Table of Contents APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant. If the performance goals are not achieved as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost is based on the awards that are probable to vest and is reflected over the service period and reduced for estimated forfeitures. The fair value of the portion of the awards subject to targeted levels of TSR is estimated on the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upon the assumption of 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeitures. 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  At October 25, 2020, 1.2 million additional performance-based awards could be earned based upon achievement of certain levels of specified performance goals. Employee Stock Purchase Plans Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Applied issued 3 million shares in each of fiscal 2020, 4 million shares in fiscal 2019 and 3 million shares in fiscal 2018, under the ESPP. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. 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 94