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Stock-Based Compensation and Employee Benefit Plans
12 Months Ended
Jun. 24, 2012
Compensation and Retirement Disclosure [Abstract]  
Stock-Based Compensation and Employee Benefit Plans
6. Stock‑Based Compensation and Employee Benefit Plans
Stock Incentive Plans
The Company makes stock based incentive awards ("Equity Awards") and issues shares in connection with those awards under the Company's stock incentive plans.

For the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010, Equity Awards were granted under the Company's Amended and Restated 2000 Incentive Plan (the "2000 Plan") and the Company's 2011 Performance Incentive Plan (the "2011 Plan"), and Equity Awards remained outstanding under those plans at the end of those fiscal years.  At the end of those fiscal years, Equity Awards also remained outstanding under the Company's prior 1997 Employee Stock Incentive Plan ("1997 Plan"), although no Equity Awards were granted under the 1997 plan during those fiscal years.

The 2011 Plan was adopted by the Board of Directors (the "Board") on August 15, 2011 and approved by the shareholders of the Company on November 11, 2011.  Following shareholder approval of the 2011 Plan, no further Equity Awards may be made under the 2000 Plan; however the 2000 Plan remains in effect with respect to pre-existing Equity Awards.  The grant of Equity Awards under the 1997 Plan ceased in November 2004 following an amendment increasing the share limit of the 2000 Plan.

Directors, officers and employees of the Company, and certain consultants to the Company, are eligible to receive Equity Awards under the 2011 Plan.  As of June 24, 2012, approximately 8,505,327 shares were available for Equity Award purposes under the 2011 Plan.   The 2011 Plan has rules which determine the number of shares that apply for share limits depending whether the awards are "full value awards." Each share issued for a "full-value award" is counted against the share limit under the 2011 Plan as 1.50 shares for every one share actually issued in connection with the award.  For this purpose, a "full-value award" means any award other than a stock option or stock appreciation right.


6. Stock‑Based Compensation and Employee Benefit Plans (Continued)

Options granted under the Company's stock incentive plans before November 22, 2004, generally became exercisable in annual installments of 25 percent beginning on the first anniversary date, and expire after seven years.  Options granted after November 22, 2004, generally became exercisable in annual installments of 33 1/3 percent beginning on the first anniversary date, and expire after five years.  RSUs, other than performance- or market- based RSUs, generally vest in annual installments of 33 1/3 percent beginning on the first anniversary date, with RSUs issued in connection with non-employee director compensation vesting on the first anniversary date of grant.  Performance- or market- based RSUs generally vest upon the achievement of the performance- or market- based conditions established at the time of grant.
During the fiscal year ended June 24, 2012, the Company granted an aggregate of 21,000 stock options to Company employees under its 2000 Plan and 30,000 stock options to Company employees under the 2011 Plan.  Subject to the terms and conditions of the 2000 and 2011 Plans and applicable award documentation, those 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 activity for the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010 (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 28, 2009
 
 
8,248
 
 
$
30.40
 
 
 
 
$
3,738
 
Granted
 
 
268
 
 
$
19.03
 
 
$
6.11
 
 
 
 
 
Exercised
 
 
(351
)
 
$
16.02
 
 
 
 
 
 
$
1,674
 
Expired or forfeited
 
 
(2,380
)
 
$
37.31
 
 
 
 
 
 
 
 
 
Outstanding, June 27, 2010
 
 
5,785
 
 
$
27.88
 
 
 
 
 
 
$
13,946
 
Granted
 
 
31
 
 
$
23.42
 
 
$
6.66
 
 
 
 
 
Exercised
 
 
(791
)
 
$
14.42
 
 
 
 
 
 
$
11,153
 
Expired or forfeited
 
 
(2,033
)
 
$
42.75
 
 
 
 
 
 
 
 
 
Outstanding, June 26, 2011
 
 
2,992
 
 
$
21.30
 
 
 
 
 
 
$
22,154
 
Granted
 
 
51
 
 
$
21.76
 
 
$
6.82
 
 
 
 
 
Exercised
 
 
(225
)
 
$
14.54
 
 
 
 
 
 
$
1,481
 
Expired or forfeited
 
 
(774
)
 
$
35.29
 
 
 
 
 
 
 
 
 
Outstanding, June 24, 2012
 
 
2,044
 
 
$
16.76
 
 
 
 
 
 
$
7,031
 
For the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010, the Company received proceeds of $3.3 million, $11.4 million and $5.6 million, respectively, as a result of the exercise of stock options issued under its stock based compensation plans. The tax benefit realized for the tax deductions from stock-based awards was $1.7 million and $1.4 million for fiscal years ended June 24, 2012, and June 26, 2011, respectively, and zero for the fiscal year ended June 27, 2010.

