STOCK-BASED COMPENSATION

9 Months Ended

Mar. 29, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

We recognize stock-based compensation expense in our condensed consolidated statement of operations related to all share-based awards, including grants of stock options, based on the grant date fair value of such share-based awards. Estimating the grant date fair value of such share-based awards requires us to make judgments in the determination of inputs into the Black-Scholes stock option pricing model which we use to arrive at an estimate of the grant date fair value for such awards. The assumptions used in this model to value stock option grants were as follows:

	Three Months Ended			Nine Months Ended
	March 29, 2014		March 30, 2013	March 29, 2014		March 30, 2013
Stock options:
Expected life	5.3 years		—	5.3 years		5.1 years
Risk-free interest rate	1.6	%	—	1.5	%	0.7	%
Volatility	84.8	%	—	83.9	%	82.9	%
Dividend yield	—		—	—		—

The amounts included in cost of revenues and operating expenses for stock-based compensation were as follows:

	Three Months Ended					Nine Months Ended
	March 29, 2014			March 30, 2013		March 29, 2014			March 30, 2013
	(Thousands)
Stock-based compensation by category of expense:
Cost of revenues	$	244		$	488	$	746		$	1,217
Research and development	249			380		701			1,168
Selling, general and administrative	2,492			715		3,347			2,380
	$	2,985		$	1,583	$	4,794		$	4,765
Stock-based compensation by type of award:
Stock options	$	210		$	574	$	803		$	1,948
Restricted stock awards	2,810			828		4,034			2,364
Purchase rights under ESPP	—			118		—			531
Inventory adjustment to cost of revenues	(35		)	63		(43		)	(78		)
	$	2,985		$	1,583	$	4,794		$	4,765

As of March 29, 2014 and June 29, 2013, we had capitalized approximately $0.3 million and $0.4 million, respectively, of stock-based compensation as inventory.

As of March 29, 2014, we determined that the achievement of the performance conditions associated with the PSUs issued in July 2012 are improbable. We have not recorded any compensation cost associated with these PSUs. If the performance conditions are not met or not expected to be met, no compensation cost will be recognized on the underlying PSUs, and any previously recognized compensation expense related to those PSUs would be reversed.

Included in stock-based compensation for the three and nine months ended March 29, 2014 is approximately $2.0 million in compensation cost related to the grant of 0.8 million RSUs to our chief executive officer on February 10, 2014, which vested in full on the grant date.