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Shareholders' Equity and Share-Based Compensation
 9 Months Ended
Mar. 30, 2013
Shareholder's Equity and Share-Based Compensation [Abstract]  
SHAREHOLDERS' EQUITY AND SHARE-BASED COMPENSATION
9. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION
 
PREFERRED STOCK
 
The Company’s shareholders have authorized the Board of Directors to issue 5,000,000 shares of preferred stock from time to time in one or more series and to fix the rights, privileges and restrictions of each series. As of March 30, 2013, the Company has issued no shares of preferred stock.
 
STOCK OPTION PLANS
 
At March 30, 2013 the Company had four stock incentive plans and an employee stock purchase plan, consisting of the 1995 Stock Option Plan, 2001 Stock Option Plan, SaRonix Acquisition Stock Option Plan, 2004 Stock Incentive Plan and the 2010 Employee Stock Purchase Plan.
 
Under the four stock incentive plans, the Company has reserved an aggregate of 5.2 million shares of common stock as of March 30, 2013 for issuance to employees, officers, directors, independent contractors and consultants of the Company in the form of incentive or nonqualified stock options, or grants of restricted stock.
 
The Company may grant stock options at the fair value on the grant date for incentive stock options and nonqualified stock options. Options vest over periods of generally 48 months as determined by the Board of Directors. Options granted under the Plans expire 10 years from the grant date.
 
The Company estimates the fair value of each employee stock option on the date of grant using the Black-Scholes option valuation model and expenses that value as compensation using a straight-line method over the option’s vesting period, which corresponds to the requisite employee service period. The Company estimates expected stock price volatility based on actual historical volatility for periods that the Company believes represent predictors of future volatility. The Company uses historical data to estimate option exercises, expected option holding periods and option forfeitures. The Company bases the risk-free interest rate for periods within the contractual life of the option on the U.S. Treasury yield corresponding to the expected life of the underlying option.
 
The value of the Company’s stock options granted under its stock incentive plans during the three months ended March 30, 2013 was estimated at the date of grant using the following weighted average assumptions:
 
   
Three
Months Ended
  
   
March 30,
2013
  
Expected Life
  
5.9 years
  
Risk-free interest rate
     1.13 %
Volatility
     54 %
Dividend Yield
     —  

No stock options were granted under the stock incentive plans during the three months ended March 31, 2012.
 
The following table summarizes the Company’s stock option activity for the nine months ended March 30, 2013:
 
   
Shares
  
Weighted
Average
Exercise
Price
  
Weighted
Average
Remaining
Contractual
Term
  
Aggregate
Intrinsic Value
   
(in thousands)
      
(years)
  
(in thousands)
Options outstanding at June 30, 2012
    
2,453
    
$
10.34
      
5.12
    
$
912
  
                                 
Granted
    
175
      
8.54
                  
Exercised
    
(6
)
    
7.87
                  
Cancelled or expired
    
(157
)
    
9.58
                  
Options outstanding at March 30, 2013
    
2,465
    
$
10.27
      
4.82
    
$
25
  
                                 
Options vested and expected to vest at March 30, 2013
    
2,433
    
$
10.29
      
4.76
    
$
25
  
Options exercisable at March 30, 2013
    
2,110
    
$
10.52
      
4.21
    
$
25
  

At March 30, 2013, 1.6 million shares were available for future grants under the incentive plans. The aggregate intrinsic value of options exercised during the nine months ended March 30, 2013 was not significant.
 
At March 30, 2013, expected future compensation expense relating to options outstanding is $1.3 million, which will be amortized to expense over a weighted average period of 2.3 years.
 
Additional information regarding options outstanding and exercisable as of March 30, 2013 is as follows:
 
         
Options Outstanding
  
Exercisable Options
 
Range of Exercise
Prices
  
Number
Outstanding as
of March 30,
2013
  
Weighted
Average
Remaining
Contractual
Term (years)
  
Weighted
Average
Exercise
Price
  
Number
Exercisable as
of March 30,
2013
  
Weighted
Average
Exercise
Price
                           
$ 4.89  
$
8.03
      
500,000
      
4.99
    
$
7.72
      
399,000
    
$
7.73
  
  8.10    
8.85
      
582,000
      
5.14
      
8.52
      
410,000
      
8.45
  
  8.86    
10.01
      
497,000
      
5.27
      
9.74
      
435,000
      
9.71
  
  10.15    
14.57
      
494,000
      
3.71
      
11.00
      
474,000
      
10.98
  
  14.68    
18.10
      
392,000
      
4.94
      
15.87
      
392,000
      
15.87
  
$ 4.89  
$
18.10
      
2,465,000
      
4.82
    
$
10.27
      
2,110,000
    
$
10.52
  
 
Restricted Stock Units
 
Restricted stock units (“RSUs”) are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Typically, vesting of RSUs is subject to the employee’s continuing service to the Company. RSUs generally vest over a period of 4 years and are expensed ratably on a straight-line basis over their respective vesting period net of estimated forfeitures. The fair value of RSUs granted pursuant to the Company’s 2004 Stock Incentive Plan is the product of the number of shares granted and the grant date fair value of the common stock. A summary of activity of RSUs for the nine months ended March 30, 2013 is presented below:
 
