Stock-Based Compensation

12 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation [Text Block]

STOCK-BASED COMPENSATION

At June 30, 2012, the Company had five stock option plans and one employee stock purchase plan, including the Company's 1996 Stock Incentive Plan (the "1996 Plan"), 1993 Officer and Director Stock Option Plan, 1987 Stock Option Plan, 1987 Supplemental Stock Option Plan, Supplemental Non-employee Stock Option Plan and 2008 Employee Stock Purchase Plan ("2008 ESPP").

The following tables present stock-based compensation expense by type of award and resulting tax effect included in the Consolidated Statements of Income for fiscal years 2012, 2011, and 2010:

	For the Year Ended
	June 30, 2012		June 25, 2011		June 26, 2010
	(in thousands)
Stock options	$	16,294	$	20,070	$	26,545
Restricted stock units	64,579		65,689		59,715
Employee stock purchase plan	8,994		8,538		7,265
Pre-tax stock-based compensation expense	89,867		94,297		93,525
Less: Income tax effect	20,215		25,457		25,041
Net stock-based compensation expense	$	69,652	$	68,840	$	68,484

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

	For the Year Ended
	June 30, 2012		June 25, 2011		June 26, 2010
	(in thousands)
Cost of goods sold	$	13,139	$	14,001	$	15,220
Research and development	49,068		53,686		54,065
Selling, general and administrative	27,660		26,610		24,240
	$	89,867	$	94,297	$	93,525

Modifications and Settlements

2009 Goodwill Program

In January 2009, the Company approved a program ("Goodwill Program") wherein non-officer employees holding options that were outstanding as of November 1, 2008 and which reached or will reach their contractual 10-year expiration term between November 2008 and December 2009 would be eligible for a payment in the form of cash or restricted stock units ("RSUs"). Payments exceeding $5,000 would be settled in restricted stock units that vest over three quarters and are contingent upon continued employment, while amounts below $5,000 would be settled in cash in a lump sum payment. A similar program was extended to officers in May 2009, except that payments exceeding $5,000 to officers were settled in restricted stock units vesting over six quarters rather than three quarters.

The Company recorded a liability for the options settling in cash under the Goodwill Program. Options associated with payments being made in the form of restricted stock units under the Goodwill Program, which contain market and service conditions, are accounted for under the provisions of ASC 718. The Company recognized $0.0 million, $0.2 million and $5.4 million in stock based compensation expense related to this program during fiscal years 2012, 2011 and 2010, respectively.

Fair Value

The fair value of share-based awards granted to employees under the Company's 1996 Plan and 2008 ESPP is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on the historical volatilities from its traded common stock over a period equal to the expected term. The Company is utilizing the simplified method under ASC 718 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. As required by ASC 718, the Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on a quarterly basis.

The fair value of each award granted in fiscal years 2012, 2011 and 2010 has been estimated at the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:

	Stock Option Plan For the Year Ended
	June 30, 2012		June 25, 2011		June 26, 2010
Expected holding period (in years)	5.1		5.2		5.2
Risk-free interest rate	1.2	%	1.7	%	2.3	%
Expected stock price volatility	36.9	%	37.1	%	38.0	%
Dividend yield	3.2	%	4.2	%	4.5	%
	ESP Plan For the Year Ended
	June 30, 2012		June 25, 2011		June 26, 2010
Expected holding period (in years)	0.5		0.5		0.7
Risk-free interest rate	0.1	%	0.1	%	0.3	%
Expected stock price volatility	25.0	%	24.7	%	35.0	%
Dividend yield	3.2	%	3.3	%	4.4	%

The weighted-average fair value of stock options granted was $5.91, $4.02 and $4.23 per share for fiscal years 2012, 2011 and 2010, respectively. The weighted-average fair value of RSUs granted was $20.80, $16.61 and $16.20 per share for fiscal years 2012, 2011 and 2010, respectively.

Stock Option Plans

1996 Stock Incentive Plan

The Company's 1996 Plan, which was previously approved by the Company's stockholders, permits the grant of up to 120.1 million shares. The 1996 Plan provides for the grant of stock options, restricted stock units and restricted stock. To date, the Company has only issued stock options and restricted stock units. Under the 1996 Plan, the exercise price for all stock options will not be less than the fair market value of the Company's common stock on the date of grant. Options granted under the 1996 Plan, as well as under the Company's other stock plans described above, generally vest over a period of up to four years and expire from five to ten years from the date of the grant or such shorter term as may be provided in the agreement.

At June 30, 2012, the Company had 19.1 million shares of its common stock available for issuance to employees and other option recipients under its 1996 Stock Incentive Plan, 1993 Officer and Director Stock Option Plan, 1987 Stock Option Plan, 1987 Supplemental Stock Option Plan, and Supplemental Non-employee Stock Option Plan.

