Share-Based Compensation (Notes)

3 Months Ended

Sep. 28, 2012

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

Share-Based Compensation

SHARE-BASED COMPENSATION

During the three month periods ended September 28, 2012 and September 30, 2011, the Company granted stock options and restricted stock units to employees and non-employee directors under its 2005 Equity Incentive Plan and issued shares of the Company's common stock to participating employees under its 2005 Employee Stock Purchase Plan. Total share-based compensation expense was as follows (in thousands):

	Three Months Ended
	September 28, 2012		September 30, 2011
Cost of revenue	$	500	$	282
Research and development	539		515
Sales and marketing	386		361
General and administrative	1,086		911
Total share-based compensation expense	$	2,511	$	2,069

Determining Fair Value

The fair value of share-based awards was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions for the following periods:

	Three Months Ended
	September 28, 2012			September 30, 2011
Option Plans Shares
Risk-free interest rate	0.7		%	1.1		%
Volatility	67.6		%	75.6		%
Weighted average expected life (in years)	5.00			4.66
Expected dividend yield	—			—
Weighted average fair value	$	3.67		$	8.66
ESPP Plan shares
Risk-free interest rate	0.2		%	0.1		%
Volatility	83.0		%	80.0		%
Weighted average expected life (in years)	1.25			1.25
Expected dividend yield	—			—
Weighted average fair value	$	4.39		$	6.43

Stock Option Activity

A summary of stock option activity for the three months ended September 28, 2012 was as follows:

	Options Outstanding
	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual term in years	Aggregate Intrinsic Value
						(in thousands)
Balance at June 29, 2012	3,703,660		$	10.79
Options granted	64,000		6.62
Options exercised	(105,073	)	5.33
Options cancelled	(109,784	)	11.63
Balance at September 28, 2012	3,552,803		$	10.85	5.44	$	3,657
Vested and expected to vest at September 28, 2012	3,324,688		$	10.90	5.20	$	3,399
Exercisable at September 28, 2012	2,280,623		$	11.41	3.55	$	2,205

The total intrinsic value of options exercised in the three months ended September 28, 2012 and September 30, 2011 was $0.3 million and $0.8 million, respectively. The total fair value of shares vested during the three months ended September 28, 2012 and September 30, 2011 was $0.9 million and $0.7 million, respectively.

As of September 28, 2012, there was $3.0 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted average period of 1.28 years.

Restricted Stock Unit Activity

The following table summarizes the Company's activity with respect to restricted stock units (“RSUs”) for the three months ended September 28, 2012:

	Number of Shares
Balance at June 29, 2012	918,764
Awarded	774,489
Released	(65,035	)
Forfeited	(88,844	)
Balance at September 28, 2012	1,539,374
Vested and expected to vest at September 28, 2012	1,124,163

On August 7, 2012, pursuant to the 2005 Equity Plan and the fiscal 2013 Performance RSU Stock Matrix, the Company's Compensation Committee approved the grant of 185,000 performance-based restricted stock units (the “Performance-Based RSUs” or “PSUs”), pursuant to the 2005 Equity Plan, to various individuals on the Company's executive management team with an effective vest commencement date of August 13, 2012. Of the total PSUs, 25% shall vest on the third business day following the date that the Company publicly announces financial results for fiscal 2013, subject to the attainment of certain performance targets. The remaining 75% of the PSUs will vest in three successive equal annual installments over the three-year period measured from the first anniversary of the vesting commencement date, subject to the continued service of the recipient through each vesting date. The ultimate award will be determined based on the achievement of specific performance targets which will be measured at the end of the fiscal 2013 based on the financial results and can be as low as 50% of the aggregate grant amount or as high as 150% of the aggregate grant amount. In accordance with the 2013 Performance RSU Stock Matrix and based on the information available as of September 28, 2012 and the Company's assessment of 100% achievement of the performance metrics, the award was increased by a factor of 125% to 231,250 PSUs for purposes of reporting and to determine the share-based compensation expense. The Company will assess the achievement of these performance metrics on a quarterly basis through the end of fiscal 2013. If the performance targets are not met at that time, none of the PSUs will vest and will be forfeited.

As of September 28, 2012, there was $9.2 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted average period of 3.15 years.

RSUs are converted into common stock upon vesting. Upon the vesting of RSUs, the Company generally withholds a portion of the shares to cover applicable taxes and decreases the shares issued to the employee by a corresponding value. The withholding tax obligations are based upon the fair market value of the Company’s common stock on the vesting date. The number and the value of the shares withheld for tax purposes are summarized in the table below (in thousands except share amounts):

	Three Months Ended
	September 28, 2012		September 30, 2011
RSUs shares withheld for taxes	24,381		29,366
RSUs amounts withheld for taxes	$	188	$	420

Employee Stock Purchase Plan

At September 28, 2012, the total unrecognized compensation cost related to rights to purchase the Company's common stock under the employee stock purchase plan ("ESPP") was approximately $2.2 million. This cost will be amortized on a straight-line basis over approximately 1.9 years. The following table shows the shares issued and their respective weighted-average purchase price per share, pursuant to the ESPP, during the three months ended September 28, 2012 and September 30, 2011.

	Three Months Ended
	September 28, 2012		September 30, 2011
Shares issued	256,972		259,347
Weighted-average purchase price per share	$	6.76	$	5.99