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Equity Awards

A summary of the Company’s RSU activity and related information for the six months ended March 26, 2011, is as follows (in thousands, except per share amounts):

Number of Shares

Weighted- Average Grant Date Fair Value

Aggregate Intrinsic Value

13,034 4,920 (2,283) (390)

$ 165.63 $ 293.25 $ 148.62 $ 169.53

15,281

$ 209.16

$5,372,009

Balance at September 25, 2010 RSUs granted RSUs vested RSUs cancelled

Balance at March 26, 2011

RSUs that vested during the three- and six-month periods ended March 26, 2011 had a fair value of $69 million and $728 million, respectively, as of the vesting date. RSUs that vested during the three- and six-month periods ended March 27, 2010 had a fair value of $345 million and $637 million, respectively, as of the vesting date.

A summary of the Company’s stock option activity and related information for the six months ended March 26, 2011, is as follows (in thousands, except per share amounts and contractual term in years):

Weighted-

Average

Number

Exercise

of Shares

Price

21,725

$ 90.46

1

$ 342.62

(113)

$ 119.05

(6,861)

$ 60.13

14,752

$ 104.38

12,786

$ 95.72

1,966

$ 160.79

Balance at September 25, 2010 Options granted Options cancelled Options exercised

Balance at March 26, 2011 Exercisable at March 26, 2011

Expected to vest after March 26, 2011

    • 2.77

      $3,645,999

    • 2.61

      $3,270,977

    • 3.81

      $ 375,022

Weighted- Average Remaining Contractual Term

Aggregate Intrinsic Value

Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value excludes stock options that have a zero or negative intrinsic value. The total intrinsic value of options at the time of exercise was $875 million and $1.8 billion for the three- and six-month periods ended March 26, 2011, respectively, and $377 million and $1.1 billion for the three- and six-month periods ended March 27, 2010, respectively.

The Company had approximately 53.8 million shares and 62.7 million shares reserved for future issuance under the Company’s stock plans as of March 26, 2011 and September 25, 2010, respectively. RSUs granted are deducted from the shares available for grant under the Company’s stock plans utilizing a factor of two times the number of RSUs granted. Similarly, RSUs cancelled are added back to the shares available for grant under the Company’s stock plans utilizing a factor of two times the number of RSUs cancelled.

Stock-Based Compensation

Stock-based compensation cost for RSUs is measured based on the closing fair market value of the Company’s common stock on the date of grant. Stock-based compensation cost for stock options and employee stock purchase plan rights (“stock purchase rights”) is estimated at the grant date and offering date, respectively, based on the fair-value as calculated using the Black-Scholes Merton (“BSM”) option-pricing model. The BSM option-pricing model incorporates various assumptions including expected volatility, expected life and interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the expected life of the Company’s stock options and other relevant factors including implied volatility in market traded options on the Company’s common stock. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock awards it grants to employees. The Company recognizes stock-based compensation cost as expense on a straight-line basis over the requisite service period.

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