Intel 2012 Annual Report Download - page 89

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grant. We based the weighted average estimated value of restricted stock unit grants, as well as the weighted average
assumptions that we used in calculating the fair value, on estimates at the date of grant, as follows:
2012
2011
2010
Estimated values .......................................................................................................
$ 25.32
$ 19.86
$ 22.56
Risk-free interest rate ................................................................................................
0.3%
0.7%
1.1%
Dividend yield ............................................................................................................
3.3%
3.4%
2.6%
Volatility .....................................................................................................................
26%
27%
31%
We use the Black-Scholes option pricing model to estimate the fair value of options granted under our equity incentive
plans and rights to acquire stock granted under our stock purchase plan. We based the weighted average estimated value
of employee stock option grants and rights granted under the stock purchase plan, as well as the weighted average
assumptions used in calculating the fair value, on estimates at the date of grant, as follows:
Stock Options
Stock Purchase Plan
2012
2011
2010
2012
2011
2010
Estimated values ...........................................
$ 4.22
$ 3.91
$ 4.82
$ 5.47
$ 4.69
$ 4.71
Expected life (in years)..................................
5.3
5.4
4.9
0.5
0.5
0.5
Risk-free interest rate ....................................
1.0%
2.2%
2.5%
0.1%
0.2%
0.2%
Volatility .........................................................
25%
27%
28%
24%
26%
32%
Dividend yield ................................................
3.3%
3.4%
2.7%
3.3%
3.6%
3.1%
We base the expected volatility on implied volatility because we have determined that implied volatility is more reflective of
market conditions and a better indicator of expected volatility than historical volatility. Prior to 2011, we used the simplified
method of calculating expected life due to significant differences in the vesting terms and contractual life of current option
grants compared to our historical grants. In 2011, we began using historical option exercise data as the basis for
determining expected life, as we believe that we have sufficient historical data to provide a reasonable basis upon which
to estimate the expected life input for valuing options using the Black-Scholes model.
Restricted Stock Unit Awards
Information with respect to outstanding restricted stock unit (RSU) activity is as follows:
(In Millions, Except Per RSU Amounts)
Number of
RSUs
Weighted
Average
Grant-Date
Fair Value
December 26, 2009 ....................................................................................................................
105.4
$ 17.03
Granted........................................................................................................................................
32.4
$ 22.56
Vested .........................................................................................................................................
(34.6)
$ 17.70
Forfeited ......................................................................................................................................
(3.4)
$ 17.98
December 25, 2010 ....................................................................................................................
99.8
$ 18.56
Granted........................................................................................................................................
43.3
$ 19.86
Assumed in acquisition................................................................................................................
5.8
$ 20.80
Vested .........................................................................................................................................
(37.5)
$ 18.60
Forfeited ......................................................................................................................................
(4.4)
$ 19.07
December 31, 2011 ....................................................................................................................
107.0
$ 19.18
Granted........................................................................................................................................
49.9
$ 25.32
Vested .........................................................................................................................................
(43.2)
$ 18.88
Forfeited ......................................................................................................................................
(4.4)
$ 20.93
December 29, 2012 ....................................................................................................................
109.3
$ 22.03
Expected to vest as of December 29, 2012 .............................................................................
103.5
$ 20.21
The aggregate fair value of awards that vested in 2012 was $1.2 billion ($753 million in 2011 and $808 million in 2010),
which represents the market value of Intel common stock on the date that the restricted stock units vested. The grant-date
fair value of awards that vested in 2012 was $816 million ($697 million in 2011 and $612 million in 2010). The number of
restricted stock units vested includes shares that we withheld on behalf of employees to satisfy the minimum statutory tax
withholding requirements. Restricted stock units that are expected to vest are net of estimated future forfeitures.