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

12 Months Ended

Oct. 25, 2020

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 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 (loss), 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, net of tax	21		(7)		(51)		(1)		(38)
Balance at October 27, 2019	$	11	$	(16)	$	(188)	$	13	$	(180)


Other comprehensive income (loss) before reclassifications	16		(115)		(21)		—		(120)
Amounts reclassified out of AOCI	(7)		(2)		10		—		1
Other comprehensive income (loss), net of tax	9		(117)		(11)		—		(119)
Balance at October 25, 2020	$	20	$	(133)	$	(199)	$	13	$	(299)

(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.

Summary of stock repurchases

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


	2020		2019		2018

	(In millions, except per share amounts)
Shares of common stock repurchased	12		60		102
Cost of stock repurchased	$	649	$	2,403	$	5,283
Average price paid per share	$	56.32	$	39.86	$	51.55

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:


	2020		2019		2018

	(In millions)
Cost of products sold	$	103	$	89	$	87
Research, development, and engineering	116		99		96
Marketing and selling	36		31		31
General and administrative	52		44		44

Total share-based compensation	$	307	$	263	$	258

Income tax benefits recognized	$	39	$	37	$	45

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 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
Granted	6	$	53.89
Vested	(8)	$	31.25
Canceled	(1)	$	42.61
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2020	15	$	45.36	2.2 years	$	914
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	14	$	45.51	2.1 years	$	871

Significant valuation assumptions in relation to ESPP

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


	2020		2019		2018
ESPP:
Dividend yield	1.41	%	1.99	%	1.68	%
Expected volatility	48.2	%	35.5	%	34.4	%
Risk-free interest rate	0.58	%	2.21	%	2.09	%
Expected life (in years)	0.5		0.5		0.5
Weighted average estimated fair value	$17.30		$10.61		$12.02