Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Incentive Compensation Plans

v2.4.0.6
Stock-Based Incentive Compensation Plans
 6 Months Ended
Jun. 30, 2012
Share-based Compensation [Abstract]  
Stock-Based Incentive Compensation Plans
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
 
 
June 30,
2012
 
July 2,
2011
 
June 30,
2012
 
July 2,
2011
 
 
(In millions)
Cost of sales
 
$
2

 
$
2

 
$
4

 
$
3

Research and development
 
14

 
10

 
25

 
22

Marketing, general, and administrative
 
10

 
8

 
18

 
22

Stock-based compensation expense, net of tax of $0
 
$
26

 
$
20

 
$
47

 
$
47



For all periods presented, 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
 
 
June 30,
2012
 
July 2,
2011
 
June 30,
2012
 
July 2,
2011
Expected volatility
 
53.58
%
 
50.42
%
 
52.16
%
 
5.08
%
Risk-free interest rate
 
0.49
%
 
1.30
%
 
0.54
%
 
1.53
%
Expected dividends
 
0.00
%
 
0.00
%
 
0.00
%
 
0.00
%
Expected life (in years)
 
3.79

 
3.75

 
3.79

 
3.75



For the quarters ended June 30, 2012 and July 2, 2011, the Company granted 5,853,000 and 3,491,000 employee stock options, respectively, with weighted average grant date fair values per share of $2.34 and $2.85, respectively. For the six months ended June 30, 2012 and July 2, 2011, the Company granted 7,046,000 and 4,624,000 employee stock options, respectively, with weighted average grant date fair values per share of $2.32 and $2.97, respectively. In addition, the Company granted unvested employee stock options to purchase approximately 4,792,000 shares of the Company’s common stock upon the closing of the SeaMicro acquisitionon March 23, 2012, with weighted average estimated grant date fair values of $6.49. (See Note 3).
Restricted Stock Units
For the quarters ended June 30, 2012 and July 2, 2011, the Company granted 13,206,000 and 10,548,000 restricted stock units, respectively, with weighted average grant date fair values per share of $5.97 and $7.58, respectively. For the six months ended June 30, 2012 and July 2, 2011, the Company granted 14,036,000 and 10,959,000 restricted stock units, respectively, with weighted average grant date fair values per share of $6.01 and $7.62, respectively.
Restricted Stock
For the six months ended June 30, 2012, the Company granted approximately 322,000 shares of restricted stock upon the closing of the SeaMicro acquisition on March 23, 2012, with weighted average estimated grant date fair values per share of $4.03. (See Note 3).
Market-based restricted stock units
For the quarter ended June 30, 2012, the Company granted 1,754,000 shares of restricted stock units, with weighted average estimated grant date fair values per share of $3.95.