Stock-Based Compensation

9 Months Ended

Sep. 28, 2013

Stock-Based Compensation

Stock-Based Compensation

10. Stock-Based Compensation

In fiscal 2009, the stockholders of the Company approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Employee Stock Purchase Plan (the “2009 Purchase Plan”). The 2009 Plan is currently effective, and has a term of 10 years from the shareholders’ approval date. The 2009 Purchase Plan became effective upon the termination of the previous Employee Stock Purchase Plan, on April 30, 2010.

Stock-based compensation costs are based on the fair values on the date of grant for stock options and on the date of enrollment for the employee stock purchase plans, estimated by using the Black-Scholes option-pricing model. The fair values of stock awards and restricted stock units (RSUs) equal their intrinsic value on the date of grant. The fair values of market-based performance awards generally are estimated using a Monte Carlo simulation based on the date of grant.

The following table presents details of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income (in thousands):

	Three Months Ended				Nine Months Ended
	September 28,  2013		September 29, 2012		September 28,  2013		September 29, 2012
Cost of revenues	$	269	$	261	$	785	$	938
Research and development	3,729		3,039		10,551		9,595
Selling, general and administrative	4,622		4,631		10,968		13,263
	8,620		7,931		22,304		23,796
Income tax benefit	904		988		1,822		4,199
	$	7,716	$	6,943	$	20,482	$	19,597

The Company recorded $0.5 million and $1.9 million in selling, general and administrative expense during the three and nine months ended September 29, 2012, respectively, in connection with modifications to certain stock awards. The Company accelerated the vesting of certain RSUs and market stock units (MSUs) and extended the exercise period of stock options pursuant to a separation agreement between the Company and its former CEO. Stock compensation for the nine months ended September 29, 2012 also included the reversal of previously recognized stock compensation for the modified awards.

The Company had approximately $60.1 million of total unrecognized compensation costs related to stock awards at September 28, 2013 that are expected to be recognized over a weighted-average period of 2.3 years. There were no significant stock-based compensation costs capitalized into assets in any of the periods presented.