NOTE 14—EQUITY-BASED COMPENSATION

Our equity compensation plans are summarized below (in thousands):


Equity Compensation Arrangement	Total Number of Shares in Arrangement	Shares Outstanding as of January 1, 2016	Shares Available for Issuance at January 1, 2016
1999 Plan	36,250	24	-
2008 Plan	46,352	8,563	14,262
2009 Option Exchange Plan	2,914	719	-
Inducement Plan	433	216	-
ESPP	9,033	-	2,451
	94,982	9,522	16,713

Grant Date Fair Values and Underlying Assumptions; Contractual Terms

For Options granted in 2015 and 2014, we estimated the fair value of each Option as of the date of grant with the following assumptions:


	Year Ended
	January 1, 2016	January 2, 2015
Expected volatilities	32.1%	32.2%
Dividend yields	4.0%	3.6%
Risk-free interest rate	1.0%	0.8%
Expected lives, in years	2.6	2.6

The following table represents the weighted-average fair value compensation cost per share of Options and Awards granted:



	Year Ended
	January 1, 2016		January 2, 2015		January 3, 2014
Options	$	1.88	$	2.18	$	1.67
Awards	$	14.20	$	13.12	$	8.58

Information Regarding Options and Awards—Information about Options and Awards as of January 1, 2016 and activity for Options and Awards for the three years then ended is presented below:



	Options				Awards	Aggregate information
	Shares	Weighted-average price		Weighted-average remaining contract lives	Shares	Aggregate intrinsic value			Aggregate unrecognized compensation cost
	(in thousands)		(per share)	(in years)	(in thousands)		(in thousands)		(in thousands)
Outstanding as of December 28, 2012	11,946	$	14.90	3.7	3,367
Granted(1)	340		8.38		3,334
Exercised (2)	(106)		8.34		(931)
Canceled	(4,684)		16.89		(1,166)
Outstanding as of January 3, 2014	7,496	$	13.46	3.3	4,604
Granted (1)	70		13.45		2,109
Exercised (2)	(1,205)		12.36		(1,153)
Canceled	(978)		19.28		(309)
Outstanding as of January 2, 2015	5,383	$	12.65	2.9	5,251
Granted (1)	40		12.01	6.3	2,321
Exercised (2)	(908)		12.01	1.8	(1,527)
Canceled	(502)		18.02	1.2	(536)
Outstanding as of January 1, 2016	4,013	$	12.02	2.2	5,509	$	75,432	$	29,042

As of January 1, 2016:
Exercisable/vested (2)	3,881	$	12.01	2.1	67	$	5,974
Vested and expected to vest	4,013	$	12.02	2.2	4,078	$	57,278

(1)

Grants include 360,153, 433,564, and 784,000 MSU Awards issued in 2015, 2014, and 2013, respectively.

(2)

Awards exercised are those that have reached full vested status and have been delivered to the recipients as a taxable event due to elective deferral, available in the case of deferred stock units. Deferred stock units for which the deferral is elected timely are vested but still outstanding as Awards. Total un-issued shares related to deferred stock units as of January 1, 2016 were 67 thousand shares as shown in the Awards column as Exercisable/vested.

The unrecognized compensation cost is expected to be recognized over a period of 1.79 years.



Additional Disclosures	Year Ended
	January 1, 2016		January 2, 2015		January 3, 2014

		(in thousands)
Shares issued under the employee stock purchase plan		537		495		712
Aggregate intrinsic value of stock options exercised	$	2,243	$	2,445	$	175

The following table is a summary of the number and weighted-average grant date fair values regarding our unexercisable/unvested Options and Awards as of January 1, 2016 and activity during the year then ended (in thousands, except per share data):


	Options Unvested	Options-Weighted Average Grant Date Fair Values		Awards Unvested	Awards-Weighted Average Grant Date Fair Values
Unvested as of January 2, 2015	717	$	2.86	5,184	$	10.51
Granted	40		1.88	2,321		14.20
Vested	(573)		2.23	(1,527)		10.37
Forfeited	(52)		2.79	(536)		11.18
Unvested as of January 1, 2016	132	$	5.29	5,442	$	12.28

Financial Statement Effects and Presentation—The following table shows total equity-based compensation expense for the periods indicated (in thousands):



	Year Ended
	January 1, 2016		January 2, 2015		January 3, 2014
By statement of income line item
Cost of revenue	$	1,400	$	1,326	$	1,387
Research and development	$	10,167	$	8,468	$	7,777
Selling, general and administrative	$	11,591	$	8,894	$	9,927
By stock type
Stock options	$	617	$	1,189	$	4,690
Restricted and deferred stock awards	$	21,464	$	16,493	$	13,378
Employee stock purchase plan	$	1,077	$	1,006	$	1,023

Market and Performance-based Grants — As of January 1, 2016, we had Options and Awards outstanding that include the usual service conditions as well as (1) market conditions related to total stockholder return and (2) performance conditions relating to revenue and operating income relative to peer companies. Under the terms of the agreements, participants may receive from 0 - 300% of the original grant. Equity-based compensation cost is measured at the grant date, based on the fair value of the number of shares ultimately expected to vest, and is recognized as an expense, on a straight line basis, over the requisite service period (shares in thousands):



	January 1, 2016
	Options	Awards
	(in thousands)
Performance and market-based units outstanding	368	1,393
Maximum shares that could be issued assuming the highest level of performance	341	2,948
Performance and market-based shares vested / expected to vest	341	1,552
Amount to be recognized as compensation cost over the performance period	$ -	$ 1,778