Stock-Based Compensation

3 Months Ended

Sep. 29, 2012

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

Stock-Based Compensation [Text Block]

STOCK-BASED COMPENSATION

The following table shows total stock-based compensation expense by type of award, and the resulting tax effect, included in the Condensed Consolidated Statements of Income for the three months ended September 29, 2012 and September 24, 2011:

Stock-based compensation expense by type of award
	Three Months Ended
	September 29, 2012		September 24, 2011
	(in thousands)
Stock options	$	3,782	$	4,000
Restricted stock units	16,500		17,390
Employee stock purchase plan	2,215		2,075
Pre-tax stock-based compensation expense	22,497		23,465
Less: income tax effect	4,832		5,459
Net stock-based compensation expense	$	17,665	$	18,006

The following table shows pre-tax stock-based compensation expense by income statement classification:

	Three Months Ended
	September 29, 2012		September 24, 2011
	(in thousands)
Cost of goods sold	$	2,988	$	3,257
Research and development	12,323		13,261
Selling, general and administrative	7,186		6,947
	$	22,497	$	23,465

Fair Value

The fair value of options granted to employees under the Company's 1996 Stock Incentive Plan and rights to acquire common stock under the Company's 2008 Employee Stock Purchase Plan (the "ESPP") is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of Restricted Stock Units ("RSUs") is estimated using the value of the Company's common stock on the date of grant, reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting.

Expected volatilities are based on the historical volatilities from the Company's traded common stock over a period equal to the expected term. The Company is utilizing the simplified method to estimate expected holding periods. The risk-free interest rate is based on the U.S. Treasury yield. The Company determines the dividend yield by dividing the annualized dividends per share by the prior quarter's average stock price. The result is analyzed by the Company to decide whether it represents expected future dividend yield. The Company also estimates forfeitures at the time of grant and makes revisions to forfeitures on a quarterly basis.

The fair value of share-based awards granted to employees has been estimated at the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:

	1996 Stock Incentive Plan
	Three Months Ended
	September 29, 2012		September 24, 2011
Expected holding period (in years)	5.4		5.3
Risk-free interest rate	0.7	%	1.4	%
Expected stock price volatility	37.8	%	38.0	%
Dividend yield	3.3	%	3.2	%

The weighted-average fair value of stock options granted was $6.24 and $5.79 per share for the three months ended September 29, 2012 and September 24, 2011, respectively. The weighted-average fair value of RSUs granted was $24.31 and $19.69 per share for the three months ended September 29, 2012 and September 24, 2011, respectively.

Stock Options

The following table summarizes outstanding, exercisable and vested and expected to vest stock options as of September 29, 2012 and their activity for the three months ended September 29, 2012:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1)
Balance at June 30, 2012	24,234,994		$	25.20
Options Granted	2,530,804		27.26
Options Exercised	(1,098,144	)	17.47
Options Cancelled	(928,478	)	34.90
Balance at September 29, 2012	24,739,176		$	25.39	3.7	$	130,703,636
Exercisable, September 29, 2012	12,813,102		$	29.72	2.2	$	49,479,720
Vested and expected to vest, September 29, 2012	23,149,811		$	25.56	3.6	$	123,286,805

(1) Aggregate intrinsic value represents the difference between the exercise price and the closing price per share of the Company's common stock on September 28, 2012, the last business day preceding the fiscal quarter-end, multiplied by the number of options outstanding, exercisable or vested and expected to vest as of September 29, 2012.

As of September 29, 2012, there was $42.8 million of total unrecognized stock compensation cost related to 11.9 million unvested stock options, which is expected to be recognized over a weighted average period of approximately 3.1 years.

Restricted Stock Units

The following table summarizes outstanding and expected to vest RSUs as of September 29, 2012 and their activity during the three months ended September 29, 2012:

	Number of Shares		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (1)
Balance at June 30, 2012	8,923,454
Restricted stock units granted	2,392,659
Restricted stock units released	(822,458	)
Restricted stock units cancelled	(165,545	)
Balance at September 29, 2012	10,328,110		3.0	$	285,375,233
Vested and expected to vest, September 29, 2012	8,966,075		2.9	$	246,656,725

(1) Aggregate intrinsic value for RSUs represents the closing price per share of the Company's common stock on September 28, 2012, the last business day preceding the fiscal quarter-end, multiplied by the number of RSUs outstanding or expected to vest as of September 29, 2012.

The Company withheld shares totaling $7.1 million in value as a result of employee withholding taxes based on the value of the RSUs on their vesting date as determined by the Company's closing stock price for the three months ended September 29, 2012. The total payments for the employees' tax obligations to the taxing authorities are reflected as financing activities within the Condensed Consolidated Statements of Cash Flows.

As of September 29, 2012, there was $153.3 million of unrecognized compensation expense related to 10.3 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 3.0 years.

Employee Stock Purchase Plan

As of September 29, 2012, there was $3.0 million of unrecognized compensation expense related to the ESPP.