   
Shares
  
Weighted
Average
Award
Date Fair
Value
  
Weighted
Average
Remaining
Contractual
Term
  
Aggregate
Intrinsic Value
   
(in thousands)
      
(years)
  
(in thousands)
RSUs outstanding at June 30, 2012
    
504
    
$
9.06
      
1.42
    
$
4,535
  
                                 
Awarded
    
277
      
7.81
                  
Released
    
(160
)
    
9.52
                  
Forfeited
    
(59
)
    
8.26
                  
RSUs outstanding at March 30, 2013
    
562
    
$
8.39
      
1.54
    
$
3,969
  
                                 
RSUs expected to vest after March 30, 2013
    
496
    
$
8.43
      
1.45
    
$
3,505
  
 
At March 30, 2013, expected future compensation expense relating to RSUs is $3.2 million, which will be amortized to expense over a weighted average remaining recognition period of 2.5 years.
 
2010 EMPLOYEE STOCK PURCHASE PLAN
 
The Company’s 2010 Employee Stock Purchase Plan (the “Stock Purchase Plan”) allows eligible employees of the Company to purchase shares of Common Stock through payroll deductions. The Company reserved 2.0 million shares of the Company’s Common Stock for issuance under this Plan, of which 1.8 million remain available at March 30, 2013. The Stock Purchase Plan permits eligible employees to purchase Common Stock at a discount through payroll deductions during six-month purchase periods. The six-month periods come to an end on or about May 1 and November 1 and the purchases are then made. Thus there were no purchases under the Stock Purchase Plan for the three months ended March 30, 2013 and March 31, 2012. Participants in the Stock Purchase Plan may purchase stock at 85% of the lower of the stock’s fair market value on the first day and last day of the offering period. The maximum number of shares of Common Stock that any employee may purchase during any offering period under the plan is 1,500 shares, and an employee may not accrue more than $15,000 for share purchases in any offering period. During the first nine months of fiscal years 2013 and 2012, the Company issued 56,809 and 55,915 shares of common stock under the Stock Purchase Plan at weighted average prices of $6.57 and $7.22, respectively. The weighted average fair value of the awards for the first nine months of fiscal 2013 and 2012 were $1.77 and $2.43 per share, respectively.
 
The Company estimates the fair value of stock purchase rights granted under the Company’s Stock Purchase Plan on the date of grant using the Black-Scholes option valuation model. ASC Topic 718 states that a “lookback” pricing provision with a share limit should be considered a combination of stock and a call option. The valuation results for these elements have been combined to value the specific features of the stock purchase rights. The Company bases volatility on the expected volatility of the Company’s stock during the offering period. The expected term is determined by the time from enrollment until purchase, and the Company uses the U.S. Treasury yield for the risk-free interest rate for the offering period.
 
The following table summarizes activity in the Company’s employee stock purchase plan during the nine months ended March 30, 2013:
 
   
Shares
  
Weighted
Average
Purchase
Price
                 
Beginning Available
    
1,835,939
          
Purchases
    
(56,809
)
  
$
6.57
  
                 
Ending Available
    
1,779,130
          
 
At March 30, 2013, the Company had $18,000 in unamortized share-based compensation related to its employee stock purchase plan which will be amortized and recognized in the consolidated statement of operations over the next month.
 
SHARE-BASED COMPENSATION
 
The following table shows total share-based compensation expense classified by Consolidated Statements of Operations reporting caption for the three and nine months ended March 30, 2013 and March 31, 2012 generated from the plans described above:
 
   
Three Months Ended
  
Nine Months Ended
(In thousands)
  
March 30,
2013
  
March 31,
2012
  
March 30,
2013
  
March 31,
2012
                 
Cost of revenues
  
$
51
    
$
60
    
$
146
    
$
161
  
Research and development
    
317
      
371
      
972
      
1,099
  
Selling, general and administrative
    
474
      
496
      
1,425
      
1,573
  
Pre-tax share-based compensation expense
    
842
      
927
      
2,543
      
2,833
  
Income tax impact
    
(277
)
    
(41
)
    
(838
)
    
(689
)
Net share-based compensation expense
  
$
565
    
$
886
    
$
1,705
    
$
2,144
  

Share-based compensation by type of award is as follows:
 
   
Three Months Ended
    
Nine Months Ended
  
(In thousands)
  
March 30,
2013
    
March 31,
2012
    
March 30,
2013
    
March 31,
2012
  
                         
Stock options
   $ 265     $ 304     $ 803     $ 1,074  
Restricted stock units
     523       549       1,578       1,556  
Stock purchase plan
     54       74       162       203  
Total share-based compensation expense
   $ 842     $ 927     $ 2,543     $ 2,833  
 
The amount of share-based compensation expense capitalized in inventory at March 30, 2013 and June 30, 2012 is immaterial.