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Equity Plans | 12 Months Ended
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Aug. 29, 2019
Share-based Payment Arrangement [Abstract] |
Equity Plans | Equity Plans As of August 29, 2019, 108 million shares of our common stock were available for future awards under our equity plans, including 29 million shares approved for issuance under our employee stock purchase plan ("ESPP"). Restricted Stock and Restricted Stock Units ("Restricted Stock Awards") As of August 29, 2019, there were 16 million shares of Restricted Stock Awards outstanding, 14 million of which contained only service conditions. For service-based Restricted Stock Awards, restrictions generally lapse in one-fourth or one-third increments during each year of employment after the grant date. Restrictions lapse on Restricted Stock granted in 2019 with performance or market conditions over a three-year period if conditions are met. At the end of the performance period, the number of actual shares to be awarded will vary between 0% and 200% of target amounts, depending upon the achievement level. Restricted Stock Awards activity for 2019 is summarized as follows:
|  | Number of Shares |  | Weighted-Average Grant Date Fair Value Per Share
Outstanding as of August 30, 2018 |  | 15 |  |  | $ | 25.18 |
Granted |  | 9 |  |  | 41.11 |
Restrictions lapsed |  | (6 | ) |  | 24.22 |
Canceled |  | (2 | ) |  | 24.79 |
Outstanding as of August 29, 2019 |  | 16 |  |  | 34.72 |
For the year ended |  | 2019 |  | 2018 |  | 2017 |
Restricted stock award shares granted |  | 9 |  |  | 4 |  |  | 8 |
Weighted-average grant-date fair value per share |  | $ | 41.11 |  |  | $ | 42.48 |  |  | $ | 18.77 |
Aggregate vesting-date fair value of shares vested |  | $ | 248 |  |  | $ | 259 |  |  | $ | 115 |
Stock Options Our stock options are generally exercisable in increments of either one-fourth or one-third per year beginning one year from the date of grant. Stock options issued after February 2014 expire eight years from the date of grant. Options issued prior to February 2014 expire six years from the date of grant. Option activity for 2019 is summarized as follows:
|  | Number of Shares |  | Weighted-Average Exercise Price Per Share |  | Weighted-Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value
Outstanding as of August 30, 2018 |  | 18 |  |  | $ | 23.38 |  |  |  |  |
Granted |  | — |  |  | 44.30 |  |  |  |  |
Exercised |  | (5 | ) |  | 17.50 |  |  |  |  |
Canceled or expired |  | (1 | ) |  | 22.60 |  |  |  |  |
Outstanding as of August 29, 2019 |  | 12 |  |  | 25.94 |  |  | 4.3 |  | $ | 220 |
Exercisable as of August 29, 2019 |  | 7 |  |  | $ | 25.37 |  |  | 3.7 |  | $ | 143 |
Unvested as of August 29, 2019 |  | 5 |  |  | 26.94 |  |  | 5.5 |  | 77 |
The total intrinsic value was $108 million, $446 million, and $198 million for options exercised in 2019, 2018, and 2017, respectively. Stock options granted and assumptions used in the Black-Scholes option valuation model were as follows:
For the year ended |  | 2019 |  | 2018 |  | 2017 |
Stock options granted |  | — |  |  | 2 |  | 8 |
Weighted-average grant-date fair value per share |  | $ | 19.50 |  | $ | 18.65 |  | $ | 8.68 |
Average expected life in years |  | 5.4 |  | 5.5 |  | 5.5 |
Weighted-average expected volatility |  | 44.0 | % |  |  | 44.0 | % |  |  | 46.0 | % |  |
Weighted-average risk-free interest rate |  | 2.9 | % |  |  | 2.2 | % |  |  | 1.8 | % |  |
Expected dividend yield |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | % |  |
Stock price volatility was based on an average of historical volatility and the implied volatility derived from traded options on our stock. The expected lives of options granted were based, in part, on historical experience and on the terms and conditions of the options. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. Employee Stock Purchase Plan Our employee stock purchase plan ("ESPP") was offered to substantially all employees beginning in August 2018 and permits eligible employees to purchase shares of our common stock through payroll deductions of up to 10% of their eligible compensation, subject to certain limitations. The purchase price of the shares under the ESPP equals 85% of the lower of the fair market value of our common stock on either the first or last day of each six-month offering period. Compensation expense is calculated as of the beginning of the offering period as the fair value of the employees' purchase rights utilizing the Black-Scholes option valuation model and is recognized over the offering period. Assumptions used in the Black-Scholes option valuation model were as follows:
For the year ended |  | 2019 |  | 2018 |
Weighted-average grant-date fair value per share |  | $ | 11.60 |  | $ | 14.55 |
Average expected life in years |  | 0.5 |  | 0.5 |
Weighted-average expected volatility |  | 45.0 | % |  |  | 43.0 | % |  |
Weighted-average risk-free interest rate |  | 2.2 | % |  |  | 2.2 | % |  |
Expected dividend yield |  | 0.0 | % |  |  | 0.0 | % |  |
Employees purchased 3 million shares of common stock for $95 million in 2019 under the ESPP. Stock-based Compensation Expense
For the year ended |  | 2019 |  | 2018 |  | 2017
Stock-based compensation expense by caption |  |  |  |  |  |
Cost of goods sold |  | $ | 102 |  |  | $ | 83 |  |  | $ | 88 |
Selling, general, and administrative |  | 73 |  |  | 61 |  |  | 75 |
Research and development |  | 68 |  |  | 54 |  |  | 52 |
|  | $ | 243 |  |  | $ | 198 |  |  | $ | 215 |
Stock-based compensation expense by type of award |  |  |  |  |  |
Restricted stock awards |  | $ | 178 |  |  | $ | 140 |  |  | $ | 144 |
Stock options |  | 33 |  |  | 55 |  |  | 71 |
ESPP |  | 32 |  |  | 3 |  |  | — |
|  | $ | 243 |  |  | $ | 198 |  |  | $ | 215 |
The income tax benefit related to share-based compensation was $66 million, $158 million and $97 million for 2019, 2018 and 2017, respectively. The income tax benefits related to share-based compensation for the periods presented prior to the second quarter of 2018 were offset by an increase in the U.S. valuation allowance. Stock-based compensation expense of $30 million and $19 million was capitalized and remained in inventory as of August 29, 2019 and August 30, 2018, respectively. As of August 29, 2019, $439 million of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the fourth quarter of 2023, resulting in a weighted-average period of 1.3 years.

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