Stockholders' Equity

12 Months Ended

Jul. 01, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 6—Stockholders’ Equity

Stock Options and Awards

Symmetricom has equity benefit plans under which employees, directors and consultants may be granted non-qualified and incentive options to purchase shares of our common stock and restricted stock. Stock options granted under these plans have contractual terms ranging from 5-10 years. One of these plans was amended in fiscal 2003 to effectively provide that restricted stock could be granted and repurchased for no cash purchase price. Stock appreciation rights may also be granted under this plan; however, none have been granted to date. All options have been granted at the fair market value of our common stock on the date of grant and generally vest over three or four years.

Our right to repurchase restricted shares generally lapses over the same three or four-year term as the vesting period applicable to the stock options. The estimated future annual forfeiture rate used to record stock-based compensation expense was 7%, 8%, and 8% for fiscal 2012, 2011, and 2010, respectively. At July 1, 2012, the total future compensation cost related to unvested stock-based awards granted to employees, directors and consultants under the Company’s stock option plans was approximately $4.4 million, net of estimated forfeitures of $0.9 million. This cost will be amortized on an accelerated basis over a period of approximately 1.2 years and will be adjusted for subsequent changes in estimated forfeitures.

The following table shows total stock-based compensation expense included in the consolidated statements of operations:

	Year ended
	July 1, 2012		July 3, 2011		June 27, 2010
	(In thousands)
Cost of sales	$	867	$	802	$	802
Research and development		1,183		870		758
Selling, general and administrative		4,092		3,126		2,154
Pre-tax stock-based compensation expense		6,142		4,798		3,714
Less: Income Tax effect		2,273		1,775		1,374
Net Stock-based compensation expense	$	3,869	$	3,023	$	2,340

The following table summarizes stock option and award activity for fiscal years 2012, 2011 and 2010:

				Non Performance- based Options Outstanding					Performance-based Options Outstanding					Restricted Stock Outstanding
	Shares Available For Grant			Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Grant-Date Fair Value
	(In thousands, except per share amounts)
Balances at June 28, 2009		7,151			5,290		$	6.53		125		$	8.53		540		$	6.22
Granted—options		(2,683	)		2,683			4.98
Granted—restricted shares		(254	)		—			—		—			—		127			5.25
Exercised		—			(439	)		4.48
Vested		—			—			—		—			—		(373	)		6.69
Canceled		1,655			(1,491	)		7.12		(125	)		8.53		(75	)		5.24
Expired		(172	)		—										—			—
Balances at June 27, 2010		5,697			6,043		$	5.84		—		$	—		219		$	5.20
Granted—options		(2,193	)		2,193			6.20
Granted—restricted shares		(422	)		—			—		—			—		211			6.55
Exercised		—			(462	)		4.69
Vested		—			—			—		—			—		(175	)		5.19
Canceled & Expired		1,457			(1,240	)		7.22		—			—		(27	)		5.78
Expired from plans prior to 1999		(76	)		—										—			—
Balances at July 3, 2011		4,463			6,534		$	5.78		—		$	—		228		$	6.39
Granted—options		(2,109	)		2,109			5.16
Granted—restricted shares		(312	)		—			—		—			—		156			5.32
Exercised		—			(475	)		4.53
Vested		—			—			—		—			—		(123	)		6.53
Cancelled and Expired		852			(852	)		7.07		—			—		—
Shares Expired from plans prior to 1999		(5	)		—			—							—			—
Balances at July 1, 2012		2,889			7,316		$	5.54		—		$	—		261		$	5.68

Options outstanding, vested and expected to vest, and exercisable as of July 1, 2012 were as follows:

Option	Number of Shares		Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In thousands)		(In years)				(In thousands)
Outstanding		7,316		4.60	$	5.54	$	5,152
Vested and expected to vest		7,012		4.54	$	5.54	$	4,956
Exercisable		3,592		3.48	$	5.68	$	2,715

The aggregate intrinsic value in the preceding table represents the total pre-tax value of stock options outstanding as of July 1, 2012, based on our common stock closing price of $5.99 on July 1, 2012, which would have been received by the option holders had all option holders exercised and sold their options as of that date.

As of July 1, 2012, July 3, 2011, and June 27, 2010, the number of shares and weighted average exercise prices of exercisable options were 3.6 million at $5.68; 2.8 million at $6.02; and 2.5 million at $7.26, respectively.

The total intrinsic value of options exercised during fiscal 2012, 2011, and 2010, was $0.6 million, $0.6 million, and $0.6 million, respectively.

The weighted average grant-date fair value of options granted was $2.45 in 2012, $3.06 in 2011 and $2.46 in 2010. Our calculations were made using the Black-Scholes option-pricing model. The fair value of our stock-based awards to employees was estimated assuming no expected dividend and the following weighted-average assumptions for fiscal 2012, 2011 and 2010:

	Year ended
	July 1, 2012			July 3, 2011			June 27, 2010
Expected life (in years)		4.9			5.1			4.9
Risk-free interest rate		0.6	%		1.2	%		1.9	%
Volatility		56.6	%		56.6	%		56.6	%

Restricted Stock Awards

Our restricted stock awards are grants that entitle the holder to acquire shares of restricted common stock with certain designated prices or at no cost on a time or performance basis. The shares of restricted stock cannot be sold, pledged, or otherwise disposed of until the award vests and any unvested shares may be reacquired by us following the awardees’ termination of service. The restricted stock awards typically vest on the first, second or third anniversary of the grant date or on a graded vesting schedule over the designated service period with certain conditions and restrictions.

In fiscal 2012, we repurchased 24,000 shares for an aggregate price of approximately $0.1 million as income tax withholding on vested restricted stock for the recipients.

Employee Stock Purchase Plan

On August 13, 2010, the Board of Directors approved an employee stock purchase plan (the “ESPP”) and reserved 1.4 million shares for issuance under the ESPP. The ESPP allows eligible employees to purchase shares of the Company’s stock at a discount through payroll deductions. The ESPP consists of six-month offering periods commencing on the first trading day of March and September each year. Employees purchase shares in the purchase period at 85% of the market value of the Company’s common stock at either the beginning of the offering period or the end of the offering period, whichever price is lower. The first six month offering period commenced on March 1, 2011.

Stock Repurchase Program

On November 17, 2011, the Company’s Board of Directors authorized management to repurchase an additional 4.1 million shares of Symmetricom common stock in addition to the remaining shares available for repurchase under previously approved programs. As of July 1, 2012, the total number of shares available for repurchase under the repurchase program authorized by the Board of Directors was approximately 2.8 million.

During fiscal 2012, we repurchased 2.9 million shares of common stock pursuant to our repurchase program for an aggregate price of approximately $16.0 million. The repurchased shares were recorded as a reduction of our common stock and resulted in a reduction of stockholders’ equity.

Preferred Stock

We have 500,000 shares of $0.0001 par value preferred stock authorized, of which 200,000 shares were reserved for issuance in connection with our preferred stock rights plan. The right entitled the holder to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock at a price of $72.82. The rights were distributed at the rate of one right for each share of common stock as a non-taxable dividend and exercisable only in the event that a person or group acquires 15% or more of our outstanding common stock. The rights expired in August 2011.