Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Incentive Compensation Plans

 v2.3.0.11
Stock-Based Incentive Compensation Plans
 6 Months Ended
Jul. 02, 2011
Stock-Based Incentive Compensation Plans  
Stock-Based Incentive Compensation Plans

NOTE 9. Stock-Based Incentive Compensation Plans

The following table summarizes stock-based compensation expense related to employee stock options and restricted stock units, which is allocated in the Company's condensed consolidated statements of operations:

 

     Quarter Ended      Six Months Ended  
     July 2,
2011		      June 26,
2010		      July 2,
2011		      June 26,
2010		  
     (In millions)  

Cost of sales

    $ 2       $ 1       $ 3       $ 2   

Research and development

      10         11         22         21   

Marketing, general, and administrative

      8         11         22         20   
  

 

 

     

 

 

     

 

 

     

 

 

  

Stock-based compensation expense, net of tax

    $ 20       $ 23       $ 47       $ 43   
  

 

 

     

 

 

     

 

 

     

 

 

  

For all of the periods presented above, the Company did not realize any excess tax benefit related to stock-based compensation and therefore did not record any related financing cash flows.

Stock Options

The weighted average assumptions applied in the lattice-binomial model that the Company uses to value employee stock options are as follows:

 

     Quarter Ended     Six Months Ended  
     July 2,
2011		     June 26,
2010		     July 2,
2011		     June 26,
2010		  

Expected volatility

      50.42 %      57.96 %      50.80 %      56.45 % 

Risk-free interest rate

      1.30 %      1.58 %      1.53 %      1.64 % 

Expected dividends

      0 %      0 %      0 %      0 % 

Expected life (in years)

      3.75        3.71        3.75        3.71   

For the quarters ended July 2, 2011 and June 26, 2010, the Company granted 3,490,510 and 1,326,912 employee stock options, respectively, with weighted average grant date fair values of $2.85 and $3.80, respectively. For the six months ended July 2, 2011 and June 26, 2010, the Company granted 4,624,097 and 2,830,241 employee stock options, respectively, with weighted average grant date fair values of $2.97 and $3.50, respectively.

Restricted Stock Units

For the quarters ended July 2, 2011 and June 26, 2010, the Company granted 10,548,432 and 9,864,566 restricted stock units, respectively, with weighted average grant date fair values of $7.58 and $8.79, respectively. For the six months ended July 2, 2011 and June 26, 2010, the Company granted 10,959,399 and 10,438,346 restricted stock units, respectively, with weighted average grant date fair values of $7.62 and $8.74, respectively.