STOCK-BASED COMPENSATION

3 Months Ended

Sep. 27, 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
	September 27, 2014		September 28, 2013
Stock options:
Expected life	5.3 years		—
Risk-free interest rate	1.6	%	—
Volatility	77.5	%	—
Dividend yield	—		—

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

	Three Months Ended
	September 27, 2014			September 28, 2013
	(Thousands)
Stock-based compensation by category of expense:
Cost of revenues	$	330		$	252
Research and development	332			246
Selling, general and administrative	624			465
	$	1,286		$	963
Stock-based compensation by type of award:
Stock options	$	142		$	331
Restricted stock awards	1,185			658
Inventory adjustment to cost of revenues	(41		)	(26		)
	$	1,286		$	963

As of September 27, 2014 and June 28, 2014, we had capitalized approximately $0.4 million and $0.4 million, respectively, of stock-based compensation as inventory.

As of September 27, 2014, we had $1.0 million in unrecognized stock-based compensation expense related to unvested stock options and SARs, net of estimated forfeitures, that will be recognized over a weighted-average period of 2.2 years, and $10.2 million in unrecognized stock-based compensation expense related to unvested restricted stock awards, net of estimated forfeitures, that will be recognized over a weighted-average period of 1.9 years.

The amount of stock-based compensation expense recognized in any one period related to PSUs can vary based on the achievement or anticipated achievement of the performance conditions. If the performance conditions are not met or not expected be met, no compensation cost would be recognized on the underlying PSUs, and any previously recognized compensation expense related to those PSUs would be reversed. During the three months ended September 27, 2014 and September 28, 2013, we recorded minimal stock-based compensation expense in connection with the issuance of the PSUs from July 2011, March 2014 and August 2014.