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

9 Months Ended

Jul. 26, 2020

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 (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 as of October 27, 2019	$	11	$	(16)	$	(188)	$	13	$	(180)
Other comprehensive income (loss) before reclassifications	19		(109)		—		—		(90)
Amounts reclassified out of AOCI	(6)		(1)		—		—		(7)
Other comprehensive income (loss), net of tax	13		(110)		—		—		(97)
Balance as of July 26, 2020	$	24	$	(126)	$	(188)	$	13	$	(277)

	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 as of October 28, 2018	$	7	$	(9)	$	(137)	$	14	$	(125)
Adoption of new accounting standards (a)	(17)		—		—		—		(17)
Other comprehensive income (loss) before reclassifications	19		(13)		—		(1)		5
Other comprehensive income (loss), net of tax	19		(13)		—		(1)		5
Balance as of July 28, 2019	$	9	$	(22)	$	(137)	$	13	$	(137)

(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 in the first quarter of fiscal 2019.

Summary of stock repurchases

The following table summarizes Applied’s stock repurchases for the three and nine months ended July 26, 2020 and July 28, 2019:

	Three Months Ended				Nine Months Ended
	July 26, 2020		July 28, 2019		July 26, 2020		July 28, 2019
	(in millions, except per share amount)
Shares of common stock repurchased	4		12		11		50
Cost of stock repurchased	$	200	$	528	$	599	$	1,903
Average price paid per share	$	59.41	$	42.07	$	55.74	$	37.88

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 26, 2020		July 28, 2019		July 26, 2020		July 28, 2019
	(In millions)
Cost of products sold	$	24	$	23	$	79	$	67
Research, development and engineering	27		25		89		74
Marketing and selling	8		8		27		23
General and administrative	11		11		39		33
Total share-based compensation	$	70	$	67	$	234	$	197

Restricted stock units and restricted stock activity

A summary of the changes in any restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans during the nine months ended July 26, 2020 is presented below:

	Shares	Weighted Average Grant Date Fair Value
	(In millions, except per share amounts)
Outstanding as of October 27, 2019	18	$	35.78
Granted	6	$	53.51
Vested	(8)	$	30.99
Canceled	(1)	$	42.06
Outstanding as of July 26, 2020	15	$	44.93

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

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

	Three and Nine Months Ended
	July 26, 2020	July 28, 2019
Dividend yield	1.40%	2.18%
Expected volatility	37.2%	37.1%
Risk-free interest rate	1.05%	2.51%
Expected life (in years)	0.5	0.5
Weighted average estimated fair value	$15.24	$9.78