AMD 2007 Annual Report Download - page 284

Spansion Inc.
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)
Three Months Ended Nine Months Ended
Sep. 30,
2007
Oct.
1,
2006
Sep. 30,
2007
Oct.
1,
2006
Expected volatility 45.32% 55.80% 48.50% 59.22%
Risk-free interest rate 4.12% 5.10% 4.73% 4.93%
Expected term (in years) 4.61 4.61 4.61 4.59
Dividend yield 0% 0% 0% 0%
The Company’s dividend yield is zero because the Company has never paid dividends and does not have plans to do so over the expected life of the stock
options. The expected volatility is based on the Company’s recent historical volatility and the volatilities of the Company’s competitors who are in the same
industry sector with similar characteristics (“guideline” companies) given the limited historical realized volatility data of the Company. The risk-free interest rate
is based on the yield from U.S. Treasury zero-coupon bond with a remaining term equal to the expected stock option life. The expected term is based on the
“shortcut approach” provided in SAB 107 for developing the estimate of the expected life of a “plain vanilla” stock option. Under this approach, the expected
term is presumed to be the mid-point between the average vesting date and the end of the contractual term.
As of September 30, 2007, the total unrecognized compensation cost related to unvested stock options and RSU awards was approximately $52.2 million
after reduction for estimated forfeitures, and such stock options and RSU awards will generally vest ratably through 2011.
Stock Option and Restricted Stock Unit Activity
The following table summarizes stock option activity and related information for the period presented:
Number of
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding as of December 26, 2005 (1)
1,949,750 $ 12.00
Granted 462,500 $ 14.93
Cancelled (277,344) $ 12.00
Outstanding as of December 31, 2006 2,134,906 $ 12.63 6.08 $ 4,761
Granted 1,775,062 $ 10.39
Cancelled (210,814) $ 13.41
Exercised (5,000) $ 12.00
Outstanding as of September 30, 2007 3,694,154 $ 11.51 5.91 $ 37
Exercisable as of September 30, 2007 (2)
698,412 $ 12.27 5.24 $ —
(1) Outstanding shares at the beginning of fiscal 2006 were the shares granted upon the Company’s initial public offering (IPO) on December 15, 2005.
(2) There were 698,412 shares vested and exercisable as of September 30, 2007, with a total grant date fair value of approximately $8.6 million.
8
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008