Stock Based Compensation

9 Months Ended

Oct. 02, 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, related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards:

	Three Months Ended				Nine Months Ended
Stock-Based Compensation Expense Included In:	October 2, 2011		October 3, 2010		October 2, 2011		October 3, 2010
	(In thousands)
Cost of revenues	$	1,460	$	1,822	$	5,324	$	5,223
Research and development		5,410		6,047		18,286		18,817
Selling, general and administrative		4,883		6,135		15,462		18,261
Total stock-based compensation expense	$	11,753	$	14,004	$	39,072	$	42,301

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 (“lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Nine Months Ended
	October 2, 2011			October 3, 2010			October 2, 2011			October 3, 2010
Estimated grant date fair value per share	$	2.37		$	1.60		$	2.14		$	1.95
Expected life (years)		4.48			4.48			4.51			4.29
Risk-free interest rate		1	%		1	%		2	%		2	%
Volatility		50	%		49	%		47	%		51	%

The following table summarizes changes in stock options outstanding:

	Number of Shares			Weighted-Average Exercise Price Per Share
	(In thousands)
Options outstanding at December 31, 2010		71,224		$	6.98
Options granted		8,954			6.36
Options exercised		(6,736	)		5.04
Options canceled		(6,405	)		15.32
Options outstanding at October 2, 2011		67,037		$	6.29
Options exercisable at October 2, 2011		43,449		$	6.97

For options outstanding and options exercisable as of October 2, 2011, the weighted-average remaining contractual term was 3.47 years and 2.51 years, respectively, and the aggregate intrinsic value was $30.3 million and $13.5 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. No shares related to the ESPP were issued during the three months ended October 2, 2011 or October 3, 2010. 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 October 2, 2011, the total unrecognized compensation expense related to these restricted stock units, net of estimated forfeitures, was $55.7 million and is expected to be recognized over the next 3.1 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 nine months ended October 2, 2011 was $1.0 million and $12.0 million, respectively.

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

	Service-Based Restricted Stock  Units
	(In thousands)
Unvested service-based restricted stock units at December 31, 2010		7,027
Granted		7,493
Vested		(1,907	)
Forfeited		(680	)
Unvested service-based restricted stock units at October 2, 2011		11,933

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 October 2, 2011, the total unrecognized compensation expense related to performance-based restricted stock units was $15.9 million and, if the contingencies are fully met, is expected to be recognized over the next 3 years.

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

	Performance-Based Restricted  Stock Units
	(In thousands)
Unvested performance-based restricted stock units at December 31, 2010		2,313
Granted		3,516
Vested		(815	)
Forfeited		(224	)
Unvested performance-based restricted stock units at October 2, 2011		4,790