Note 12. Stock Incentive and Purchase Plans

Stock-Based Incentive Plans

As of April 26, 2013, we have authorized an aggregate of 19,550,000 shares of common stock for issuance pursuant to our 1996 Stock Option Plan, 1997 Stock Plan, 1998 Stock Option Plan, New Employee Equity Inducement Plan, 2005 Stock Plan, 2009 Stock Plan, our officer plans and subsequent amended versions of such plans (collectively the “Stock Plans”). Shares can no longer be issued pursuant to any plan other than the Amended and Restated New Employee Equity Inducement Plan and the 2009 Stock Plan, both of which allow issuance of nonstatutory or incentive stock options and restricted stock.

Employee Stock Purchase Plan.

Under the 1991 Employee Stock Purchase Plan (“Stock Purchase Plan”), 950,000 shares of our common stock have been authorized for issuance. Subject to certain limits, the Stock Purchase Plan allows eligible employees to purchase shares of our common stock through payroll deductions of up to 15% of their respective current compensation at a price equaling 95% of the fair market value of our common stock on the last business day of the purchase period. As of April 26, 2013 and April 27, 2012, 400,288 and 402,033 shares remain available, respectively, for issuance under the Stock Purchase Plan. No compensation expense is recorded for the Stock Purchase Plan.

Stock-Based Compensation

Amounts of stock-based compensation recognized in the consolidated statement of income by expense category are as follows:



	52 Weeks Ended April 26, 2013		52 Weeks Ended April 27, 2012		52 Weeks Ended April 29, 2011


Cost of goods sold	$	504,715	$	578,157	$	452,106
Selling, general and administrative		7,949,517		8,106,663		4,784,081
Research and development		3,229,017		2,417,417		1,128,816
Total stock-based compensation expense	$	11,683,249	$	11,102,237	$	6,365,003
Income tax benefit related to awards recognized in the consolidated statements of income		3,810,136		3,461,453		1,992,308
Total expense, net of income tax benefit	$	7,873,113	$	7,640,784	$	4,372,695

Amounts of stock-based compensation expense recognized in the consolidated statement of income by type of arrangement are as follows:



	52 Weeks Ended April 26, 2013		52 Weeks Ended April 27, 2012		52 Weeks Ended April 29, 2011
Service-based stock option awards	$	2,916,855	$	2,639,748	$	2,505,417
Service-based restricted and restricted stock unit awards		5,067,292		5,290,854		3,859,586
Performance-based restricted stock and restricted stock unit awards		3,699,102		3,171,635		0
Total stock-based compensation expense	$	11,683,249	$	11,102,237	$	6,365,003

Stock-Based Compensation Unrecognized

Amount of stock-based compensation cost not yet recognized related to nonvested awards:



	April 26, 2013
		Unrecognized Compensation Cost	Weighted Average remaining Vesting Period (in years)
Service-based stock option awards	$	6,550,810	2.72
Service-based restricted and restricted stock unit awards		7,786,730	2.18
Performance-based restricted stock and restricted stock unit awards		3,866,162	1.46
Total stock-based compensation cost unrecognized	$	18,203,702

Stock Option Valuation Assumptions

We use the Black-Scholes option pricing methodology to calculate the grant date fair market value of stock option awards. The following table lists the assumptions we utilized as inputs to the Black-Scholes model:



	52 Weeks Ended April 26, 2013	52 Weeks Ended April 27, 2012	52 Weeks Ended April 29, 2011
Dividend Yield (1)	0	0	0
Risk-free interest rate - based on grant date (2)	0.94% - 1.57%	0.73% - 2.23%	1.18% - 2.50%
Expected option term - in years per group of employees/consultants (3)	6.41 - 9.39	4.08 - 6.59	4.12 - 6.50
Expected volatility at grant date (4)	44.95% - 51.14%	47.04% - 59.07%	45.14% - 52.54%

⁽¹⁾	We have not historically paid dividends and currently do not plan to pay dividends.

⁽²⁾	We use yield rates on U.S. Treasury securities for a period that approximated the expected term of the award to estimate the risk-free interest rate.

⁽³⁾	We estimated the expected term of options granted using historic data of actual time elapsed between the date of grant and the exercise or forfeiture of options for employees. For consultants the expected term is the remaining time until expiration of the option.

⁽⁴⁾	We estimated the expected volatility based on our historic and implied volatility data.

Stock Option Activity

The following tables detail the activity stock option awards:



	52 Weeks Ended April 26, 2013
Options	Number of Optioned Shares	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)	Aggregate Intrinsic Value (1)
Outstanding — beginning of year	1,441,057	$	23.75
Granted	238,459		43.63
Exercised	(501,050)		23.94
Forfeited	(15,772)		28.52
Expired	(1,267)		36.87
Outstanding — end of year	1,161,427		27.67	6.24	$	18,164,690
Fully vested and exercisable — end of year	577,403		23.40	4.22		11,433,687
Fully vested and expected to vest — end of year (2)	1,130,897		27.45	6.17		17,922,143

⁽¹⁾ The aggregate intrinsic value of options at the end of fiscal year 2013 is based on the difference between the fair market value of the underlying stock at April 26, 2013, using the market closing stock price, and the option exercise price for in-the-money options.

⁽²⁾ Fully vested and expected to vest factors in expected forfeitures.



	52 Weeks Ended April 26, 2013		52 Weeks Ended April 27, 2012		52 Weeks Ended April 29, 2011
Weighted average grant date fair value of stock option awards during the fiscal year	$	20.55	$	12.31	$	11.78
Aggregate intrinsic value of stock option exercises during the fiscal year	$	11,475,610	$	5,636,206	$	9,632,100

Restricted Stock and Restricted Stock Units Awards

The following tables detail the activity for service-based restricted stock and restricted stock unit awards:



	52 Weeks Ended April 26, 2013
	Number of Shares	Wtd. Avg. Grant Date Fair Value
Non-vested shares at the beginning of year	639,033	$	20.75
Granted	117,262		44.31
Vested	(381,532)		17.38
Forfeited	(7,029)		28.18
Non-vested shares at end of year	367,734	$	31.61



	52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	April 26,		April 27,		April 29,
	2013		2012		2011
Weighted average grant date fair value of service-based share grants issued during the fiscal year	$	44.31	$	26.58	$	27.23
Aggregate fair value of service-based share grants that vested during the year	$	15,969,922	$	7,638,546	$	2,978,345

The following tables detail the activity for performance-based and market-based restricted stock and restricted stock unit awards:



	52 Weeks Ended April 26, 2013
	Number of Shares	Wtd. Avg. Grant Date Fair Value
Non-vested shares at the beginning of year	464,125	$	25.36
Granted	8,982		50.10
Vested	(76,946)		27.34
Forfeited	0		0
Non-vested shares at end of year	396,161	$	25.54



	52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	April 26,		April 27,		April 29,
	2013		2012		2011
Weighted average grant date fair value of performance-based share grants issued during the fiscal year	$	50.10	$	25.23	$	0
Aggregate fair value of performance-based share grants that vested during the year	$	3,318,681	$	0	$	0