Stock Based Compensation

6 Months Ended

Jul. 03, 2011

Stock-Based Compensation[Abstract]

Stock-Based Compensation

Note 2 — Stock-Based Compensation

Stock-Based Compensation Expense

     The following table summarizes stock-based compensation expense, net of estimated forfeitures, included within the continuing operations related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards.

	Three Months Ended				Six Months Ended
Stock-Based Compensation Expense Included In:	July 3, 2011		July 4, 2010		July 3, 2011		July 4, 2010
			(In thousands)
Cost of revenues	$	2,051	$	1,985	$	3,864	$	3,401
Research and development		6,653		6,750		12,876		12,770
Selling, general and administrative		4,948		6,439		10,579		12,126
Total stock-based compensation expense	$	13,652	$	15,174	$	27,319	$	28,297

     Stock Options:

     The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (the “lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.65		$	2.05		$	2.14		$	1.97
Expected life (years)		5.01			4.35			4.51			4.28
Risk-free interest rate		2	%		2	%		2	%		2	%
Volatility		47	%		54	%		47	%		51	%

     The following table summarizes changes in stock options outstanding:

				Weighted-Average
	Number of			Exercise
	Shares			Price Per Share
	(In thousands)
Options outstanding at December 31, 2010		71,607		$	6.97
Options granted		8,869			6.35
Options exercised		(5,327	)		5.03
Options canceled		(5,098	)		15.99
Options outstanding at July 3, 2011		70,051		$	6.38
Options exercisable at July 3, 2011		44,473		$	7.10

     For options outstanding and options exercisable as of July 3, 2011, the weighted-average remaining contractual term was 3.64 years and 2.61 years, respectively, and the aggregate intrinsic value was $106.8 million and $52.5 million, respectively.

     Employee Stock Purchase Plan:

     Compensation expense for the Company’s ESPP is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Under the ESPP, rights to purchase shares are granted during the second and fourth quarters of each year. A total of 2.9 million shares and 3.3 million shares were issued under the ESPP during the three months ended July 3, 2011 and July 4, 2010, respectively. The following table summarizes the weighted-average assumptions that went into the calculation of the fair value for the May 2011 and May 2010 grants:

	Three Months Ended
	July 3, 2011			July 4, 2010
Estimated grant date fair value per share	$	2.10		$	1.74
Expected life (years)		0.8			0.8
Risk-free interest rate		0.02	%		0.3	%
Volatility		37	%		48	%

     Restricted Stock Awards:

     The cost of service-based and performance-based restricted stock unit awards is determined using the fair value of the Company’s common stock on the date of grant. For performance-based restricted stock unit awards, the Company also considers the probability that those restricted stock units will vest.

     Service-based:

     The vesting requirements for service-based restricted stock units are determined at the time of grant and require that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to these restricted stock units, net of estimated forfeitures, was $57.9 million and is expected to be recognized over the next 3.3 years on a weighted-average basis. The fair value of the shares that were issued upon the vesting of service-based restricted stock units during the three and six months ended July 3, 2011 was $0.7 million and $11.0 million, respectively.

     The following table summarizes changes in service-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested service-based restricted stock units at December 31, 2010		7,106
Granted		6,914
Vested		(1,745	)
Forfeited		(433	)
Unvested service-based restricted stock units at July 3, 2011		11,842

     Performance-based:

     The vesting of performance-based restricted stock units is contingent upon the Company meeting specified performance criteria and requires that the employee remain employed by the Company for a specified period of time. As of July 3, 2011, the total unrecognized compensation expense related to performance-based restricted stock units was $17.0 million and, if the contingencies are fully met, is expected to be recognized over the next 1 to 3 years.

     The following table summarizes changes in performance-based restricted stock units outstanding:

	Number of Units
	(In thousands)
Unvested performance-based restricted stock units at December 31, 2010		2,338
Granted		3,540
Vested		(827	)
Forfeited		(164	)
Unvested performance-based restricted stock units at July 3, 2011		4,887