The following table summarizes stock options outstanding, exercisable and vested and expected to vest as of June 30, 2012:

	Options			Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (1)
	Number of Shares		Weighted Average Exercise Price
Balance at June 27, 2009	29,599,916		$28.83
Options Granted	3,671,459		18.08
Options Exercised	(47,327	)	12.86
Options Cancelled	(4,061,541	)	32.38
Balance at June 26, 2010	29,162,507		27.05
Options Granted	3,559,132		17.61
Options Exercised	(1,460,652	)	17.22
Options Cancelled	(2,928,501	)	33.67
Balance at June 25, 2011	28,332,486		25.62
Options Granted	3,353,017		23.14
Options Exercised	(2,843,444	)	16.55
Options Cancelled	(4,607,065	)	31.62
Balance at June 30, 2012	24,234,994		25.20	3.5	$	108,906,939
Exercisable at June 30, 2012	13,945,087		$30.02	2.3	$	40,690,170
Vested and expected to vest, June 30, 2012	23,169,056		$25.43	3.4	$	103,363,007

(1) Aggregate intrinsic value represents the difference between the exercise price and the closing price per share of the Company's common stock on June 29, 2012, the last business day preceding the fiscal year end, multiplied by the number of option outstanding, exercisable or vested and expected to vest as of June 30, 2012.

The following table summarizes information about stock options that were outstanding and exercisable at June 30, 2012:

	Outstanding Options			Options Exercisable
Range of Exercise Prices	Number Outstanding at June 30, 2012	Weighted Average Remaining Contractual Term (In years)	Weighted Average Exercise Price	Number Exercisable at June 30, 2012	Weighted Average Exercise Price
$12.00 - $18.04	7,181,461	4.13	$14.29	2,875,727	$13.01
$18.11 - $27.22	7,100,505	4.67	$20.88	1,423,354	$21.13
$27.24 - $40.96	8,445,771	2.12	$34.69	8,138,749	$34.92
$41.92 - $51.00	1,507,257	2.00	$44.37	1,507,257	$44.37
	24,234,994			13,945,087

During fiscal year 2012, the Company granted approximately 3.4 million stock options from its 1996 Plan with an estimated total grant date fair value of $19.8 million. The total intrinsic value of options exercised during fiscal years 2012 and 2011 were $30.7 million and $11.8 million, respectively, and insignificant for fiscal year 2010. The total fair value of options vested during fiscal years 2012 and 2011 were $14.7 million and $23.0 million, respectively and insignificant for fiscal year 2010. As of June 30, 2012, there was $31.3 million of total unrecognized compensation costs related to 10.3 million unvested stock options expected to be recognized over a weighted average period of approximately 2.6 years.

Restricted Stock Units

Restricted stock units ("RSUs") generally vest on a quarterly basis over a service period of up to four years from the grant date. The restricted stock units represent a promise by the Company to the employees to issue shares of its common stock in the future, provided the vesting criteria are satisfied. RSUs granted reduce the total number of shares available for issuance under the 1996 Plan by a factor of two. To the extent RSUs are returned back to the 1996 Plan, for example, due to cancellations, such RSUs would increase the number of shares available to grant by a factor of two.

The following table summarizes outstanding and expected to vest RSUs as of June 30, 2012 and their activity during fiscal years 2012, 2011 and 2010:

	Number of Shares		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (1)
Balance at June 27, 2009	11,867,329
Restricted stock units granted	4,259,756
Restricted stock units released	(4,813,738	)
Restricted stock units cancelled	(737,930	)
Balance at June 26, 2010	10,575,417
Restricted stock units granted	4,171,372
Restricted stock units released	(3,922,768	)
Restricted stock units cancelled	(823,283	)
Balance at June 25, 2011	10,000,738
Restricted stock units granted	3,645,864
Restricted stock units released	(3,433,989	)
Restricted stock units cancelled	(1,289,159	)
Balance at June 30, 2012	8,923,454		2.5	$	223,759,831
Expected to vest at June 30, 2012	7,854,496		2.5	$	197,619,128

(1) Aggregate intrinsic value for RSUs represents the closing price per share of the Company's common stock on June 29, 2012, the last business day preceding the fiscal year end, multiplied by the number of RSUs outstanding, or expected to vest as of June 30, 2012.

The Company withheld shares worth $29.6 million related to employee withholding taxes based on the value of the RSUs on their vesting date as determined by the Company's closing stock price during the fiscal year ended June 30, 2012. The total payments for the employees' tax obligations to the taxing authorities are reflected as financing activities within the Consolidated Statements of Cash Flows.

As of June 30, 2012, there was $114.0 million of unrecognized compensation cost related to 8.9 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.5 years.

2008 Employee Stock Purchase Plan

Under the 2008 ESPP, the Company has reserved to date 10.0 million shares of its common stock for future issuance. The 2008 ESPP permits two purchases over a twelve month offer period. Pursuant to the terms of the 2008 ESPP, eligible employees may elect withholdings of up to 25% of eligible compensation to purchase shares of common stock at the lower of (i) 85% of the fair market value of the shares on the offer date or (ii) 85% of the fair market value of the shares on the purchase date. The 2008 ESPP does not permit employees to buy more than $25,000 worth of stock annually or 1,600 shares during an offer period.

The Company issued 1.7 million shares of its common stock for total consideration of $33.7 million related to the ESPP plan during the fiscal year ended June 30, 2012. As of June 30, 2012, the Company had 4.3 million shares of its common stock reserved and available for future issuance under the 2008 ESPP.