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

12 Months Ended

Oct. 31, 2021

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 28, 2018	$	7	$	(9)	$	(137)	$	14	(125)
Adoption of new accounting standards (a)	(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)


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


Other comprehensive income (loss) before reclassifications	(14)		28		20		—		34
Amounts reclassified out of AOCI	(7)		2		10		—		5
Other comprehensive income (loss), net of tax	(21)		30		30		—		39
Balance at October 31, 2021	$	(1)	$	(103)	$	(169)	$	13	$	(260)

(a) - 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:


	2021		2020		2019

	(In millions, except per share amounts)
Shares of common stock repurchased	28		12		60
Cost of stock repurchased	$	3,750	$	649	$	2,403
Average price paid per share	$	134.03	$	56.32	$	39.86

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:


	2021		2020		2019

	(In millions)
Cost of products sold	$	118	$	103	$	89
Research, development, and engineering	129		116		99
Marketing and selling	43		36		31
General and administrative	56		52		44

Total share-based compensation	$	346	$	307	$	263

Income tax benefits recognized	$	43	$	39	$	37

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 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
Granted	5	$	92.04
Vested	(6)	$	43.11
Canceled	(1)	$	59.41
Non-vested restricted stock units, restricted stock, performance shares and performance units at October 31, 2021	13	$	63.29	2.2 years	$	1,752
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest	13	$	63.37	2.0 years	$	1,724

Significant valuation assumptions in relation to ESPP

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


	2021		2020		2019
ESPP:
Dividend yield	0.72	%	1.41	%	1.99	%
Expected volatility	41.3	%	48.2	%	35.5	%
Risk-free interest rate	0.05	%	0.58	%	2.21	%
Expected life (in years)	0.5		0.5		0.5
Weighted average estimated fair value	$33.77		$17.30		$10.61