AOCI	(1)		(6)		(8)		—		(15)
Other comprehensive income (loss), net of tax	23		7		21		—		51
Balance at October 29, 2017	$	53	$	(11)	$	(120)	$	14	$	(64)
Adoption of new accounting standards (a)	5		(2)		—		—		3

Other comprehensive income (loss) before reclassifications	(66)		5		(23)		—		(84)
Amounts reclassified out of AOCI	15		(1)		6		—		20
Other comprehensive income, net of tax	(51)		4		(17)		—		(64)
Balance at October 28, 2018	$	7	$	(9)	$	(137)	$	14	$	(125)
Adoption of new accounting standards (b)	(17)		—		—		—		(17)

Other comprehensive income (loss) before reclassifications	22		(10)		(57)		(1)		(46)
Amounts reclassified out of AOCI	(1)		3		6		—		8
Other comprehensive income (loss), net of tax	21		(7)		(51)		(1)		(38)
Balance at October 27, 2019	$	11	$	(16)	$	(188)	$	13	$	(180)

(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.

(b) - Represents the reclassification adjustment related to the adoption of Accounting Standard Update (ASU) 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities in the first quarter of fiscal 2019. See Note 1.

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases for each fiscal year:


	2019		2018		2017

	(In millions, except per share amounts)
Shares of common stock repurchased	60		102		28
Cost of stock repurchased	$	2,403	$	5,283	$	1,172
Average price paid per share	$	39.86	$	51.55	$	42.08

Effect of share-based compensation on the results of operations by expense type

Applied recognized share-based compensation expense related to equity awards and ESPP shares. The effect of share-based compensation on the results of operations and the related tax benefits for each fiscal year were as follows:


	2019		2018		2017

	(In millions)
Cost of products sold	$	89	$	87	$	69
Research, development, and engineering	99		96		83
Marketing and selling	31		31		28
General and administrative	44		44		40

Total share-based compensation	$	263	$	258	$	220

Income tax benefits recognized	$	37	$	45	$	60

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 is 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 30, 2016	25	$	18.28	2.3 years	$	718
Granted	8	$	31.79
Vested	(10)	$	16.50
Canceled	(1)	$	21.25
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 29, 2017	22	$	23.96	2.2 years	$	1,239
Granted	6	$	50.62
Vested	(9)	$	22.15
Canceled	(1)	$	30.19
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2018	18	$	32.64	2.0 years	$	600
Granted	8	$	36.00
Vested	(7)	$	28.41
Canceled	(1)	$	34.59
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2019	18	$	35.78	2.1 years	$	985
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	17	$	35.31	1.9 years	$	934

Significant valuation assumptions in relation to ESPP

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


	2019		2018		2017
ESPP:
Dividend yield	1.99	%	1.68	%	0.99	%
Expected volatility	35.5	%	34.4	%	26.3	%
Risk-free interest rate	2.21	%	2.09	%	0.92	%
Expected life (in years)	0.5		0.5		0.5
Weighted average estimated fair value	$10.61		$12.02		$9.14