STOCK-BASED COMPENSATION

9 Months Ended

Mar. 28, 2015

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 28, 2015	March 29, 2014		March 28, 2015		March 29, 2014
Stock options:
Expected life	N/A	5.3 years		5.3 years		5.3 years
Risk-free interest rate	N/A	1.6	%	1.6	%	1.5	%
Volatility	N/A	84.8	%	76.9	%	83.9	%
Dividend yield	N/A	—		—		—

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

	Three Months Ended						Nine Months Ended
	March 28, 2015			March 29, 2014			March 28, 2015		March 29, 2014
	(Thousands)
Stock-based compensation by category of expense:
Cost of revenues	$	434		$	244		$	1,340	$	746
Research and development	396			249			1,138		701
Selling, general and administrative	745			2,492			2,139		3,347
	$	1,575		$	2,985		$	4,617	$	4,794
Stock-based compensation by type of award:
Stock options	$	87		$	210		$	317	$	803
Restricted stock awards	1,497			2,810			4,233		4,034
Inventory adjustment to cost of revenues	(9		)	(35		)	67		(43		)
	$	1,575		$	2,985		$	4,617	$	4,794

As of March 28, 2015 and June 28, 2014, we had capitalized approximately $0.5 million and $0.4 million, respectively, of stock-based compensation as inventory.

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.

As of March 28, 2015, we had $0.5 million in unrecognized stock-based compensation expense related to unvested stock options, net of estimated forfeitures, that will be recognized over a weighted-average period of 2.7 years, and $6.1 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 1.5 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 second quarter of fiscal year 2015, we determined that the achievement of the performance conditions associated with the PSUs granted in March 2014 was improbable. We reversed approximately $0.1 million in previously recognized stock-based compensation expense related to these PSUs.

During the three and nine months ended March 28, 2015, we recorded $0.1 million and $0.2 million in stock-based compensation in connection with the issuance of the PSUs from July 2011, March 2014 and August 2014. During the three and nine months ended March 29, 2014, we recorded minimal stock-based compensation expense in connection with the issuance of the PSUs from July 2011 and March 2014.