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<!-- Begin Block Tagged Note 5 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. Stock-Based Compensation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During the three and six months ended January 1, 2010, the Company charged to expense $9
million and $17 million, respectively, for stock-based compensation related to options issued under
stock option plans and the ESPP, compared to $5 million and $10 million in the comparative
prior-year periods. At January 1, 2010, total compensation cost related to unvested stock options
and ESPP rights issued to employees but not yet recognized was $67 million and will be amortized on
a straight-line basis over a weighted average service period of approximately 2.39 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company granted approximately 0.6 million restricted stock units during the six months
ended January 1, 2010, which are payable in an equal number of shares of the Company’s common stock
at the time of vesting of the units. The aggregate market value of the shares underlying the
restricted stock unit awards was $20 million at the date of grant. As of January 1, 2010, the
aggregate unamortized fair value of all restricted stock unit awards was $41 million and will be
recognized on a straight-line basis over a weighted average vesting period of approximately 1.7
years. For the three and six months ended January 1, 2010, the Company recognized approximately $4
million and $10 million, respectively, in expense related to restricted stock unit awards that
vested during the period, compared to $6 million and $11 million in the comparative prior-year
periods.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Stock Option Activity</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table summarizes activity under the Company’s stock option plans (in millions,
except per share and remaining contractual life amounts):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Aggregate</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Exercise Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Contractual Life</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Intrinsic</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>of Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Per Share</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(in years)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Options outstanding at July 3, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">11.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17.00</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">1.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">35.68</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">15.29</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Canceled or expired
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Options outstanding at October 2, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">11.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19.17</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">0.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38.40</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">13.80</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Canceled or expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">22.76</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Options outstanding at January 1, 2010
</div></td>
<td> </td>
<td> </td>
<td align="right">10.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">20.08</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.32</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">247</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercisable at January 1, 2010
</div></td>
<td> </td>
<td> </td>
<td align="right">4.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14.05</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.29</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">125</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The aggregate intrinsic value is calculated based on the difference between the exercise price
of the underlying awards and the quoted price of the Company’s common stock for those awards that
have an exercise price below the quoted price on the date the intrinsic value is determined. As of
January 1, 2010, the Company had options outstanding to purchase an aggregate of 10.3 million
shares with an exercise price below the quoted price of the Company’s stock on that date resulting
in an aggregate intrinsic value of $247 million. During the three and six months ended January 1,
2010, the aggregate intrinsic value of options exercised under the Company’s stock option plans was
$33 million and $50 million, respectively, determined as of the date of exercise, compared to $0.3
million and $1.6 million in the comparative prior-year periods.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Fair Value Disclosures – Stock Options and ESPP</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The fair value of stock options granted during the three and six months ended January 1, 2010
was estimated using a binomial option pricing model. The binomial model requires the input of
highly subjective assumptions including the expected stock price volatility, the expected price
multiple at which employees are likely to exercise stock options and the expected employee
termination rate. The Company uses historical data to estimate option exercise, employee
termination, and expected stock price volatility within the binomial model. The risk-free rate for
periods within the contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of
grant. The fair value of stock options granted during the three and six months ended January
1, 2010 and December 26, 2008 was estimated using the following weighted average assumptions:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>THREE MONTHS ENDED</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>SIX MONTHS ENDED</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Jan. 1,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Dec. 26,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Jan. 1,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Dec. 26,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Suboptimal exercise factor
</div></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>1.77</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">1.73</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>1.73</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">1.73</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Range of risk-free interest
rates
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top"><b>0.47% to 3.39%</b>
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top">0.38% to 1.80%
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top"><b>0.37% to 3.39%</b>
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top">0.38% to 3.44%
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Range of expected stock price
volatility
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top"><b>0.51 to 0.63</b>
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top">0.49 to 0.71
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top"><b>0.51 to 0.72</b>
</td>
<td> </td>
<td nowrap="nowrap" colspan="3" align="center" valign="top">0.43 to 0.71
</td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Weighted average expected
volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>0.54</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">0.56</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>0.57</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">0.49</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Post-vesting termination rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>3.81</b></td>
<td nowrap="nowrap" valign="bottom"><b>%</b></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">4.15</td>
<td nowrap="nowrap" valign="bottom">%</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>3.60</b></td>
<td nowrap="nowrap" valign="bottom"><b>%</b></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">4.39</td>
<td nowrap="nowrap" valign="bottom">%</td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Dividend yield
</div></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>—</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">—</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom"><b>—</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"> </td>
<td align="right" valign="bottom">—</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Fair value
</div></td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"><b>$</b></td>
<td align="right" valign="bottom"><b>17.26</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom">$</td>
<td align="right" valign="bottom">7.01</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom"><b>$</b></td>
<td align="right" valign="bottom"><b>17.10</b></td>
<td nowrap="nowrap" valign="bottom"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="bottom">$</td>
<td align="right" valign="bottom">9.62</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The weighted average expected term of the Company’s stock options for the three and six months
ended January 1, 2010 was 4.73 years and 4.60 years, respectively, compared to 4.79 years and 5.49
years in the comparative prior-year periods.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The fair value of ESPP purchase rights issued is estimated at the date of grant of the
purchase rights using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton
option-pricing model was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. The
Black-Scholes-Merton option-pricing model
requires the input of highly subjective assumptions such as the expected stock price volatility and
the expected period until options are exercised. Purchase rights under the current ESPP provisions
are granted on either June 1 or December 1. ESPP activity was immaterial to the condensed
consolidated financial statements for the three and six months ended January 1, 2010 and December
26, 2008.
</div>
</div>
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