6. Stock‑Based Compensation and Employee Benefit Plans (Continued)
The following table summarizes the stock options outstanding at June 24, 2012, and the related weighted average price and life information (in thousands, except year and price data):
 
 
June 24, 2012
 
 
Outstanding
 
Exercisable
Range of Exercise Price per Share
 
 
Number Outstanding
 
 
Weighted Average Remaining Life (Years)
 
 
Weighted Average Exercise Price
 
Aggregate Intrinsic Value
 
Number Exercisable
 
 
Weighted Average Remaining Life (Years)
 
 
Weighted Average Exercise Price
 
Aggregate Intrinsic Value
$
0.0 to $12.07
 
 
 
93
 
 
 
1.31
 
 
$
12.02
 
 
 
 
93
 
 
 
1.31
 
 
$
12.02
 
 
$
12.95 to $12.95
 
 
 
586
 
 
 
1.86
 
 
$
12.95
 
 
 
 
586
 
 
 
1.86
 
 
$
12.95
 
 
$
13.56 to $18.35
 
 
 
124
 
 
 
1.85
 
 
$
14.44
 
 
 
 
113
 
 
 
1.71
 
 
$
14.03
 
 
$
18.55 to $40.54
 
 
 
1,241
 
 
 
1.50
 
 
$
19.15
 
 
 
 
957
 
 
 
1.33
 
 
$
19.06
 
 
 
 
 
 
 
2,044
 
 
 
1.62
 
 
$
16.76
 
$7,031
 
 
1,749
 
 
 
1.53
 
 
$
16.31
 
$6,719


The following table summarizes the RSU activity for the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010 (in thousands, except per share price data):
 
 
Restricted Stock
Units
 
 
Weighted Average
Grant Date
Fair Value Per Share
 
 
Aggregate
Intrinsic Value
 
Outstanding, June 28, 2009
 
 
355
 
 
$
17.84
 
 
$
5,215
 
Granted
 
 
203
 
 
$
19.26
 
 
 
 
 
Vested
 
 
(101
)
 
$
19.38
 
 
$
1,960
 
Expired or forfeited
 
 
(5
)
 
$
19.51
 
 
 
 
 
Outstanding, June 27, 2010
 
 
452
 
 
$
18.49
 
 
$
9,113
 
Granted
 
 
1,984
 
 
$
21.37
 
 
 
 
 
Vested
 
 
(342
)
 
$
18.73
 
 
$
9,719
 
Expired or forfeited
 
 
(43
)
 
$
18.97
 
 
 
 
 
Outstanding, June 26, 2011
 
 
2,051
 
 
$
21.22
 
 
$
53,501
 
Granted
 
 
1,518
 
 
$
19.80
 
 
 
 
 
Vested
 
 
(560
)
 
$
22.49
 
 
$
12,821
 
Expired or forfeited
 
 
(104
)
 
23.84
 
 
 
 
 
Outstanding, June 24, 2012
 
 
2,905
 
 
$
21.72
 
 
$
57,932
 
The Company's stock-based compensation plan permits the reduction of a participant's RSUs for purposes of settling a participant's income tax withholding obligation. During the fiscal years ended June 24, 2012, June 26, 2011 and June 27, 2010, the Company withheld RSUs representing 185,701, 124,363 and 39,744 shares, respectively, to fund participant income tax withholding obligations.
During the fiscal year ended June 24, 2012, the Company granted 21,150 RSUs to employees, and 46,200 RSUs to members of the Board, in each case under the 2000 Plan, and 1,451,128 RSUs to employees under the 2011 Plan. The RSUs provided for vesting over a period of service, subject to the terms and conditions of their respective plans and applicable award documentation.  For the RSU 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 RSU awards made to members of the Board were made as part of the Board's annual director compensation program, under which the vesting of RSU awards takes place generally on the first anniversary of the date of grant.
6. Stock‑Based Compensation and Employee Benefit Plans (Continued)
During fiscal year 2011, the Company made RSU awards with performance (non-market-based) vesting 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.  During the first quarter of the fiscal year ended June 24, 2012, 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 the prior year had determined were probable within the time established for the awards, were no longer considered probable as of the end of fiscal year 2012.  After the effect of such credit, the Company recognized $(1.1) million, $3.8 million, and $1.9 million of expense (credit) for these awards during fiscal years 2012, 2011, and 2010, respectively, based on actual achievement or the determination that the achievement of certain of the performance goals was probable within the time established for the awards.
In the fourth quarter of fiscal year 2012, the Company granted 433,394 RSUs with market-based vesting criteria to executives and certain key employees pursuant to the 2011 Plan.  These market-based awards vest (or fail to vest) as of the end of the Company's fiscal year 2015 but the actual number of these awards which will ultimately vest is based on the average closing market price of the Company's common stock computed over the Company's 2015 fiscal year, and otherwise subject to the terms and conditions of the 2011 Plan and applicable award documentation.  The fair value of these awards was estimated using the Monte Carlo Simulation method which takes into account the probability that the market conditions of these awards will be achieved.  Compensation costs related to awards with a market-based condition are recognized regardless of whether the market conditions are satisfied, provided that the requisite service has been provided.
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 June 24, 2012, June 26, 2011, and June 27, 2010, is as follows (in thousands):
 
