STOCK-BASED COMPENSATION

3 Months Ended

Oct. 01, 2016

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

	Three Months Ended
	October 1, 2016			September 26, 2015
	(Thousands)
Stock-based compensation by category of expense:
Cost of revenues	$	289		$	456
Research and development	457			424
Selling, general and administrative	1,697			944
	$	2,443		$	1,824
Stock-based compensation by type of award:
Stock options	$	38		$	62
Restricted stock awards	2,590			1,761
Inventory adjustment to cost of revenues	(185		)	1
	$	2,443		$	1,824

As of October 1, 2016 and July 2, 2016, we had capitalized approximately $0.5 million and $0.3 million, respectively, of stock-based compensation as inventory.

As of October 1, 2016, we had capitalized approximately $0.1 million of stock-based compensation in connection with the development of internal use software.

As of October 1, 2016, we had $0.1 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 1.7 years, and $19.5 million in unrecognized stock-based compensation expense related to unvested time-based restricted stock awards, net of estimated forfeitures, that will be recognized over a weighted-average period of 2.6 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 to be met, no compensation cost would be recognized on the shares underlying the PSUs, and any previously recognized compensation expense related to those PSUs would be reversed. As of October 1, 2016, we determined that the achievement of the performance conditions associated with the PSUs issued in August 2016 is probable at 100 percent of the target level.

During the three months ended October 1, 2016, we recorded $0.6 million in stock-based compensation in connection with the PSUs issued in August 2015 and August 2016. During the three months ended September 26, 2015, we recorded $0.2 million in stock-based compensation expense in connection with the issuance of PSUs.