Stock-Based Compensation

3 Months Ended

Sep. 25, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

The Company issues new shares to fulfill the obligations under all of its stock-based compensation awards.  Such shares are subject to registration under applicable securities laws, including pursuant to the rules and regulations promulgated by the Securities and Exchange Commission, unless an applicable exemption applies.

During the fiscal quarter ended September 25, 2011, the Company granted an aggregate of 10,000 stock options to Company employees under its Amended and Restated 2000 Incentive Plan (“the “2000 Plan”).  Subject to the terms and conditions of the 2000 Plan and applicable award documentation, such awards generally vest and become exercisable in equal installments over each of the first three anniversaries of the date of grant, with a maximum award term of five years.

The following table summarizes the stock option activities for the three months ended September 25, 2011 (in thousands, except per share price data):

	Stock Option Shares			Weighted Average Option Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Outstanding, June 26, 2011		2,992		$	21.30		—	$	22,154
Granted		10		$	20.78	$	7.51		—
Exercised		(28	)	$	14.34		—	$	202
Expired or forfeited		(392	)	$	34.71		—		—
Outstanding, September 25, 2011		2,582		$	19.34		—	$	8,050

For the three months ended September 25, 2011 and September 26, 2010, the Company received $0.4 million and $0.8 million, respectively, for stock options exercised.  There were no tax benefits realized from issuance of stock-based awards for the three months ended September 25, 2011 and September 26, 2010, respectively.

During the fiscal quarter ended September 25, 2011, the Company granted 13,150 restricted stock units  (“RSUs”) to employees, and 46,200 RSUs to members of the Board of Directors, in each case under the 2000 Plan, and which awards provided for vesting over a period of service, subject to the terms and conditions of the 2000 Plan and applicable award documentation.   For the awards made to employees, the vesting of awards generally takes place in equal installments over each of the first three anniversaries of the date of grant.  The awards made to members of the Board of Directors were made as part of the Board’s annual director compensation program, under which the vesting of awards takes place generally on the first anniversary of the date of grant.

During fiscal year 2011, the Company made RSU awards with performance vesting (non-market-based) criteria to executives and certain key employees pursuant to the 2000 Plan. Any vesting of such awards takes place upon the achievement of certain performance goals, and otherwise subject to the terms and conditions of the 2000 Plan and applicable award documentation.  The performance goals for the awards vary depending on the executive officer or key employee, and must be achieved generally on or before the end of the Company’s fiscal year 2012 for the awards to vest, although some of the awards provide for achievement of performance goals on or before earlier dates. For the three months ended September 25, 2011, the Company recorded a net credit of $1.3 million to stock-compensation expense relating to these awards, based on the determination that the achievement of certain of the performance goals that the Company in prior periods determined were probable, were as of the three months ended September 25, 2011 not probable within the time established for the awards, partly offset by the achievement of one other performance goal.

The following table summarizes the RSU activity for the three months ended September 25, 2011 (in thousands, except per share price data):

	Restricted Stock Units			Weighted Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Outstanding, June 26, 2011		2,051		$	21.22	$	53,501
Granted		59		$	21.59		—
Vested		(220	)	$	18.94	$	5,820
Forfeited		(10	)	$	21.52		—
Outstanding, September 25, 2011		1,880		$	21.50	$	37,920

The Company's stock based compensation plans and award documentation permits the reduction of a grantee's RSUs for purposes of settling a grantee's income tax obligation. During the three months ended September 25, 2011, the Company withheld RSUs representing 66,423 underlying shares to fund grantees’ income tax obligations.

Additional information relating to the Company’s stock based compensation plans, including employee stock options and RSUs (including RSUs with performance-based and market-based vesting criteria) at September 25, 2011 and June 26, 2011 is as follows (in thousands):

	As of
	September 25, 2011		June 26, 2011
Outstanding options exercisable		1,707		1,905
Options and RSUs available for grant		736		510
Total reserved common stock shares for stock option plans		5,198		5,553

For the three months ended September 25, 2011 and September 26, 2010, stock-based compensation expense associated with the Company’s stock options and RSUs (including RSUs with performance-based vesting and market-based vesting criteria) was as follows (in thousands):

	Three Months Ended
	September 25, 2011		September 26, 2010
Selling, general and administrative expense	$	2,655	$	2,923
Research and development expense		727		650
Cost of sales		325		792
Total stock-based compensation expense	$	3,707	$	4,365

The total unrecognized compensation expense for outstanding stock options and RSUs was $32.8 million as of September 25, 2011.  The unrecognized compensation expense for the outstanding stock options and RSUs will generally be recognized over three years, except for the performance-based RSUs, and one stock option award and one RSU award made to the Chief Executive Officer (the “CEO”) during fiscal year 2008.  The compensation expense for the CEO’s awards made during fiscal year 2008 is being recognized over 5 years.  The unrecognized compensation expense for outstanding performance based RSUs will be recognized when it is determined that it is probable the goals will be achieved or upon achievement of the goals, whichever event occurs first.  The weighted average number of years to recognize the total compensation expense (including that of the CEO) is 1.6 years.

The fair value of the Company stock options issued during the three months ended September 25, 2011 and September 26, 2010, was determined at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

	September 25, 2011			September 26, 2010
Expected life	3.5 years			3.5 years
Risk free interest rate		0.4	%		0.7	%
Volatility		49.6	%		41.5	%
Dividend yield		0.0	%		0.0	%