Note 15 - Equity incentive plans and employee benefits

12 Months Ended

Jan. 28, 2012

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

15.          Equity incentive plans and employee benefits

Stock incentive plans

We have adopted equity incentive plans that provide for the grant of stock awards to employees, directors and consultants that are designed to encourage and reward their long-term contributions to us and provide an incentive for them to remain with us.  These plans also align our employees’ interest with the creation of long-term shareholder value.  As of January 28, 2012, we have four stock option plans: the 2003 Director Stock Option Plan (the “2003 Director Plan”), the 2001 Stock Plan (the “2001 Plan”), the Amended and Restated 2009 Stock Incentive Plan (the “2009 Incentive Plan”) and the CopperGate Share Option Plan (the “CopperGate Plan”).  The 2009 Incentive Plan was approved by our shareholders in July 2009 along with the approval of a one-time stock option exchange program and on July 8, 2011, by shareholder approval, was amended and restated to increase the number of shares of common stock authorized for issuance by 2,000,000.  The CopperGate Plan was assumed by us in connection with the acquisition of CopperGate in November 2009.

Our 2009 Incentive Plan provides for the grant of stock options, restricted stock, restricted stock units, and other stock-related and performance awards that may be settled in cash, stock or other property.  In July 2009, 2,900,000 shares of common stock were reserved for issuance and in July 2011 an additional 2,000,000 shares were reserved for issuance under the 2009 Incentive Plan.  In addition, up to 1,000,000 shares of common stock subject to stock awards outstanding under the 2001 Plan but terminated prior to exercise and would otherwise be returned to the share reserves under our 2001 Plan may become available for issuance under the 2009 Incentive Plan.  

 As of January 28, 2012, 1,970,263 shares were available for future grants under our stock incentive plans.  Additionally, up to 798,869 shares of common stock subject to stock awards outstanding under the 2001 Plan may become available for issuance under the 2009 Incentive Plan.  As of September 23, 2009, the 2001 Plan and the 2003 Director Plan were closed for future grants, however, these plans will continue to govern all outstanding options that we originally granted from each plan.

Stock Options

The total stock option activities and balances of our stock option plans are summarized as follows:

	Number of Shares Outstanding			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Balance, January 31, 2009		4,457,757		$	17.50		7.46
Granted (Weighted average fair value of $6.54)		2,322,931			11.15
Cancelled		(883,657	)		38.88
Exercised		(151,236	)		6.39
Balance, January 30, 2010		5,745,795		$	11.96		7.35
Granted (Weighted average fair value of $5.95)		1,161,350			11.14
Cancelled		(356,305	)		12.90
Exercised		(466,715	)		5.20
Balance, January 29, 2011		6,084,125		$	12.26		6.91
Granted (Weighted average fair value of $5.26)		532,800			10.22
Cancelled		(479,119	)		11.87
Exercised		(291,779	)		5.14
Balance, January 28, 2012		5,846,027		$	12.47		6.16	$	885,840
Ending Vested and Expected to Vest		5,728,782		$	12.51		6.11	$	866,141
Ending Exercisable		3,704,525		$	13.03		5.21	$	734,887

The aggregate intrinsic value, as of January 28, 2012, in the table above represents the total pretax intrinsic value, based on our closing stock price of $5.92 on that date which would have been received by the option holders had all options holders exercised their options as of that date.  The aggregate exercise date intrinsic value of options that were exercised under our stock plans during fiscal 2012, 2011 and 2010 equaled $1.6 million, $3.1 million and $1.3 million, respectively, determined as of the exercise date.  The total fair value of options which vested during fiscal 2012, 2011 and 2010 was $10.5 million, $12.1 million and $6.8 million, respectively.  

The options outstanding and currently exercisable as of January 28, 2012 were in the following exercise price ranges:

Options Outstanding										Options Exercisable
Range of Exercise Prices Per Share				Number of Shares Outstanding as of January 28, 2012		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price Per Share		Number of Shares Exercisable as of January 28, 2012		Weighted Average Exercise Price Per Share
$	0.92	$	7.67		588,671		4.87	$	4.81		351,999	$	4.16
$	7.84	$	10.51		521,817		5.20	$	8.98		401,704	$	8.72
$	10.59	$	10.59		617,050		7.97	$	10.59		245,700	$	10.59
$	10.87	$	10.87		641,363		6.11	$	10.87		425,350	$	10.87
$	11.06	$	11.07		960,368		5.96	$	11.06		699,478	$	11.06
$	11.09	$	11.66		663,589		5.76	$	11.33		481,786	$	11.32
$	11.69	$	12.27		611,779		7.48	$	11.98		249,458	$	12.07
$	12.30	$	15.32		596,830		6.24	$	14.72		299,080	$	14.72
$	15.64	$	41.58		591,560		5.77	$	25.63		505,806	$	26.61
$	45.83	$	45.83		53,000		5.77	$	45.83		44,164	$	45.83
$	0.92	$	45.83		5,846,027		6.16	$	12.47		3,704,525	$	13.03

