Share-Based Compensation

9 Months Ended

Apr. 01, 2012

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

Share-based compensation recognized in the condensed consolidated financial statements by line item caption is as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	April 1, 2012		March 27, 2011		April 1, 2012		March 27, 2011
Cost of product revenue	$	81	$	85	$	372	$	318
Cost of service revenue	59		75		203		225
Sales and marketing	487		446		1,306		1,406
Research and development	289		248		1,041		740
General and administrative	560		442		1,730		1,091
Total share-based compensation expense	$	1,476	$	1,296	$	4,652	$	3,780

During the three and nine months ended April 1, 2012 and March 27, 2011, the Company did not capitalize any stock-based compensation expense in inventory, as the amounts were immaterial.

The weighted-average grant-date per share fair value of options granted during the three months ended April 1, 2012 and March 27, 2011 were $1.58 and $1.85, respectively. The weighted-average estimated per share fair value of shares purchased under the Company’s 1999 Employee Stock Purchase Plan (“ESPP”) during the three months ended April 1, 2012 and March 27, 2011 were $1.05 and $1.08, respectively.

The weighted-average grant-date per share fair value of options granted during the nine months ended April 1, 2012 and March 27, 2011 were $1.65 and $1.57, respectively. The weighted-average estimated per share fair value of shares purchased under the Company’s 1999 Employee Stock Purchase Plan (“ESPP”) during the nine months ended April 1, 2012 and March 27, 2011 were $1.01 and $0.98, respectively.

The following table summarizes the activity for stock options for the nine months ended April 1, 2012:

	Number of Shares (000’s)		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($ 000’s)
Options outstanding at July 3, 2011	9,132		$	4.01
Granted	2,435		$	3.27
Exercised	(357	)	$	2.17		$	398
Canceled	(1,808	)	$	4.95
Options outstanding at April 1, 2012	9,402		$	3.71
Exercisable at April 1, 2012	5,586		$	4.02	4.59	$	2,411
Vested and expected to vest at April 1, 2012	9,013		$	3.73	5.16	$	4,414

The following table summarizes the activity for restricted stock units ("RSUs") for the nine months ended April 1, 2012:

	Number of Shares (000’s)		Weighted- Average Grant- Date Fair Value		Aggregate Fair Market Value ($ 000's)
Unvested at July 3, 2011	1,870		$	2.79
Granted	701		$	3.08
Vested	(822	)	$	3.10	$	2,549
Canceled	(255	)	$	3.14
Unvested at April 1, 2012	1,494		$	2.70

The fair value of each option award and ESPP is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The expected term of ESPP represents the contractual life of the ESPP purchase period. The risk-free rate based upon the estimated life of the option and ESPP is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on both the implied volatilities from traded options on the Company’s stock and historical volatility on the Company’s stock.

	Stock Option Plan				Employee Stock Purchase Plan				Stock Option Plan				Employee Stock Purchase Plan
	Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
	April 1, 2012		March 27, 2011		April 1, 2012		March 27, 2011		April 1, 2012		March 27, 2011		April 1, 2012		March 27, 2011
Expected life	5 yrs		4 yrs		0.25 yrs		0.24 yrs		5 yrs		4 yrs		0.25 yrs		0.24 yrs
Risk-free interest rate	0.88	%	1.81	%	0.13	%	0.22	%	1.07	%	1.48	%	0.07	%	0.19	%
Volatility	64	%	65	%	54	%	51	%	60	%	61	%	65	%	55	%
Dividend yield	—	%	—	%	—	%	—	%	—	%	—	%	—	%	—	%

The Company is required to estimate the expected forfeiture rate and only recognize expense on a straight-line method for those shares expected to vest.