Employee Benefit Plans

The Company grants options and restricted stock units from the Amended and Restated 2006 Long-Term Incentive Plan, under which awards may be granted to all employees. Award vesting periods for this plan is generally four years. As of March 30, 2014, a total of 1,463,487 shares from 2006 plan were reserved for future grants under the plan. During the second quarter of 2013, the Company's 2003 Stock Plan expired and the remaining unissued 62,791 reserved shares were retired accordingly.

Additionally, the Company sponsors an Employee Stock Purchase Plan (the “ESPP”), pursuant to which eligible employees may contribute up to 10% of base compensation, subject to certain income limits, to purchase shares of the Company’s common stock. Employees may purchase stock semi-annually at a price equal to 85% of the fair market value on the purchase date. As of March 30, 2014, a total of 261,025 shares were reserved for future grants under the ESPP.

Option Activity

Stock options activity during the three months ended March 30, 2014, was as follows:



	Options Outstanding
	Number of shares		Weighted Average Exercise Price Per Share
	(in thousands)		(in dollars)
December 31, 2013	4,165		$	30.11
Granted	—		—
Exercised	(167	)	24.27
Cancelled	(32	)	36.65
Expired	(76	)	35.95
March 30, 2014	3,890		$	30.19

RSU Activity

RSU activity during the three months ended March 30, 2014, was as follows:



	RSUs Outstanding
	Number of shares		Weighted Average Grant Date Fair Value Per Share
	(in thousands)		(in dollars)
December 31, 2013	731		$	29.40
RSUs granted	23		31.03
RSUs vested	(3	)	27.95
RSUs cancelled	(22	)	28.70
March 30, 2014	729		$	29.37

Valuation and Expense Information

The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. The estimated expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk free interest rate is based on the implied yield currently available on U.S. Treasury securities with a remaining term commensurate with the estimated expected term. Expected volatility is based on historical volatility over the most recent period commensurate with the estimated expected term.

There were no option grants in the three months ended March 30, 2014. The following table sets forth the weighted average assumptions used to fair value option grants during the three months ended March 31, 2013:



	Three Months Ended
	March 31, 2013
Expected life (in years)	4.4
Risk-free interest rate	0.74	%
Expected volatility	50.3	%
Dividend yield	—

The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and the ESPP included in the Company’s unaudited condensed consolidated statements of operations (in thousands):



	Three Months Ended
	March 30, 2014		March 31, 2013
Cost of revenue	$	471	$	189
Research and development	1,396		672
Sales and marketing	1,949		1,230
General and administrative	1,314		1,499
Total stock-based compensation	$	5,130	$	3,590

As of March 30, 2014, $13.9 million of total unrecognized compensation cost related to stock options, adjusted for estimated forfeitures, is expected to be recognized over a weighted-average period of 2.18 years. Additionally, $12.3 million of total unrecognized compensation cost related to non-vested RSUs, adjusted for estimated forfeitures, is expected to be recognized over a weighted-average period of 2.77 years.