As of January 28, 2012, the unrecorded stock-based compensation balance related to stock options outstanding excluding estimated forfeitures was $19.7 million and will be recognized over an estimated weighted average amortization period of 3.0 years.  The amortization period is based on the expected remaining vesting term of the options.

Restricted Stock Awards

We value restricted stock awards, or RSAs, using the quoted market price of the underlying stock on the date of grant.   RSAs are granted under our 2009 Incentive Plan and reduce shares available to grant under the plan by 1.3 shares for every 1 share of restricted stock granted and consist of time-based restricted shares, which shares are subject to forfeiture until vested if length of service requirements are not met.  These RSAs vest over five years according to the terms specified in the individual grants.  As of January 28, 2012, the unrecorded stock-based compensation balance related to RSAs outstanding excluding estimated forfeitures was $1.8 million and will be recognized over an estimated weighted average amortization period of 3.4 years.  The following table sets forth the shares of restricted stock awards outstanding as of January 28, 2012:

	Restricted Stock Awards			Weighted Average Grant Date Fair Value per Unit		Aggregate Value
Balance, January 29, 2011		85,137		$	13.39	$	1,139,984
Granted		163,070		$	6.91
Released		(17,028	)	$	13.39
Balance, January 28, 2012		231,179		$	8.82	$	2,038,473

Restricted Stock Units

We value restricted stock units, or RSUs, using the quoted market price of the underlying stock on the date of grant.  RSUs are granted under our 2009 Incentive Plan and reduce shares available to grant under the plan by 1.3 shares for every 1 restricted stock unit granted and consist of time-based restricted stock units.  The RSUs granted under this plan vest over a period of four years according to the terms specified in the individual grants.  As of January 28, 2012, the unrecorded stock-based compensation balance related to RSUs outstanding excluding estimated forfeitures was $3.4 million and will be recognized over an estimated weighted average amortization period of 3.8 years.  The following table sets forth the shares of RSUs outstanding as of January 28, 2012:

	Restricted Stock Units			Weighted Average Grant Date Fair Value per Unit		Aggregate Value
Balance, January 29, 2011		—		$	—	$	—
Granted		597,500		$	6.52
Cancelled		(50,000	)	$	6.64
Balance, January 28, 2012		547,500		$	5.92	$	3,241,200

Employee stock purchase plan

In July 2010, our shareholders approved the 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”).  A total of 2,500,000 shares were reserved for issuance under the 2010 Purchase Plan which replaced the 2001 Purchase Plan as of January 1, 2011.  The 2010 Purchase Plan is implemented by offerings of rights to eligible employees.  Each offering will be in such form and will contain such terms and conditions as our Board or a committee thereof will deem appropriate, subject to compliance with applicable regulations.  The provisions of separate offerings need not be identical.  Under the terms of the offerings that have commenced to date under the 2010 Purchase Plan, eligible employees may authorize payroll deductions of up to 15% of their regular base salaries to purchase common stock at 85% of the fair market value of our common stock at the beginning or end of the six-month offering period, whichever is lower.  The maximum number of shares that can be purchased in any single offering period is limited under the terms of the offering, including a limitation that an eligible employee cannot purchase in any single offering period more than 1,500 shares of common stock, as adjusted in accordance with the terms of the 2010 Purchase Plan.  These terms will automatically apply to future offerings under the 2010 Purchase Plan unless modified by the Board or a committee thereof.

During fiscal 2012, 2011 and 2010, 682,451, 334,192 and 207,798 shares of our common stock were purchased at an average price of $5.68, $8.43 and $8.86 per share, respectively.  As of January 28, 2012, we had granted 682,451 of the 2,500,000 shares of common stock reserved for issuance under the 2010 Purchase Plan.  

Valuation of stock-based compensation

The fair value of RSA and RSU awards is based on the quoted market price of the underlying stock at the date of grant.  The fair value of stock option and employee stock purchase plan right awards is estimated at the grant date using the Black-Scholes option valuation model.  The determination of fair value of stock option and employee stock purchase plan right awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables.  These variables include, but are not limited to, our expected stock price volatility over the term of the awards and actual employee stock option exercise behavior.

