11.

Share-based compensation

Share-based compensation

In determining the grant date fair value of equity awards, the Group is required to make estimates of the fair value of the Group’s ordinary shares, expected dividends to be issued, expected volatility of the Group’s shares, expected forfeitures of the awards, risk free interest rates for the expected term of the awards, expected terms of the awards, and the vesting period of the respective awards. Forfeitures are estimated at the time of grant and revised if necessary in subsequent periods if actual forfeitures differ from those estimates.

The effect of recording share-based compensation expense for the three and six months ended December 28, 2012 and December 30, 2011 was as follows:


	Three Months Ended				Six Months Ended
	December 28, 2012		December 30, 2011		December 28, 2012		December 30, 2011
Share-based compensation expense by type of award:
Share options	$	497	$	1,200	$	1,140	$	2,070
Restricted share units		881		403		1,492		521

Total share-based compensation expense		1,378		1,603		2,632		2,591

Tax effect on share-based compensation expense		—		—		—		—

Net effect on share-based compensation expense	$	1,378	$	1,603	$	2,632	$	2,591

Share-based compensation expense was recorded in the condensed consolidated statements of operations as follows: cost of revenues of $299 and $465 for the three months ended December 28, 2012 and December 30, 2011, respectively, and $644 and $911 for the six months ended December 28, 2012 and December 30, 2011, respectively; and SG&A expenses of $1,079 and $1,138 for the three months ended December 28, 2012 and December 30, 2011, respectively, and $1,988 and $1,680 for the six months ended December 28, 2012 and December 30, 2011, respectively. The Group did not capitalize any share-based compensation expense as part of any asset costs during the three and six months ended December 28, 2012 and December 30, 2011.

Share-based award activity

Share options have been granted to directors and employees. As of December 28, 2012, there were 153,403 share options outstanding under the Amended and Restated 1999 Share Option Plan (the “1999 Plan”). Additional option grants may not be made under the 1999 Plan.

On March 12, 2010, the Company’s shareholders adopted the 2010 Performance Incentive Plan (the “2010 Plan”). On December 20, 2010 and December 20, 2012, the Company’s shareholders adopted amendments to the 2010 Plan to increase the number of ordinary shares authorized for issuance under the 2010 Plan by 500,000 and 3,700,000 shares, respectively. A total of 5,700,000 ordinary shares are authorized for issuance under the 2010 Plan, plus any shares subject to share options under the 1999 Plan outstanding as of June 24, 2010, that expire, are canceled or terminate after such date. As of December 28, 2012, there were an aggregate of 1,220,984 share options outstanding, 582,055 restricted share units outstanding, and 3,817,313 ordinary shares available for future grant under the 2010 Plan.

Share options

The Company’s board of directors has the authority to determine the type of option and the number of shares subject to an option. Options generally vest and become exercisable over four years and expire, if not exercised, within 7 years of the grant date. In the case of a grantee’s first grant, 25 percent of the underlying shares subject to an option vest 12 months after the vesting commencement date and 1/48 of the underlying shares vest monthly over each of the subsequent 36 months. In the case of any additional grants to a grantee, 1/48 of the underlying shares subject to an option vest monthly over four years, commencing one month after the vesting commencement date.

The following summarizes share option activity under the 1999 Plan:


	Number of Shares Underlying Options						Weighted-Average Exercise Price Per Share
	Six Months Ended						Six Months Ended
	December 28, 2012			December 30, 2011			December 28, 2012		December 30, 2011
Shares underlying options outstanding at beginning of the period		189,540			423,205		$	5.18	$	4.34
Granted		—			—			—		—
Exercised		(36,137	)		(188,773	)		4.64		3.39
Forfeited		—			(4,593	)		—		6.01
Expired		—			(1,100	)		—		5.75

Shares underlying options outstanding at end of the period		153,403			228,739		$	5.31	$	5.09

Shares underlying options exercisable at end of the period		119,244			140,939		$	5.18	$	4.69

The following summarizes information for share options outstanding as of December 28, 2012 under the 1999 Plan:


