Stock-Based Compensation

9 Months Ended

Mar. 31, 2013

Stock-Based Compensation

Stock-Based Compensation

Note 3 — Stock-Based Compensation

The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note 12 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2012, that provides for the grant to eligible employees, consultants and directors of stock options, restricted shares, and other stock-based awards.

The amounts of stock-based compensation expense recognized in the periods presented are as follows:

	Three Months Ended				Nine Months Ended
	March 31, 2013		April 1, 2012		March 31, 2013		April 1, 2012
	(in thousands)
Stock options	$	116	$	316	$	353	$	866
Restricted stock	977		1,040		3,044		2,870
Total	1,093		1,356		3,397		3,736
Deferred income tax benefit*	301		502		1,210		1,373
Stock-based compensation expense, net	$	792	$	854	$	2,187	$	2,363

* Tax benefit during the three and nine months ended March 31, 2013, reflects the net impact of the expiration of non-qualified stock options.

Stock-based compensation is recorded within the following line items of operating expenses:

	Three Months Ended				Nine Months Ended
	March 31, 2013		April 1, 2012		March 31, 2013		April 1, 2012
	(in thousands)
Marketing and sales	$	383	$	474	$	1,189	$	1,364
Technology and development	109		136		340		489
General and administrative	601		746		1,868		1,883
Total	$	1,093	$	1,356	$	3,397	$	3,736

The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model granted during the respective periods were as follows:

	Three Months Ended				Nine Months Ended
	March 31, 2013 (1)	April 1, 2012			March 31, 2013			April 1, 2012
Weighted average fair value of options granted	n/a	$	2.01		$	2.40		$	1.84
Expected volatility	n/a	72.1		%	72.1		%	72.1		%
Expected life	n/a	8.0 yrs			6.4 yrs			8.0 yrs
Risk-free interest rate	n/a	0.90		%	0.69		%	0.90		%
Expected dividend yield	n/a	0.0		%	0.0		%	0.0		%

(1) no options were granted during the three months ended March 31, 2013.

The following table summarizes stock option activity during the nine months ended March 31, 2013:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (000s)
Outstanding at July 1, 2012	6,711,280		$	4.48
Granted	20,000		$	3.71
Exercised	(53,266	)	$	2.03
Forfeited	(1,782,093	)	$	6.23
Outstanding at March 31, 2013	4,855,921		$	3.85	5.3 years	$	8,653
Options vested at March 31, 2013	4,719,434		$	3.90	5.2 years	$	8,286
Exercisable at March 31, 2013	3,634,087		$	5.10	3.6 years	$	3,777

As of March 31, 2013, the total future compensation cost related to non-vested options, not yet recognized in the statement of income, was $2.4 million and the weighted average period over which these awards are expected to be recognized was 5.7 years.

The Company grants shares of common stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service conditions (Restricted Stock Awards). The following table summarizes the activity of non-vested restricted stock awards during the nine months ended March 31, 2013:

	Shares		Weighted Average Grant Date Fair Value
Non-vested at July 1, 2012	3,855,320		$	2.37
Granted	1,668,490		$	3.55
Vested	(1,603,204	)	$	2.48
Forfeited	(442,431	)	$	3.21
Non-vested at March 31, 2013	3,478,378		$	2.78

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of March 31, 2013, there was $7.4 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of 2.6 years.