Income Taxes (Tables)

12 Months Ended

Oct. 30, 2022

Income Tax Disclosure [Abstract]

Components of income from operations before income taxes

The components of income before income taxes for each fiscal year were as follows:

 

	2022		2021		2020
	(In millions)
U.S.	$	1,171	$	512	$	92
Foreign	6,428		6,259		4,074
	$	7,599	$	6,771	$	4,166

Components of the provision for income taxes

The components of the provision for income taxes for each fiscal year were as follows:

	2022		2021		2020
	(In millions)
Current:
U.S.	$	590	$	462	$	196
Foreign	275		344		263
State	14		17		20
	879		823		479
Deferred:
U.S.	(62)		(3)		(3)
Foreign	265		67		76
State	(8)		(4)		(5)
	195		60		68
	$	1,074	$	883	$	547

Effective income tax rate continuing operations tax rate reconciliation

A reconciliation between the statutory U.S. federal income tax rate and Applied’s actual effective income tax rate for each fiscal year is presented below:

 

	2022		2021		2020
Tax provision at U.S. statutory rate	21.0	%	21.0	%	21.0	%
Effect of foreign operations taxed at various rates	(4.4)		(7.0)		(5.9)
Changes in prior years’ unrecognized tax benefits	(0.9)		0.2		0.5
Resolutions of prior years’ income tax filings	(0.2)		(0.1)		(1.0)
Research and other tax credits	(1.0)		(0.9)		(1.3)
Other	(0.4)		(0.2)		(0.2)
	14.1	%	13.0	%	13.1	%

Components of deferred income tax assets and liabilities

The components of deferred income tax assets and liabilities were as follows: 

	October 30, 2022		October 31, 2021
	(In millions)
Deferred tax assets:
Allowance for doubtful accounts	$	5	$	4
Inventory reserves and basis difference	131		112
Installation and warranty reserves	29		29
Intangible assets	984		1,281
Accrued liabilities	35		31
Deferred revenue	82		25
Tax credits	453		369
Deferred compensation	125		133
Share-based compensation	42		34
Lease liability	81		61
Other	67		89
Gross deferred tax assets	2,034		2,168
Valuation allowance	(460)		(361)
Total deferred tax assets	1,574		1,807
Deferred tax liabilities:
Fixed assets	(111)		(93)
Right of use assets	(80)		(62)
Undistributed foreign earnings	(39)		(37)
Total deferred tax liabilities	(230)		(192)
Net deferred tax assets	$	1,344	$	1,615

Summary of valuation allowance

Changes in the valuation allowance in each fiscal year were as follows:

	2022		2021		2020
	(In millions)
Beginning balance	$	361	$	314	$	257
Increases	99		47		57
Ending balance	$	460	$	361	$	314

A reconciliation of gross unrecognized tax benefits

A reconciliation of the beginning and ending balances of gross unrecognized tax benefits in each fiscal year is as follows: 

	2022		2021		2020
	(In millions)
Beginning balance of gross unrecognized tax benefits	$	537	$	496	$	845
Settlements with tax authorities	(25)		—		(446)
Lapses of statutes of limitation	—		(4)		(3)
Increases in tax positions for current year	26		26		44
Increases in tax positions for prior years	28		23		91
Decreases in tax positions for prior years	(68)		(4)		(35)
Ending balance of gross unrecognized tax benefits	$	498	$	537	$	496