Equity Plans

As of August 30, 2018, 125 million shares of our common stock were available for future awards under our equity plans, including 33 million shares approved for issuance under our employee stock purchase plan ("ESPP").

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 2018 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 31, 2017	33		$	19.32
Granted	2		43.30
Exercised	(16	)	17.82
Canceled or expired	(1	)	22.67
Outstanding as of August 30, 2018	18		23.38		4.8	$	527

Exercisable as of August 30, 2018	8		$	21.66	3.2	$	233
Unvested as of August 30, 2018	10		24.61		6.0	294

The total intrinsic value was $446 million, $198 million, and $52 million for options exercised in 2018, 2017, and 2016, respectively.

Stock options granted and assumptions used in the Black-Scholes option valuation model were as follows:



For the year ended	2018			2017			2016
Stock options granted	2			8			8
Weighted-average grant-date fair value per share	$	18.65		$	8.68		$	6.94
Average expected life in years	5.5			5.5			5.5
Weighted-average expected volatility	44		%	46		%	47		%
Weighted-average risk-free interest rate	2.2		%	1.8		%	1.7		%
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.

Restricted Stock and Restricted Stock Units ("Restricted Stock Awards")

As of August 30, 2018, there were 15 million shares of Restricted Stock Awards outstanding, of which 13 million 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 2018 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 2018 is summarized as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Outstanding as of August 31, 2017	19		$	19.78
Granted	4		42.48
Restrictions lapsed	(6	)	21.70
Canceled	(2	)	21.93
Outstanding as of August 30, 2018	15		25.18



For the year ended	2018		2017		2016
Restricted stock award shares granted	4		8		10
Weighted-average grant-date fair value per share	$	42.48	$	18.77	$	15.40
Aggregate vesting-date fair value of shares vested	$	259	$	115	$	71

Employee Stock Purchase Plan

Our ESPP 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. Our ESPP was offered to substantially all employees beginning in August 2018. 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 for the offering period beginning August 1, 2018 were as follows:



Weighted-average grant-date fair value per share	$	14.55
Average expected life in years	0.5
Weighted-average expected volatility	43		%
Weighted-average risk-free interest rate	2.2		%
Expected dividend yield	0.0		%

Stock-based Compensation Expense



For the year ended	2018		2017		2016
Stock-based compensation expense by caption
Cost of goods sold	$	83	$	88	$	76
Selling, general, and administrative	61		75		66
Research and development	54		52		49
	$	198	$	215	$	191

Stock-based compensation expense by type of award
Stock options	$	55	$	71	$	79
Restricted stock awards	140		144		112
ESPP	3		—		—
	$	198	$	215	$	191

The income tax benefit related to share-based compensation was $158 million, $97 million and $41 million for 2018, 2017 and 2016, 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 $19 million and $20 million was capitalized and remained in inventory as of August 30, 2018 and August 31, 2017, respectively. As of August 30, 2018, $316 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 2022, resulting in a weighted-average period of 1.3 years.