Medtronic 2011 Annual Report Download - page 86

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82 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
The following table presents the components and classification
of stock-based compensation expense, for stock options, restricted
stock awards, and ESPP shares recognized for fiscal years 2011,
2010, and 2009:
Fiscal Year
(in millions) 2011 2010 2009
Stock options $ 87 $ 112 $ 1 40
Restricted stock awards 97 98 82
Employee stock purchase plan 14 15 15
Total stock-based compensation expense $ 198 $ 225 $ 237
Cost of products sold$ 22 $ 26 $ 28
Research and development expense 49 55 58
Selling, general, and administrative expense 127144 151
Total stock-based compensation expense $ 198 $ 225 $ 237
Income tax benefits (58) (67) (69)
Total stock-based compensation expense,
net of tax $ 140 $ 1 58 $ 1 68
In connection with the acquisition of Kyphon in November
2007, the Company assumed Kyphon’s unvested stock-based
awards. These awards are amortized over 2.5 years, which was
their remaining weighted average vesting period at the time
of acquisition. For fiscal years 2011, 2010, and 2009, the
Company recognized $4 million, $12 million, and $21 million,
respectively, of stock-based compensation expense associated
with the assumed Kyphon awards, which is included in the
amounts presented above.
Stock Options The following table summarizes all stock option activity, including activity from options assumed or issued as a result of
acquisitions, during fiscal years 2011, 2010, and 2009:
Fiscal Year
2011 2010 2009
Options
(in thousands)
Wtd. Avg.
Exercise Price
Options
(in thousands)
Wtd. Avg.
Exercise Price
Options
(in thousands)
Wtd. Avg.
Exercise Price
Beginning balance 89,613 $46.13 93,394 $46.57 92,444 $47.21
Granted 6,371 37.59 7,863 35.81 12,447 37.25
Exercised (627) 32.84 (3,126) 32.96 (8,046) 39.01
Canceled (10,705) 48.91 (8,518) 46.27 (3,451) 47.59
Outstanding at year-end 84,652 $45.23 89,613 $46.13 93,394 $46.57
Exercisable at year-end 66,286 $47.24 67,944 $48.24 67,795 $47.78
For options outstanding and exercisable at April 29, 2011, the
weighted average remaining contractual life was 4.77 years and
3.81 years, respectively. The total intrinsic value, calculated as the
closing stock price at year-end less the option exercise price, of
options exercised during fiscal years 2011, 2010, and 2009 was $4
million, $19 million, and $105 million, respectively. For options
outstanding and exercisable at April 29, 2011, the total intrinsic
value of in-the-money options was $134 million and $50 million,
respectively. The Company issues new shares when stock option
awards are exercised. Cash received from the exercise of stock
options for the fiscal year ended April 29, 2011 was $21 million.
The Company’s tax benefit related to the exercise of stock options
for fiscal year 2011 was $1 million. Unrecognized compensation
expense related to outstanding stock options as of April 29, 2011
was $101 million and is expected to be recognized over a
weighted average period of 2.2 years and will be adjusted for any
future changes in estimated forfeitures.