Stockholders' Equity

6 Months Ended

Dec. 30, 2012

Stockholders' Equity

Note 7. Stockholders’ Equity

Stock Options and Awards Activity

Stock award activity for the six months ended December 30, 2012 is as follows:

	Shares Available For Grant			Non Performance-based Options Outstanding					Restricted Stock Outstanding
				Number of Shares			Weighted Average Exercise Price Per Share		Number of Shares			Weighted Average Grant-Date Fair Value
	(In thousands, except per share amounts)
Balances at July 1, 2012		2,889			7,316		$	5.54		261		$	5.68
Granted—options		(1,280	)		1,280			6.14		—			—
Granted—restricted shares		(406	)		—			—		203			6.19
Exercised		—			(316	)		4.88		—			—
Vested		—			—			—		(107	)		5.94
Cancelled		140			(140	)		5.85		—			—
Balances at December 30, 2012		1,343			8,140		$	5.65		357		$	5.89

Stock options outstanding, vested and expected to vest, and exercisable as of December 30, 2012 were as follows:

Options	Number of Shares		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value
	(In thousands)		(In years)				(In thousands)
Outstanding		8,140		4.58	$	5.65	$	3,179
Vested and expected to vest		7,852		4.53	$	5.65	$	3,117
Exercisable		4,208		3.50	$	5.64	$	2,157

The aggregate intrinsic value in the preceding table represents the total pre-tax value of stock options outstanding as of December 30, 2012, based on our common stock closing price of $5.66 on December 28, 2012, which would have been received by the option holders had all option holders exercised their options as of that date.

The total intrinsic value of options exercised during the second quarter of fiscal 2013 and 2012 was approximately $141,000 and $54,000, respectively.

For the second quarter of fiscal 2013 and 2012, the weighted-average estimated fair value of options granted was $2.92 and $2.43 per share, respectively. For the six months ended December 30, 2012 and January 1, 2012, the weighted-average estimated fair value of options granted was $2.92 and $2.43 per share, respectively. Our calculations were made using the Black-Scholes option-pricing model. The fair value of Symmetricom stock-based awards to employees was estimated assuming no expected dividend and the weighted-average assumptions for the three and six months ended December 30, 2012 and January 1, 2012 as follows:

	Three months ended						Six months ended
	December 30, 2012			January 1, 2012			December 30, 2012			January 1, 2012
Expected life (in years)		4.9			4.9			4.9			5.0
Risk-free interest rate		0.5	%		0.6	%		0.5	%		0.7	%
Volatility		56.8	%		56.8	%		56.8	%		56.2	%

We calculated the stock-based compensation expense in the second quarter of fiscal 2013 and 2012, using an estimated annual forfeiture rate of 5.6% and 7.2%, respectively. At December 30, 2012, the total cumulative compensation cost related to unvested stock-based awards granted to employees, directors and consultants under the Company’s stock option plans, but not yet recognized, was approximately $6.6 million, net of estimated forfeitures of $1.1 million. This cost will be amortized on an accelerated method basis over a period of approximately 1.4 years and will be adjusted for subsequent changes in estimated forfeitures.

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

	Three Months Ended				Six Months Ended
	December 30, 2012		January 1, 2012		December 30, 2012		January 1, 2012
	(In thousands)				(In thousands)
Cost of sales	$	250	$	215	$	541	$	334
Research and development		316		295		677		584
Selling, general and administrative		1,121		1,170		2,241		1,925
Pre-tax stock-based compensation expense		1,687		1,680		3,459		2,843
Less: Income Tax effect		624		622		1,280		1,052
Total	$	1,063	$	1,058	$	2,179	$	1,791

The above table includes expense of $0.2 million and $0.3 million, relating to the employee stock purchase plan (ESPP) for the second quarter and first six months of both fiscal 2013 and 2012.

Performance Awards

In the second quarter of fiscal 2012, the Company communicated its intention to grant 110,000 shares of performance based restricted stock to its executive management employees subject to the achievement of certain financial performance targets. The number of stock awards that will ultimately be granted depends on actual business performance measured for fiscal 2012 against certain targets for revenue and profitability for the Company’s business as well as continued employment with the Company. During the first quarter of fiscal 2013, 92,620 restricted shares were granted upon achievement of financial performance targets.

In the second quarter of fiscal 2013, the Company communicated its intention to grant 103,000 shares of performance based restricted stock to its executive management employees subject to the achievement of certain financial performance targets. The number of stock awards that will ultimately be granted depends on actual business performance measured for fiscal 2013 against certain targets for revenue and profitability for the Company’s business as well as continued employment with the Company.

Stock Repurchases

During the second quarter of fiscal 2013, we repurchased 257,927 shares of common stock pursuant to our repurchase program for an aggregate price of approximately $1.6 million. Further, we repurchased 77,234 shares in the second quarter of fiscal 2013 for an aggregate price of approximately $0.5 million to cover the cost of employee income taxes on vested restricted stock and option exercises.

As of December 30, 2012, the total number of shares available for repurchase under the repurchase program authorized by the Board of Directors was approximately 1.9 million.