STOCK-BASED COMPENSATION

The following table shows total stock-based compensation expense by type of award, and the resulting tax effect, included in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2012 and March 26, 2011:



Stock-based compensation expense by type of award

	Three Months Ended				Nine Months Ended
	March 31, 2012		March 26, 2011		March 31, 2012		March 26, 2011
	(in thousands)
Stock options	$	4,048	$	4,023	$	12,757	$	16,053
Restricted stock units	15,492		15,030		49,524		50,573
Employee stock purchase plan	2,498		2,175		6,696		6,263
Pre-tax stock-based compensation expense	22,038		21,228		68,977		72,889
Less: income tax effect	4,061		5,039		15,329		19,332
Net stock-based compensation expense	$	17,977	$	16,189	$	53,648	$	53,557

The following table shows pre-tax stock-based compensation expense by income statement classification:



	Three Months Ended				Nine Months Ended
	March 31, 2012		March 26, 2011		March 31, 2012		March 26, 2011
	(in thousands)
Cost of goods sold	$	3,099	$	3,336	$	10,048	$	10,979
Research and development	11,547		11,743		37,717		41,764
Selling, general and administrative	7,392		6,149		21,212		20,146
	$	22,038	$	21,228	$	68,977	$	72,889

Fair Value

The fair value of options granted to employees under the Company's 1996 Stock Incentive Plan and rights to acquire common stock under the Company's 2008 Employee Stock Purchase Plan (the "ESPP") is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of Restricted Stock Units ("RSUs") is estimated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting.

Expected volatilities are based on the historical volatilities from the Company's traded common stock over a period equal to the expected term. The Company is utilizing the simplified method to estimate expected holding periods. The risk-free interest rate is based on the U.S. Treasury yield. The Company determines the dividend yield by dividing the annualized dividends per share by the prior quarter's average stock price. The result is analyzed by the Company to decide whether it represents expected future dividend yield. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on a quarterly basis.

The fair value of share-based awards granted to employees has been estimated at the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:



	Stock Option Plan
	Three Months Ended				Nine Months Ended
	March 31, 2012		March 26, 2011		March 31, 2012		March 26, 2011
Expected holding period (in years)	4.8		5.0		5.1		5.2
Risk-free interest rate	0.8	%	2.1	%	1.3	%	1.7	%
Expected stock price volatility	38.6	%	36.4	%	36.8	%	36.9	%
Dividend yield	3.5	%	3.9	%	3.2	%	4.3	%



	ESPP
	Three Months Ended				Nine Months Ended
	March 31, 2012		March 26, 2011		March 31, 2012		March 26, 2011
Expected holding period (in years)	0.5		0.5		0.5		0.5
Risk-free interest rate	0.1	%	0.2	%	0.1	%	0.2	%
Expected stock price volatility	32.2	%	31.4	%	32.2	%	31.4	%
Dividend yield	3.8	%	4.9	%	3.8	%	4.9	%

The weighted-average fair value of stock options granted was $6.53 and $6.25 per share for the three months ended March 31, 2012 and March 26, 2011, respectively. The weighted-average fair value of RSUs granted was $25.38 and $24.39 per share for the three months ended March 31, 2012 and March 26, 2011, respectively.

The weighted-average fair value of stock options granted was $5.85 and $3.85 per share for the nine months ended March 31, 2012 and March 26, 2011, respectively. The weighted-average fair value of RSUs granted was $20.46 and $15.60 per share for the nine months ended March 31, 2012 and March 26, 2011, respectively.

Stock Options

The following table summarizes outstanding, exercisable and vested and expected to vest stock options as of March 31, 2012 and their activity for the nine months ended March 31, 2012:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1)
Balance at June 25, 2011	28,332,486		$	25.62
Options Granted	3,103,962		22.76
Options Exercised	(1,982,156	)	17.08
Options Cancelled	(3,254,938	)	32.76
Balance at March 31, 2012	26,199,354		$	25.04	3.6	$	175,393,636
Exercisable, March 31, 2012	14,658,695		$	30.45	2.4	$	55,870,398
Vested and expected to vest, March 31, 2012	24,757,954		$	25.36	3.5	$	162,536,417



(1)	Aggregate intrinsic value represents the difference between the exercise price and the closing price per share of the Company's common stock on March 30, 2012, the last business day preceding the fiscal quarter-end, multiplied by the number of options outstanding, exercisable or vested and expected to vest as of March 31, 2012.

As of March 31, 2012, there was $36.4 million of total unrecognized stock compensation cost related to 11.5 million unvested stock options, which is expected to be recognized over a weighted average period of approximately 2.7 years.

Restricted Stock Units

The following table summarizes outstanding and expected to vest RSUs as of March 31, 2012 and their activity during the nine months ended March 31, 2012:



	Number of Shares		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1)
Balance at June 25, 2011	10,000,738
Restricted stock units granted	3,403,624
Restricted stock units released	(2,616,786	)
Restricted stock units cancelled	(999,655	)
Balance at March 31, 2012	9,787,921		2.6	$	278,302,475
Vested and expected to vest, March 31, 2012	8,646,051		2.6	$	246,498,922



(1)	Aggregate intrinsic value for RSUs represents the closing price per share of the Company's common stock on March 30, 2012, the last business day preceding the fiscal quarter-end, multiplied by the number of RSUs outstanding or expected to vest as of March 31, 2012.

The Company withheld shares totaling $7.7 million and $22.7 million in value as a result of employee withholding taxes based on the value of the RSUs on their vesting date as determined by the Company's closing stock price for the three and nine months ended March 31, 2012, respectively. The total payments for the employees' tax obligations to the taxing authorities are reflected as financing activities within the Condensed Consolidated Statements of Cash Flows.

As of March 31, 2012, there was $128.2 million of unrecognized compensation expense related to 9.8 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.6 years.

Employee Stock Purchase Plan

As of March 31, 2012, there was $4.6 million of unrecognized compensation expense related to the ESPP.