Stock-Based Compensation Expense

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation Expense

Note 2 — Stock-Based Compensation Expense

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 by expense category was as follows:

	Three Months Ended
	March 31, 2013		April 1, 2012
	(In thousands)
Cost of revenues	$	2,875	$	3,512
Research and development		12,409		12,308
Selling, general and administrative		10,262		15,014
Total stock-based compensation expense	$	25,546	$	30,834

The income tax benefit that the Company realized for the tax deduction from option exercises and other awards was not material for any periods presented.

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
	March 31, 2013			April 1, 2012
Estimated grant date fair value per share	$	2.33		$	2.86
Expected life (years)		4.38			4.46
Risk-free interest rate		1	%		1	%
Volatility		49	%		47	%

The following table summarizes changes in stock options outstanding:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Options outstanding at December 31, 2012		56,042		$	5.75
Granted		6,247		$	6.89
Exercised		(2,192	)	$	3.72
Canceled		(1,006	)	$	8.24
Options outstanding at March 31, 2013		59,091		$	5.90		3.86	$	85,227
Options exercisable at March 31, 2013		39,726		$	5.87		2.72	$	62,059

As of March 31, 2013, the total unrecognized compensation expense related to unvested stock options, net of estimated forfeitures, was $41.8 million and is expected to be recognized over the next 2.6 years on a weighted-average basis.

Restricted Stock Units (“RSUs”)

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

Service-based:

The vesting of service-based RSUs requires that the employees remain employed by the Company for a specified period of time.

The following table summarizes changes in service-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested service-based RSUs outstanding at December 31, 2012		17,655		$	6.99
Granted		7,227		$	6.90
Vested		(4,461	)	$	6.84
Forfeited		(309	)	$	6.77
Unvested service-based RSUs outstanding at March 31, 2013		20,112		$	7.00

As of March 31, 2013, the total unrecognized compensation expense related to the service-based RSUs, net of estimated forfeitures, was $124.0 million and will be recognized over the next 3 years on a weighted-average basis.

Performance-based:

The vesting of performance-based RSUs is contingent upon the Company meeting specified performance criteria and requires that the employees remain employed by the Company for a specified period of time.

The following table summarizes changes in performance-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested performance-based RSUs outstanding at December 31, 2012		5,634		$	7.29
Granted		1,441		$	6.89
Vested		(2,324	)	$	7.87
Forfeited		(330	)	$	6.40
Unvested performance-based RSUs outstanding at March 31, 2013		4,421		$	6.93

As of March 31, 2013, the total unrecognized compensation expense related to the performance-based RSUs, net of estimated forfeitures, was $17.2 million and, if the performance conditions are fully met, will be recognized over the next 3 years.

Employee Stock Purchase Plan

Compensation expense for the 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. No shares related to the ESPP were issued during the three months ended March 31, 2013 or April 1, 2012.