Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Incentive Compensation Plans

v2.4.0.6
Stock-Based Incentive Compensation Plans
 9 Months Ended
Sep. 29, 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
 
Nine Months Ended
 
 
September 29,
2012
 
October 1,
2011
 
September 29,
2012
 
October 1,
2011
 
 
(In millions)
Cost of sales
 
$
2

 
$
1

 
$
6

 
$
4

Research and development
 
15

 
13

 
40

 
35

Marketing, general and administrative
 
10

 
8

 
28

 
30

Stock-based compensation expense, net of tax of $0
 
$
27

 
$
22

 
$
74

 
$
69



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
 
Nine Months Ended
 
 
September 29,
2012
 
October 1,
2011
 
September 29,
2012
 
October 1,
2011
Expected volatility
 
54.81
%
 
57.86
%
 
53.04
%
 
53.15
%
Risk-free interest rate
 
0.57
%
 
0.58
%
 
0.55
%
 
1.21
%
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 September 29, 2012 and October 1, 2011, the Company granted 2,186,000 and 1,990,000 employee stock options including performance-based options, respectively, with weighted average grant date fair values per share of $1.67 and $2.68, respectively. For the nine months ended September 29, 2012 and October 1, 2011, the Company granted 9,232,000 and 6,614,000 employee stock options including performance-based options, respectively, with weighted average grant date fair values per share of $2.16 and $2.88, 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 acquisition on March 23, 2012, with weighted average estimated grant date fair values per share of $6.49. (See Note 3).
Restricted Stock Units
For the quarters ended September 29, 2012 and October 1, 2011, the Company granted 673,000 and 1,470,000 restricted stock units, respectively, with weighted average grant date fair values per share of $4.17 and $6.50, respectively. For the nine months ended September 29, 2012 and October 1, 2011, the Company granted 14,709,000 and 12,427,000 restricted stock units, respectively, with weighted average grant date fair values per share of $5.92 and $7.49, respectively.
Restricted Stock
For the nine months ended September 29, 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 stock options
For the nine months ended October 1, 2011, the Company granted 739,000 market-based stock options, with weighted average estimated grant date fair values per share of $2.77.
Market-based restricted stock units
For the nine months ended September 29, 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.