	Number of Shares Underlying Options		Exercise Price Per Share		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
		525	$	2.25		0.17
		1,900		2.75		0.67
		1,600		3.00		0.69
		16,421		3.50		1.01
		2,405		4.25		1.67
		4,545		4.75		1.92
		10,074		5.00		2.13
		3,930		5.25		2.36
		8,350		5.50		2.66
		100,353		5.75		3.81
		3,300		6.25		4.35

Options outstanding		153,403				3.14	$	1,175

Options exercisable		119,244				2.91	$	929

As of December 28, 2012, $21 of estimated share-based compensation expense related to share options under the 1999 Plan remains to be recorded. That cost is expected to be recorded over an estimated amortization period of 0.93 years.

The following summarizes share option activity under the 2010 Plan:


	Number of Shares Underlying Options						Weighted-Average Exercise Price Per Share
	Six Months Ended						Six Months Ended
	December 28, 2012			December 30, 2011			December 28, 2012		December 30, 2011
Shares underlying options outstanding at beginning of the period		1,280,750			925,921		$	16.32	$	17.37
Granted		—			548,127			—		14.54
Exercised		—			—			—		—
Forfeited		(19,135	)		(18,346	)		17.79		16.29
Expired		(40,631	)		(1,137	)		16.84		16.80

Shares underlying options outstanding at end of the period		1,220,984			1,454,565		$	16.28	$	16.32

Shares underlying options exercisable at end of the period		528,347			258,716		$	16.48	$	16.71

The following summarizes information for share options outstanding as of December 28, 2012 under the 2010 Plan:


	Number of Shares Underlying Options		Exercise Price Per Share		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
		40,000	$	13.77		4.65
		614,228		16.83		4.79
		30,000		15.05		4.85
		30,744		25.50		5.05
		8,400		26.16		5.10
		12,800		23.62		5.35
		193,571		15.16		5.64
		251,231		14.12		5.87
		31,160		19.36		6.12
		5,550		18.60		6.17
		3,300		12.83		6.36

Options outstanding		1,220,984				5.20	$	0

Options exercisable		528,347				5.05	$	0

As of December 28, 2012, $1,547 of estimated share-based compensation expense related to share options under the 2010 Plan remains to be recorded. That cost is expected to be recorded over an estimated amortization period of 2.35 years.

Restricted share units

Restricted share units are one type of share-based award that may be granted under the 2010 Plan. Restricted share units granted to non-employee directors generally cliff vest 100% on the first of January, approximately 1 year from the date of grant. Restricted share units granted to employees generally vest as to 1/4th of the shares over 4 years on each anniversary of the vesting commencement date.

The following summarizes restricted share unit activity under the 2010 Plan:


	Number of Shares Underlying Restricted Share Units						Weighted-Average Grant Date Fair Value Per Share
	Six Months Ended						Six Months Ended
	December 28, 2012			December 30, 2011			December 28, 2012		December 30, 2011
Unvested balance at beginning of the period		168,275			25,900		$	14.44	$	21.62
Granted		446,884			198,247			12.35		14.05
Issued		(30,100	)		(25,900	)		14.12		21.62
Forfeited		(3,004	)		—			13.12		—

Unvested balance at end of the period		582,055			198,247		$	12.86	$	14.05

As of December 28, 2012, $4,980 of estimated share-based compensation expense related to restricted share units under the 2010 Plan remains to be recorded. That cost is expected to be recorded over an estimated amortization period of 3.30 years.

For the three months ended December 28, 2012, the Company withheld an aggregate of 1,086 shares upon the vesting of restricted share units, based upon the closing share price on the vesting date to settle the employees’ minimum statutory obligation for the applicable income and other employment taxes. The Company then remitted cash of $10 to the appropriate taxing authorities, and presented it in a financing activity within the condensed consolidated statements of cash flows. The payment had the effect on shares issued by the Company as it reduced the number of shares that would have been issued on the vesting date and was recorded as a reduction of additional paid-in capital.