Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Our stock-based compensation expense included in the consolidated statements of comprehensive income was as follows:



(In thousands)	2013			2012			2011

Cost of sales	$	1,932		$	1,872		$	1,655
Research and development expense	42,515			41,652			36,410
Selling, general, and administrative expense	52,177			50,062			44,685
Pre-tax stock-based compensation expense	96,624			93,586			82,750
Income tax benefit	(25,432		)	(23,998		)	(20,278		)
Net stock-based compensation expense	$	71,192		$	69,588		$	62,472

Assumptions Used to Estimate Fair Value of Stock Options ESPP RSUs And PRSUs

The assumptions used to estimate the fair value of the ESPP shares, and the stock options, RSUs and PRSUs granted under the 2005 Plan were as follows:



	2013			2012			2011
Stock options:
Expected term (in years)	6.0			6.0			5.0
Expected stock price volatility	32.8		%	35.1		%	32.7		%
Risk-free interest rate	1.3		%	1.1		%	0.3		%
Dividend yield	1.5		%	0.8		%	0.6		%
Weighted-average estimated fair value per share	$	9.35		$	10.85		$	12.92

ESPP shares:
Expected term (in years)	0.7			1.0			0.8
Expected stock price volatility	28.1		%	36.8		%	35.9		%
Risk-free interest rate	0.1		%	0.2		%	0.1		%
Dividend yield	1.8		%	1.1		%	0.7		%
Weighted-average estimated fair value per share	$	7.87		$	9.61		$	12.03

RSUs:
Risk-free interest rate	0.3		%	0.3		%	0.6		%
Dividend yield	1.3		%	1.0		%	0.7		%
Weighted-average estimated fair value per share	$	32.19		$	32.67		$	41.30

PRSUs:
Expected Altera stock price volatility	34.7		%	34.9		%	$	—
Expected SOX stock price volatility	27.1		%	28.9		%	$	—
Risk-free interest rate	0.3		%	0.3		%	$	—
Dividend yield	1.2		%	1.1		%	$	—
Weighted-average estimated fair value per share	$	33.03		$	41.18		$	—

Summary of Activity for Restricted Stock Units and Performance Based Restricted Stock Units

A summary of activity for our RSUs and PRSUs for 2013 and information regarding RSUs and PRSUs outstanding and expected to vest as of December 31, 2013 is as follows:



(In thousands, except per share amounts and terms)	Number of Shares		Weighted-Average Grant-Date Fair Market Value Per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value⁽¹⁾
Outstanding, December 31, 2012	6,960		$	34.03
Grants	2,794		$	33.21
Vested	(2,685	)	$	31.11
Forfeited	(677	)	$	35.00
Outstanding, December 31, 2013	6,392		$	34.80	1.5	$	207,818
Vested and expected to vest, December 31, 2013	5,671		$	34.80	1.4	$	184,371


(1)	Aggregate intrinsic value represents the closing price per share of our stock on December 31, 2013, multiplied by the number of RSUs and market-based PRSUs outstanding or vested and expected to vest as of December 31, 2013.

Summary of Stock Option Activity

A summary of stock option activity for 2013 and information regarding stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2013 is as follows:



(In thousands, except per share amounts and terms)	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value⁽¹⁾
Outstanding, December 31, 2012	5,163		$	25.81
Grants	94		$	19.14
Exercises	(1,792	)	$	21.01
Forfeited/Cancelled/Expired	(19	)	$	28.61
Outstanding, December 31, 2013	3,446		$	28.11	4.4	$	24,076
Exercisable, December 31, 2013	2,431		$	24.74	3.0	$	23,018
Vested and expected to vest, December 31, 2013	3,347		$	27.90	4.3	$	23,982


(1)	For those stock options with an exercise price below the closing price per share on December 31, 2013, aggregate intrinsic value represents the difference between the exercise price and the closing price per share of our common stock on December 31, 2013, multiplied by the number of stock options outstanding, exercisable, or vested and expected to vest as of December 31, 2013