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 and nine months ended March 30, 2013 and March 31, 2012:



	Three Months Ended
	March 30, 2013								March 31, 2012
	Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total		Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total
	(in thousands)
Cost of goods sold	$	337	$	2,120	$	598	$	3,055	$	470	$	2,217	$	412	$	3,099
Research and development	1,440		7,116		1,480		10,036		1,742		8,203		1,602		11,547
Selling, general and administrative	1,157		4,764		601		6,522		1,836		5,072		484		7,392
Pre-tax stock-based compensation expense	$	2,934	$	14,000	$	2,679	$	19,613	4,048		$	15,492	$	2,498	$	22,038
Less: income tax effect							2,847								4,061
Net stock-based compensation expense							$	16,766							$	17,977



	Nine Months Ended
	March 30, 2013								March 31, 2012
	Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total		Stock Options		Restricted Stock Units		Employee Stock Purchase Plan		Total
	(in thousands)
Cost of goods sold	$	1,212	$	6,863	$	1,651	$	9,726	$	1,552	$	7,181	$	1,315	$	10,048
Research and development	5,557		24,727		4,215		34,499		6,237		27,368		4,112		37,717
Selling, general and administrative	3,998		15,035		1,697		20,730		4,968		14,975		1,269		21,212
Pre-tax stock-based compensation expense	$	10,767	$	46,625	$	7,563	$	64,955	$	12,757	$	49,524	$	6,696	$	68,977
Less: income tax effect							11,617								15,329
Net stock-based compensation expense							$	53,338							$	53,648

Fair Value

The fair value of options granted to employees under the Company's Amended and Restated 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:



	Stock Options
	Three Months Ended				Nine Months Ended
	March 30, 2013		March 31, 2012		March 30, 2013		March 31, 2012
Expected holding period (in years)	4.9		4.8		5.3		5.1
Risk-free interest rate	0.8	%	0.8	%	0.7	%	1.3	%
Expected stock price volatility	37.5	%	38.6	%	37.8	%	36.8	%
Dividend yield	3.4	%	3.5	%	3.3	%	3.2	%



	ESPP
	Three Months Ended				Nine Months Ended
	March 30, 2013		March 31, 2012		March 30, 2013		March 31, 2012
Expected holding period (in years)	0.5		0.5		0.5		0.5
Risk-free interest rate	0.1	%	0.1	%	0.1	%	0.1	%
Expected stock price volatility	26.1	%	32.2	%	26.1	%	32.2	%
Dividend yield	3.6	%	3.8	%	3.6	%	3.8	%

The weighted-average fair value of stock options granted was $7.39 and $6.53 per share for the three months ended March 30, 2013 and March 31, 2012, respectively. The weighted-average fair value of RSUs granted was $29.48 and $25.38 per share for the three months ended March 30, 2013 and March 31, 2012, respectively.

The weighted-average fair value of stock options granted was $6.69 and $5.85 per share for the nine months ended March 30, 2013 and March 31, 2012, respectively. The weighted-average fair value of RSUs granted was $25.08 and $20.46 per share for the nine months ended March 30, 2013 and March 31, 2012, respectively.

Stock Options

The following table summarizes outstanding, exercisable and vested and expected to vest stock options as of March 30, 2013 and their activity for the nine months ended March 30, 2013:



	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	2,734,760		27.41
Options Exercised	(3,526,585	)	18.41
Options Cancelled	(2,787,116	)	35.09
Balance at March 30, 2013	20,656,053		$	25.83	3.6	$	161,335,027
Exercisable, March 30, 2013	10,465,420		$	29.79	2.0	$	61,145,026
Vested and expected to vest, March 30, 2013	19,374,026		$	25.97	3.4	$	151,092,550



(1)	Aggregate intrinsic value represents the difference between the exercise price and the closing price per share of the Company's common stock on March 29, 2013, 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 March 30, 2013.

As of March 30, 2013, there was $35.3 million of total unrecognized stock compensation cost related to 10.2 million unvested stock options, which is expected to be recognized over a weighted average period of approximately 2.8 years.

Restricted Stock Units

The following table summarizes outstanding and expected to vest RSUs as of March 30, 2013 and their activity during the nine months ended March 30, 2013:



	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	2,864,915
Restricted stock units released	(2,360,280	)
Restricted stock units cancelled	(739,441	)
Balance at March 30, 2013	8,688,648		2.7	$	276,614,866
Outstanding and expected to vest, March 30, 2013	7,805,947		2.7	$	246,589,880



(1)	Aggregate intrinsic value for RSUs represents the closing price per share of the Company's common stock on March 29, 2013, the last business day preceding the fiscal quarter-end, multiplied by the number of RSUs outstanding or expected to vest as of March 30, 2013.

The Company withheld shares totaling $7.9 million and $21.6 million in value as a result of employee withholding taxes based on the value of the RSUs on their vesting date for the three and nine months ended March 30, 2013, respectively. 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 March 30, 2013, there was $127.6 million of unrecognized compensation expense related to 8.7 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.7 years.

Employee Stock Purchase Plan

As of March 30, 2013, there was $1.7 million of unrecognized compensation expense related to the ESPP.