Stock-Based Incentive Compensation Plans

3 Months Ended

Mar. 31, 2012

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
	March 31, 2012		April 2, 2011
	(In millions)
Cost of sales	$	2	$	1
Research and development		11		12
Marketing, general, and administrative		8		14
Stock-based compensation expense, net of tax of $0	$	21	$	27

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
	March 31 2012			April 2, 2011
Expected volatility		50.74	%		51.18	%
Risk-free interest rate		0.58	%		1.75	%
Expected dividends		—	%		—	%
Expected life (in years)		3.79			3.75

For the first quarters of 2012 and 2011, the Company granted approximately 1,193,000 and 1,134,000 employee stock options, respectively, with weighted average estimated grant date fair values of $2.20 and $3.34, 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 SeaMicro acquisition closing on March 23, 2012 with weighted average estimated grant date fair values of $6.60. The Company also issued vested AMD's employee stock options to purchase approximately 1,652,000 shares of the Company's common stock as part of the acquisition. (See Note 3).

Restricted Stock Units

For the first quarters of 2012 and 2011, the Company granted approximately 830,000 and 409,000 restricted stock units, respectively, with weighted average grant date fair values of $6.57 and $8.66, respectively.

Restricted Stock

The Company granted approximately 322,000 shares of restricted stock awards upon the SeaMicro acquisition closing on March 23, 2012 with weighted average estimated grant date fair values of $4.03. (See Note 3).