EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION

Equity Award Plans

The Company’s stock benefit plans include the 2002 Employee Stock Purchase Plan (“ESPP”) and current active stock plans adopted in 1995 and 2002. See Note 12, “Employee Benefit Plans and Stock-based Compensation” of Notes to Consolidated Financial Statements in the 2018 Form 10-K for details pertaining to each plan.

As of March 29, 2019, there were 0.8 million and 4.8 million shares of common stock reserved for future grants under the Company’s ESPP and active stock plans, respectively.

Stock Option Activities

The following table summarizes the Company’s stock option activities and related information during the three months ended March 29, 2019 (in thousands, except per share amounts and terms):



	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance at December 31, 2018	3,068		$	5.76
Exercised	(6	)	2.25
Canceled or expired	(379	)	6.14
Balance at March 29, 2019	2,683		5.71		2.4	$	1,646.6
As of March 29, 2019
Vested and expected to vest	2,683		5.71		2.4	$	1,646.3
Exercisable	2,673		5.72		2.4	$	1,633.5

The aggregate intrinsic value disclosed above represents the difference between the exercise price of the options and the fair value of the Company’s common stock. There were no employee stock options granted in the three months ended March 29, 2019.

There were no realized tax benefits attributable to stock options exercised in jurisdictions where this expense is deductible for tax purposes for the three months ended March 29, 2019 and March 30, 2018, respectively.

Restricted Stock Units (“RSUs”) Activities

The following table summarizes the Company’s RSUs activities and related information during the three months ended March 29, 2019 (in thousands, except per share amounts):



	Restricted Stock Units Outstanding
	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Balance at December 31, 2018	3,403		$	3.99
Granted	35		5.49
Vested	(1,313	)	3.91
Forfeited	(20	)	4.01
Balance at March 29, 2019	2,105		4.10

French Retirement Benefit Plan

The Company assumed obligations under a defined benefit pension plan in connection with the acquisition of TVN in 2016. The plan is unfunded and there are no contributions required by laws or funding regulations, discretionary contributions or non-cash contributions expected to be made. The table below presents the components of net periodic benefit costs (in thousands):



	Three months ended
	March 29, 2019		March 30, 2018
Service cost	$	57	$	63
Interest cost	20		19
Net periodic benefit cost	$	77	$	82

The present value of the Company’s pension obligation as of March 29, 2019 was $4.9 million, of which $0.1 million was reported as a component of “Accrued and other current liabilities” and $4.8 million was reported as a component of “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. The present value of the Company’s pension obligation as of December 31, 2018 was $4.9 million.

401(k) Plan

The Company has a retirement/savings plan for its U.S. employees, which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. This plan allows participants to contribute up to the applicable Internal Revenue Code limitations under the plan. The Company has made discretionary contributions to the plan of 25% of the first 4% contributed by eligible participants, up to a maximum contribution per participant of $1,000 per year. The contributions for the three months ended March 29, 2019 and March 30, 2018 were $122,000 and $112,000, respectively.

Stock-based Compensation

The following table summarizes stock-based compensation for all plans (in thousands):



	Three months ended
	March 29, 2019		March 30, 2018
Stock-based compensation in:
Cost of revenue	$	225	$	515
Research and development expense	616		1,804
Selling, general and administrative expense	1,272		3,438
Total stock-based compensation in operating expense	1,888		5,242
Total stock-based compensation	$	2,113	$	5,757

As of March 29, 2019, total unrecognized stock-based compensation cost related to unvested RSUs was $6.9 million and is expected to be recognized over a weighted-average period of approximately 1.44 years.

Valuation Assumptions

The Company estimates the fair value of employee stock options and stock purchase rights under the ESPP using a Black-Scholes option valuation model. The value of the stock purchase rights under the ESPP consists of: (1) the 15% discount on the purchase of the stock; (2) 85% of the fair value of the call option; and (3) 15% of the fair value of the put option. The call option and put option were valued using the Black-Scholes option pricing model.



	ESPP Purchase Period Ending
	July 1, 2019		July 2, 2018
Expected term (years)	0.5		0.5
Volatility	43	%	60	%
Risk-free interest rate	2.5	%	1.7	%
Expected dividends	0.0	%	0.0	%
Estimated weighted average fair value per share at purchase date	$1.31		$1.34

The expected term of the stock purchase rights under the ESPP represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has not paid and does not plan to pay any cash dividends in the foreseeable future.