The fair value of each stock option and employee stock purchase plan right was estimated on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:

	Years Ended
Stock options	January 28, 2012			January 29, 2011			January 30, 2010
Expected volatility		52.01	%		55.02	%		59.53	%
Risk-free interest rate		1.60	%		2.54	%		2.62	%
Expected term (in years)		5.94			5.94			5.91
Dividend yield	None			None			None
Weighted average fair value at grant date	$	5.27		$	5.95		$	6.54

	Years Ended
Employee stock purchase plan rights	January 28, 2012			January 29, 2011			January 30, 2010
Expected volatility		46.03	%		37.52	%		52.92	%
Risk-free interest rate		0.08	%		0.21	%		0.23	%
Expected term (in years)		0.49			0.50			0.50
Dividend yield	None			None			None
Weighted average fair value at grant date	$	1.85		$	2.94		$	3.91

The computation of the expected volatility assumptions used in the Black-Scholes calculations for new stock option and employee stock purchase plan right awards is based on the historical volatility of our stock price, measured over a period equal to the expected term of the grants or purchase rights.  The risk-free interest rate is based on the yield available on U.S. Treasury Strips with an equivalent remaining term.  The expected term of stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based payment awards and vesting schedules.  The expected term of employee stock purchase rights is the period of time remaining in the current offering period.  The dividend yield assumption is based on our history of not paying dividends and assumption that we will not pay dividends in the future.

The following table sets forth the total stock-based compensation expense that is included in each functional line item in the consolidated statements of operations (in thousands):

	Fiscal Years Ended
	January 28, 2012		January 29, 2011		January 30, 2010
Cost of revenue	$	478	$	560	$	358
Research and development		6,277		6,745		5,334
Selling and marketing		2,137		2,094		1,861
General and administrative		3,133		3,178		1,240
Total stock-based compensation expense	$	12,025	$	12,577	$	8,793

Non-employee related stock-based compensation

We recorded stock-based compensation expense for options issued to non-employees based on the fair value of the options as estimated in the period they vest, using the Black-Scholes option pricing model.  The Black-Scholes option pricing model for fiscal 2012 includes the following weighted average assumptions; expected stock price volatility of 54.0%, weighted average contractual term of 5.0 years, dividend yield of zero percent and risk-free interest rates of 1.13%.  Total non-employee stock-based compensation recorded during fiscal 2012, 2011 and 2010 was $2,000, $18,000 and $35,000, respectively.

401(k) tax deferred savings plan

We maintain a 401(k) tax deferred savings plan for the benefit of qualified employees who are U.S. based.  Under the 401(k) tax deferred savings plan, U.S. based employees may elect to reduce their current annual taxable compensation up to the statutorily prescribed limit, which was $16,500 in calendar year 2011.  Employees age 50 or over may elect to contribute an additional $5,500.  We sponsor a matching contribution program whereby we match contributions made by each employee at a rate of $0.25 per $1.00 contributed.  The matching contributions we made to the 401(k) tax deferred savings plan totaled $0.8 million, $0.7 million and $0.6 million for fiscal 2012, 2011 and 2010, respectively.

Group registered retirement savings plan

We maintain a Group Registered Retirement Savings Plan, or GRRSP, for the benefit of qualified employees who are based in Canada.  Under the GRRSP, Canadian based employees may elect to reduce their annual taxable compensation up to the statutorily prescribed limit which was $22,000 Canadian in calendar year 2011.  We have a matching contribution program under the GRRSP whereby we match employee contributions made by each employee up to 2.5% of their annual salary.  The matching contributions to the GRRSP totaled $112,000, $87,000 and $86,000 for fiscal 2012, 2011 and 2010, respectively.

Retirement pension plan

We maintain a Retirement Pension Plan for the benefit of qualified employees who are based in Denmark.  Under the Retirement Pension Plan, Denmark based employees may elect to reduce their annual taxable compensation up to their annual salary.  We have a matching contribution program whereby we will contribute 3.0% of our employee’s annual salary.  The matching contributions to the Retirement Pension Plan totaled $190,000, $119,000 and $54,000 for fiscal 2012, 2011 and 2010, respectively.

We maintain a severance plan for Israeli employees pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment.  Upon termination of employment, employees are entitled to one month salary for each year of employment or a portion thereof.  As of January 28, 2012, we have an accrued severance liability of $1.2 million partially offset by $1.1 million of severance employee funds.