AMD 2013 Annual Report Download - page 108

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The weighted-average estimated fair value of employee stock options granted for the years ended
December 28, 2013, December 29, 2012 and December 31, 2011 was $1.52, $2.12 and $2.85 per share
respectively, using the following weighted-average assumptions:
2013 2012 2011
Expected volatility ..................................... 59.03% 56.24% 54.82%
Risk-free interest rate ................................... 0.79% 0.52% 1.60%
Expected dividends .................................... — % — % — %
Expected life (in years) ................................. 3.83 3.79 3.75
The Company used a combination of the historical volatility of its common stock and the implied volatility
for publicly traded options on the Company’s common stock as the expected volatility assumption required by
the lattice-binomial model. The risk-free interest rate assumption is based upon observed interest rates
commensurate with the term of the Company’s employee stock options. The expected dividend yield is zero as
the Company does not expect to pay dividends in the future. The expected term of employee stock options
represents the weighted-average period the stock options are expected to remain outstanding and is a derived
output of the lattice-binomial model.
The following table summarizes stock option activity, including market-based stock options, and related
information:
2013 2012 2011
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
(In millions, except share price)
Stock options:
Outstanding at beginning of year .... 38 $5.51 34 $ 7.36 37 $ 7.77
Granted ........................ 6 $3.63 17 $ 3.41 8 $ 7.16
Canceled ....................... (6) $7.73 (8) $11.26 (6) $12.54
Exercised ....................... (3) $1.56 (5) $ 2.71 (5) $ 3.82
Outstanding at end of year .............. 35 $5.08 38 $ 5.51 34 $ 7.36
Exercisable at end of year .............. 22 $5.62 22 $ 6.14 25 $ 7.48
Included in the table above are approximately 1,652,000 vested and 4,792,000 unvested stock options issued
upon the acquisition of SeaMicro in 2012 (See Note 4). The estimated fair value of the unvested stock options
was $6.60 per share.
As of December 28, 2013, the weighted-average remaining contractual life of outstanding stock options was
4.25 years and their aggregate intrinsic value was $18 million. As of December 28, 2013, the weighted-average
remaining contractual life of exercisable stock options was 3.20 years and their aggregate intrinsic value was $13
million. The total intrinsic value of stock options exercised for 2013, 2012 and 2011 was $5 million, $18 million
and $21 million, respectively.
Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units vest in accordance
with the terms and conditions established by the Compensation Committee of the Board of Directors, and are
based either on continued service or continued service and performance. The cost of restricted stock and
restricted stock units is determined using the fair value of the Company’s common stock on the date of the grant,
and the compensation expense is recognized over the service period.
100