Equity Plans

As of June 2, 2011, we had an aggregate of 158.6 million shares of common stock reserved for issuance of stock options and restricted stock awards, of which 110.6 million shares were subject to outstanding awards and 48.0 million shares were available for future awards. Awards are subject to terms and conditions as determined by our Board of Directors.

Stock options: We granted 0.2 million and 15.1 million stock options during the third quarter and first nine months of 2011, respectively, with weighted-average grant-date fair values per share of $5.14 and $4.47, respectively. We granted 0.1 million and 15.8 million stock options during the third quarter and first nine months of 2010, respectively, with weighted-average grant-date fair values per share of $5.17 and $4.13, respectively.

The fair values of option awards were estimated as of the dates of grant using the Black-Scholes option valuation model. The Black-Scholes model requires the input of assumptions, including the expected stock price volatility and estimated option life. The expected volatilities utilized were based on implied volatilities from traded options on our stock and on historical volatility. Beginning in 2009, the expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options. Prior to 2009, the expected lives of options granted were based on the simplified method provided by the Securities and Exchange Commission. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at the time of the grant. No dividends were assumed in estimated option values. Assumptions used in the Black-Scholes model are presented below:



	Quarter ended				Nine months ended
	June 2, 2011		June 3, 2010		June 2, 2011		June 3, 2010
Average expected life in years	5.03		5.08		5.07		5.11
Weighted-average expected volatility	57	%	57	%	56	%	60	%
Weighted-average risk-free interest rate	2.0	%	2.4	%	1.8	%	2.3	%

Restricted stock and restricted stock units ("Restricted Stock Awards"): As of June 2, 2011, there were 8.9 million shares of Restricted Stock Awards outstanding, of which 1.3 million were performance-based Restricted Stock Awards. For service-based Restricted Stock Awards, restrictions generally lapse either in one-fourth or one-third increments during each year of employment after the grant date. For performance-based Restricted Stock Awards, vesting is contingent upon meeting certain performance goals. Restricted Stock Awards granted for the third quarter and first nine months of 2011 and 2010 were as follows:



	Quarter ended				Nine months ended
	June 2, 2011		June 3, 2010		June 2, 2011		June 3, 2010
Service-based awards	—		4.1		4.3		5.9
Performance-based awards	—		0.7		1.2		1.8
Weighted-average grant-date fair values per share	$	10.81	$	8.75	$	8.74	$	8.29

Restricted Stock Awards granted during the third quarter and first nine months of 2010 included 4.1 million of service-based and 0.7 million of performance-based Restricted Stock Awards as part of our acquisition of Numonyx.

Stock-based compensation expense: Total compensation costs for our equity plans were as follows:



	Quarter ended				Nine months ended
	June 2, 2011		June 3, 2010		June 2, 2011		June 3, 2010
Stock-based compensation expense by caption:
Cost of goods sold	$	5	$	5	$	15	$	18
Selling, general and administrative	9		9		29		39
Research and development	5		4		13		14
Equity in net income (losses) of equity method investees	—		2		—		2
	$	19	$	20	$	57	$	73

Stock-based compensation expense by type of award:
Stock options	$	11	$	9	$	32	$	28
Restricted stock awards	8		11		25		45
	$	19	$	20	$	57	$	73

As of June 2, 2011, $161 million of total unrecognized compensation costs, net of estimated forfeitures, related to non-vested awards was expected to be recognized through the third quarter of 2015, resulting in a weighted-average period of 1.4 years. Stock-based compensation expense in the above presentation does not reflect any significant income tax benefits, which is consistent with our treatment of income or loss from our U.S. operations. (See "Income Taxes" note.)