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Shareholders' Equity
3 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Shareholders' Equity
Shareholders’ Equity
Stock-based Compensation Expense
The following tables present the Company’s stock-based compensation for equity-settled awards and related tax benefit by type and financial statement line included in the Company’s condensed consolidated statements of operations:
 
Three Months Ended
 
September 30,
2016
 
October 2,
2015
 
(in millions)
Options
$
12

 
$
14

Employee Stock Purchase Plan
8

 
5

Restricted Stock Units(1)
79

 
23

Subtotal
99

 
42

Tax benefit
(25
)
 
(10
)
Total
$
74

 
$
32

 
 
(1) 
Restricted stock units (“RSUs”) include performance stock units (“PSUs”)
 
Three Months Ended
 
September 30,
2016
 
October 2,
2015
 
(in millions)
Cost of Revenue
$
13

 
$
5

Research and Development
44

 
15

Selling, General and Administrative
42

 
22

Subtotal
99

 
42

Tax benefit
(25
)
 
(10
)
Total
$
74

 
$
32


As of September 30, 2016, total compensation cost related to unvested stock options was $97 million and will be amortized on a straight-line basis over a weighted average service period of approximately 2.9 years. As of September 30, 2016, total compensation cost related to the Company’s Employee Stock Purchase Plan (“ESPP”) rights issued to employees but not yet recognized was $46 million and will be amortized on a straight-line basis over a weighted average service period of approximately 1.7 years.
As of September 30, 2016, the aggregate unamortized fair value of all unvested RSUs and PSUs was $685 million, which will be recognized on a straight-line basis over a weighted average vesting period of approximately 2.8 years, assuming the performance metrics are met for the PSUs.
Stock Option Activity
The following table summarizes stock option activity under the Company’s incentive plans:
 
Number of Shares
 
Weighted Average Exercise Price Per Share
 
Weighted Average Remaining Contractual Life
 
Aggregate Intrinsic Value
 
(in millions)
 
 
 
(in years)
 
(in millions)
Options outstanding at July 1, 2016
9.0

 
$
55.74

 
3.9
 
$
60

Granted
2.8

 


 
 
 
 
Exercised
(0.8
)
 


 
 
 
 
Canceled or expired
(0.3
)
 


 
 
 
 
Options outstanding at September 30, 2016
10.7

 
54.30

 
4.6

 
140

Exercisable at September 30, 2016
5.0

 
51.79

 
3.0

 
79

Vested and expected to vest after September 30, 2016
10.3

 
54.38

 
4.5

 
136


As of September 30, 2016, the Company had options outstanding to purchase an aggregate of 7.3 million shares with an exercise price below the quoted price of the Company’s stock on that date resulting in an aggregate intrinsic value of $140 million at that date.
RSU and PSU Activity
The following table summarizes RSU and PSU activity under the Company’s incentive plans:
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in millions)
 
 
RSUs and PSUs outstanding at July 1, 2016
15.7

 
$
41.92

Granted
5.1

 
44.98

Vested
(1.6
)
 
72.36

Forfeited
(0.5
)
 
46.47

RSUs and PSUs outstanding at September 30, 2016
18.7

 
42.64

Expected to vest after September 30, 2016
17.4

 
42.64


RSUs and PSUs are generally settled in an equal number of shares of the Company’s common stock at the time of vesting of the units. The aggregate value of RSUs and PSUs that became fully-vested during the three months ended September 30, 2016 was $76 million, determined as of the vest date.
SARs Activity
 
Three Months Ended
 
September 30,
2016
 
October 2,
2015
 
(in millions)
SAR expense (benefit)
$
5

 
$
(1
)
Tax expense (benefit)
(1
)
 

Total SAR expense (benefit)
$
4

 
$
(1
)

As of September 30, 2016, all outstanding stock appreciation rights (“SARs”) issued to employees were fully vested, and the fair values are solely subject to market price fluctuations. As of September 30, 2016, 0.5 million SARs were outstanding with a weighted average exercise price of $6.17.
The Company’s SARs will be settled in cash upon exercise. The Company had a total liability of $24 million and $20 million related to SARs included in accrued expenses in the Company’s condensed consolidated balance sheet as of September 30, 2016 and July 1, 2016, respectively.
Stock Repurchase Program
The Company’s Board of Directors (the “Board”) has authorized $5.0 billion for the repurchase of the Company’s common stock. The stock repurchase program is effective until February 3, 2020. The Company did not repurchase any shares during the three months ended September 30, 2016. The remaining amount available to be purchased under the Company’s stock repurchase program as of September 30, 2016 was $2.1 billion.
Dividends to Shareholders
On September 13, 2012, the Company announced that the Board had authorized the adoption of a quarterly cash dividend policy. Under the cash dividend policy, holders of the Company’s common stock receive dividends when and as declared by the Board. The Company paid $142 million in cash of dividends on July 15, 2016 relating to dividends declared on May 3, 2016.
On August 3, 2016, the Company’s Board of Directors declared a cash dividend for the quarter ended September 30, 2016 of $0.50 per share of the Company’s common stock, $0.01 par value per share. The cash dividend of $143 million was paid on October 17, 2016 to the Company’s stockholders of record as of September 30, 2016.
On November 3, 2016, the Company’s Board of Directors declared a cash dividend for the quarter ended December 30, 2016 of $0.50 per share of the Company’s common stock, $0.01 par value per share. The cash dividend will be paid on January 17, 2017 to shareholders of record as of December 30, 2016.
The Company may modify, suspend or cancel its cash dividend policy in any manner and at any time.