(9) Stock-Based Compensation

The following presents stock-based compensation expense in the Company’s Consolidated Statements of Operations:


	Three Months Ended				Six Months Ended
	March 29, 2014		March 30, 2013		March 29, 2014		March 30, 2013
Cost of revenues	$	2,133	$	1,723	$	3,643	$	3,557
Research and development		2,224		2,015		4,097		3,883
Selling and marketing		2,352		2,567		4,101		4,768
General and administrative		5,663		5,739		9,496		11,680
Restructuring and divestiture		—		6,969		4,761		7,191

	$	12,372	$	19,013	$	26,098	$	31,079

The Company granted approximately 2.2 million stock options during the six months ended March 29, 2014 and March 30, 2013 with weighted-average exercise prices of $21.85 and $19.91, respectively. There were 11.1 million options outstanding at March 29, 2014 with a weighted-average exercise price of $19.89.

The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:


	Three Months Ended						Six Months Ended
	March 29, 2014			March 30, 2013			March 29, 2014			March 30, 2013
Risk-free interest rate		1.3	%		0.5	%		1.2	%		0.5	%
Expected volatility		41.4	%		43.7	%		41.4	%		43.7	%
Expected life (in years)		4.5			4.4			4.4			4.4
Dividend yield		—			—			—			—
Weighted average fair value of options granted	$	7.82		$	5.83		$	7.65		$	6.99

The Company granted approximately 2.3 million and 1.9 million restricted stock units (RSUs) during the six months ended March 29, 2014 and March 30, 2013, respectively, with weighted-average grant date fair values of $21.53 and $19.86, respectively. As of March 29, 2014, there were 4.1 million unvested RSUs outstanding with a weighted-average grant date fair value of $20.29. The Company granted approximately 0.4 million performance stock units (PSUs) in the first quarter of fiscal 2014 to members of its senior management team, which have a weighted-average grant date fair value of $21.77. Each recipient of the PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three years provided the Company’s defined Return on Invested Capital metrics are achieved. The Company is recognizing compensation expense ratably over the required service period based on its estimate that it is probable the targeted number of shares will vest. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made.

In connection with appointing its new President and Chief Executive Officer in December 2013, the Company granted approximately 0.1 million market stock units (MSUs). The MSUs vest in three separate tranches in an amount of 1/3^rd of the total amount of the award based on the Company’s stock price meeting certain defined average stock prices for consecutive 30 trading day periods. These MSUs were valued at an average of $18.65 using the Monte Carlo simulation model and each tranche has its own derived service period. The Company is recognizing compensation expense under the accelerated method as prescribed by ASC 718, Compensation-Stock Compensation (ASC 718). In addition, per the terms of his employment agreement, the Company granted 0.2 million RSUs to match Mr. MacMillan’s purchase of 0.2 million shares of the Company’s common stock on the open market. The RSUs cliff vest three years from the date of grant, and the Company is accounting for this grant as a liability award pursuant to ASC 718 because this RSU award contains an additional vesting condition (the requirement that Mr. MacMillan retain the matching shares during the vesting period) that is not service, performance or market based.

At March 29, 2014, there was $32.2 million and $79.6 million of unrecognized compensation expense related to stock options and stock units (comprised of RSUs, MSUs and PSUs), respectively, to be recognized over a weighted-average period of 3.4 years and 3.0 years, respectively.