2012
2011
2010
Outstanding options exercisable
1,749
1,905
3,719
Options and RSUs available for grant
8,505
510
3,291
Total reserved common stock shares for stock option plans
13,454
5,553
9,528
Forfeitures are estimated at the time of grant. Based on the Company's historical exercise and termination data, a four percent forfeiture rate is assumed for the majority of the options and RSUs.
For the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010, stock‑based compensation expense associated with the Company's stock options and RSUs (including RSUs with performance and/or market-based vesting criteria) was as follows (in thousands):
 
 
 
2012
 
 
 
2011
 
 
 
2010
 
Selling, general and administrative expense
 
$
9,199
 
 
$
9,245
 
 
$
7,906
 
Research and development expense
 
 
4,176
 
 
 
3,115
 
 
 
1,642
 
Cost of sales
 
 
2,766
 
 
 
3,254
 
 
 
1,871
 
Total stock‑based compensation expense
 
$
16,141
 
 
$
15,614
 
 
$
11,419
 

6. Stock‑Based Compensation and Employee Benefit Plans (Continued)

The total unrecognized compensation expense for outstanding Equity Awards was $43.3 million as of June 24, 2012.  The unrecognized compensation expense for the outstanding Equity Awards 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) for stock options and RSUs are 1.0 years and 2.2 years, respectively.
The fair value of the stock options associated with the above compensation expense for the fiscal years ended June 24, 2012, June 26, 2011, and June 27, 2010, respectively, was determined at the grant date using the Black‑Scholes option pricing model with the following weighted average assumptions:
 
2012
2011
2010
Expected life
3.5 years
3.5 years
3.6 years
Risk free interest rate
0.44%
0.84%
1.31%
Volatility
42.25%
38.34%
40.07%
Dividend yield
0.00%
0.00%
0.00%
The fair value of the market-based RSUs associated with the above compensation expense for the fiscal years ended June 24, 2012, and June 26, 2011, respectively, was determined at the grant date using the Monte Carlo Simulation method with the following weighted average assumptions:
 
2012
2011
Expected award life
3.0 years
3.0 years
Risk free interest rate
0.41%
0.62%
Volatility
36.61%
35.28%
Dividend yield
0.00%
0.00%
During fiscal year 2012, the Company estimated the expected term of options using historical exercise and forfeiture data. The risk-free interest rate is based on U.S. Treasury securities with maturities equal to the expected life of the option and market-based RSU. With respect to volatility, the Company has certain financial instruments that are publicly traded from which it can derive the implied volatility. The Company uses market implied volatility of options for valuing its stock options and market-based RSUs.  The Company believes implied volatility is a better indicator of expected volatility because it considers option trader's forecast of future stock price volatility.
Employee Stock Participation Plan
The Company's amended 1984 Employee Stock Participation Plan ("Amended ESPP"), has been suspended since April 2007.  Participation in the Amended ESPP has remained suspended through fiscal year 2012. No shares have been issued during the suspension of the Amended ESPP and 755,542 shares remained unissued at June 24, 2012.
Deferred Compensation Plan
The Company has a deferred compensation plan which provides directors, executive management and other key employees with the ability to defer the receipt of compensation in order to accumulate retirement funds on a tax deferred basis.  The Company does not make contributions to the deferred compensation plan or guarantee returns on the investments.  Participant deferrals and investment gains and losses remain the Company's assets and are subject to claims of general creditors.
 
6. Stock‑Based Compensation and Employee Benefit Plans (Continued)

The assets and liabilities of the deferred compensation plan are recorded at fair value each reporting period with the changes in fair value recorded in other income (expense).  As of June 24, 2012 and June 26, 2011, the fair value of the assets was $9.0 million and $7.8 million, respectively, and the fair value of the liabilities was $8.1 million and $7.6 million, respectively.  The Company recorded gross unrealized gains for the deferred compensation plan in other expense, net, of $0.3 million, $0.4 million and $0.4 million for fiscal years 2012, 2011 and 2010, respectively.

Employee Savings Plan - 401(k) Plan

The Company sponsors a 401(k) plan which provides participating employees with an opportunity to accumulate funds for retirement.  The Company's contributions to the 401(k) plan were $2.4 million, $2.5 million, and $2.9 million for fiscal years 2012, 2011 and 2010, respectively.