Cisco 2011 Annual Report Download - page 128

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(c) Summary of Share-Based Compensation Expense
Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights,
restricted stock, and restricted stock units granted to employees. The following table summarizes share-based
compensation expense (in millions):
Years Ended July 30, 2011 July 31, 2010 July 25, 2009
Cost of sales—product ...................................... $61 $57 $46
Cost of sales—service ...................................... 177 164 128
Share-based compensation expense in cost of sales ............... 238 221 174
Research and development .................................. 481 450 382
Sales and marketing ........................................ 651 602 482
General and administrative .................................. 250 244 193
Share-based compensation expense in operating expenses .......... 1,382 1,296 1,057
Total share-based compensation expense ....................... $1,620 $1,517 $1,231
As of July 30, 2011, the total compensation cost related to unvested share-based awards not yet recognized was
$2.9 billion, which is expected to be recognized over approximately 2.2 years on a weighted-average basis. The
income tax benefit for share-based compensation expense was $444 million, $415 million, and $317 million for
fiscal 2011, 2010, and 2009, respectively.
(d) Share-Based Awards Available for Grant
A summary of share-based awards available for grant is as follows (in millions):
Share-Based Awards
Available for Grant
BALANCE AT JULY 26, 2008 ............................................. 362
Options granted and assumed ............................................... (14)
Restrictedstock,stockunits,andothershare-basedawardsgrantedandassumed .........
(140)
Share-based awards canceled/forfeited/expired ................................. 38
Additional shares reserved ................................................. 7
BALANCE AT JULY 25, 2009 ............................................. 253
Options granted and assumed ............................................... (15)
Restricted stock, stock units, and other share-based awards granted and assumed ...... (81)
Share-based awards canceled/forfeited/expired ................................. 123
Additional shares reserved ................................................. 15
BALANCE AT JULY 31, 2010 ............................................ 295
Restricted stock, stock units, and other share-based awards granted and assumed .... (84)
Share-based awards canceled/forfeited/expired .............................. 42
Additional shares reserved ............................................... 2
BALANCE AT JULY 30, 2011 ............................................ 255
As reflected in the preceding table, for each share awarded as restricted stock or subject to a restricted stock unit
award under the 2005 Plan, beginning November 15, 2007 and prior to November 12, 2009, an equivalent of 2.5
shares was deducted from the available share-based award balance. Effective as of November 12, 2009, the
equivalent number of shares was revised to 1.5 shares for each share awarded as restricted stock or subject to a
restricted stock unit award under the 2005 Plan beginning on this date.
120