Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Incentive Compensation Plans

v2.3.0.15
Stock-Based Incentive Compensation Plans
 9 Months Ended
Oct. 01, 2011
Stock-Based Incentive Compensation Plans [Abstract]  
Stock-Based Incentive Compensation Plans

NOTE 10. 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  
    October 1,
2011 		    September 25,
2010 		    October 1,
2011		     September 25,
2010 		 
    (In millions)  

Cost of sales

   $ 1      $ 1      $ 4      $ 3   

Research and development

     13        13        35        34   

Marketing, general, and administrative

     8        8        30        28   
 

 

 

    

 

 

    

 

 

    

 

 

  

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

   $ 22      $ 22      $ 69      $ 65   
 

 

 

    

 

 

    

 

 

    

 

 

  

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     Nine Months Ended  
     October 1,
2011 		    September 25,
2010 		    October 1,
2011 		    September 25,
2010 		 

Expected volatility

      57.86 %      57.79 %      53.15 %      56.89 % 

Risk-free interest rate

      0.58 %      1.01 %      1.21 %      1.43 % 

Expected dividends

      0 %      0 %      0 %      0 % 

Expected life (in years)

      3.75        3.71        3.75        3.71   

For the quarters ended October 1, 2011 and September 25, 2010, the Company granted 1,990,130 and 1,142,037 employee stock options, respectively, with weighted average grant date fair values of $2.68 and $2.75, respectively. For the nine months ended October 1, 2011 and September 25, 2010, the Company granted 6,614,227 and 3,972,278 employee stock options, respectively, with weighted average grant date fair values of $2.88 and $3.28, respectively. During the third quarter of 2011, the Company also granted 739,000 market and service-based options, with weighted average grant date fair values of $2.77.

Restricted Stock Units

For the quarters ended October 1, 2011 and September 25, 2010, the Company granted 1,469,772 and 567,795 restricted stock units, respectively, with weighted average grant date fair values of $6.50 and $6.56, respectively. For the nine months ended October 1, 2011 and September 25, 2010, the Company granted 12,427,171 and 11,006,141 restricted stock units, respectively, with weighted average grant date fair values of $7.49 and $8.63, respectively. During the third quarter of 2011, the Company also granted 287,000 market and service-based restricted stock units, with weighted average grant date fair values of $4.42.