SHAREHOLDERS’ EQUITY AND EMPLOYEE BENEFIT PLANS

Common Stock and 401(k) Retirement Income Plans

The Company has a 401(k) retirement plan (the “Plan”) for eligible U.S. employees. The Plan allows for employee contributions and matching Company contributions from 4% to 6% based upon terms and conditions of the 401(k) Plan.

The following table reflects the Company’s contributions to the Plan during fiscal 2018 and 2017:



	Fiscal
(in thousands)	2018		2017
Cash	$	1,610	$	1,645

Share Repurchase Program

On August 15, 2017, the Company's Board of Directors authorized a program (the " Program") to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020. The Company has entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program. The Program may be suspended or discontinued at any time and is funded using the Company's available cash, cash equivalents and short-term investments. Under the Program, shares may be repurchased through open market and/or privately negotiated transactions at prices deemed appropriate by management. The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations. On July 10, 2018, the Company's Board of Directors increased the share repurchase authorization under the Program by an additional $100 million. During the year ended September 29, 2018, the Company repurchased a total of 3.8 million shares of common stock at a cost of $91.1 million. The share repurchases were recorded in the periods they were delivered and accounted for as treasury stock in the Company’s Consolidated Balance Sheet. The Company records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid-in capital. If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings. As of September 29, 2018, our remaining share repurchase authorization under the Program was approximately $97.7 million.

Dividends

On June 14, 2018, the Board of Directors declared and authorized the initiation of a quarterly dividend. During the year ended September 29, 2018, the Company declared dividends of $0.24 per share of common stock. The declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on the Company's financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company's stockholders.

Accumulated Other Comprehensive Income

The following table reflects accumulated other comprehensive income / (loss) reflected on the Consolidated Balance Sheets as of September 29, 2018 and September 30, 2017:



	As of
(in thousands)	September 29, 2018			September 30, 2017
(Loss) / Gain from foreign currency translation adjustments	$	(1,211	)	$	2,422
Unrecognized actuarial loss on pension plan, net of tax	(1,620		)	(1,736		)
Unrealized (loss) / gain on hedging	(1,071		)	1,353
Accumulated other comprehensive (loss) / income	$	(3,902	)	$	2,039

Equity-Based Compensation

The Company has stockholder-approved equity-based employee compensation plans (the “Employee Plans”) and director compensation plans (the “Director Plans”) (collectively, the “Equity Plans”). As of September 29, 2018, 4.7 million shares of common stock are available for grant to its employees and directors under the 2017 Equity Plan, including previously registered shares that have been carried forward for issuance under the 2009 Equity Plan.

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Relative TSR Performance Share Units ("Relative TSR PSUs") entitles the employee to receive common shares of the Company on the award vesting date if market performance objectives which measure relative total shareholder return (“TSR”) are attained. Relative TSR is calculated based upon the 90-calendar day average price of the Company's stock as compared to specific peer companies that comprise the GICS (45301020) Semiconductor Index. TSR is measured for the Company and each peer company over a performance period, which is generally three years. Vesting percentages range from 0% to 200% of awards granted. The provisions of the Relative TSR PSUs are reflected in the grant date fair value of the award; therefore, compensation expense is recognized regardless of whether the market condition is ultimately satisfied. Compensation expense is reversed if the award is forfeited prior to the vesting date.

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In general, stock options and Time-based Restricted Share Units ("Time-based RSUs") awarded to employees vest annually over a three-year period provided the employee remains employed by the Company. The Company follows the non-substantive vesting method for stock options and recognizes compensation expense immediately for awards granted to retirement-eligible employees, or over the period from the grant date to the date retirement eligibility is achieved.

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Special/Growth Performance Share Units (“Special/Growth PSUs”) entitles the employee to receive common shares of the Company on the three-year anniversary of the grant date (if employed by the Company) if revenue growth targets set by the Management Development and Compensation Committee (“MDCC”) of the Board of Directors on the date of grant are met. If revenue growth targets are not met, the Special/Growth PSUs do not vest. Certain Special/Growth PSUs vest based on achievement of strategic goals over a certain time period or periods set by the MDCC. If the strategic goals are not achieved, the Special/Growth PSUs do not vest.

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In general, Performance-based Restricted Stock entitles the employee to receive common shares of the Company on the three-year anniversary of the grant date (if employed by the Company) if return on invested capital and revenue growth targets set by the Management Development and Compensation Committee (“MDCC”) of the Board of Directors on the date of grant are met. If return on invested capital and revenue growth targets are not met, performance-based restricted stock does not vest. Certain PSUs vest based on achievement of strategic goals over a certain time period or periods set by the MDCC. If the strategic goals are not achieved, the PSUs do not vest.

Equity-based compensation expense recognized in the Consolidated Statements of Operations for fiscal 2018, 2017, and 2016 was based upon awards ultimately expected to vest. Following the early adoption in the first quarter of fiscal 2018 of ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, forfeitures have been accounted for when they occur.

The following table reflects total equity-based compensation expense, which includes Relative TSR PSUs, Time-based RSUs, Special/Growth PSUs, Performance-based Restricted Stock and common stock, included in the Consolidated Statements of Operations for fiscal 2018, 2017, and 2016:



	Fiscal
(in thousands)	2018		2017		2016
Cost of sales	$	515	$	463	$	421
Selling, general and administrative ⁽¹⁾	8,548		9,015		3,244
Research and development	2,622		2,244		2,065
Total equity-based compensation expense	$	11,685	$	11,722	$	5,730

(1) The selling, general and administrative expense for fiscal 2016, includes the reversal of a $2.0 million expense due to the forfeiture of stock awards in connection with the October 2015 retirement of the Company's CEO.

The following table reflects equity-based compensation expense, by type of award, for fiscal 2018, 2017, and 2016:



	Fiscal
(in thousands)	2018		2017		2016
Relative TSR PSUs	$	3,583	$	3,480	$	(33	)
Time-based RSUs	7,027		7,492		5,255
Performance-based restricted stock	—		—		(43		)
Special/Growth PSUs	295		—		—
Common stock	780		750		551
Total equity-based compensation expense ⁽¹⁾	$	11,685	$	11,722	$	5,730

(1) The equity-based compensation expense for fiscal 2016, includes the reversal of a $2.0 million expense due to the forfeiture of stock awards in connection with the October 2015 retirement of the Company's CEO.

Equity-Based Compensation: Relative TSR PSUs

The following table reflects Relative TSR PSUs activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Unrecognized compensation expense (in thousands)		Average remaining service period (in years)	Weighted average grant date fair value per share
Relative TSR PSUs outstanding as of October 3, 2015	578		$	4,465	1.4
Granted	172					$	12.26
Forfeited or expired	(256	)
Vested	(10	)
Relative TSR PSUs outstanding as of October 1, 2016	484		$	2,924	1.0
Granted	388					$	13.47
Forfeited or expired	(3	)
Vested	(196	)
Relative TSR PSUs outstanding as of September 30, 2017	673		$	6,204	1.4
Granted	180					$	29.60
Forfeited or expired	(146	)
Vested	(168	)
Relative TSR PSUs outstanding as of September 29, 2018	539		$	4,629	1.1

The following table reflects the assumptions used to calculate compensation expense related to the Company’s Relative TSR PSUs issued during fiscal 2018, 2017, and 2016:



	Fiscal
	2018			2017			2016
Grant Price	$	19.65		$	12.51		$	9.58
Expected dividend yield⁽¹⁾	0.12%			N/A			N/A
Expected stock price volatility	31.71		%	30.39		%	30.85		%
Risk-free interest rate	1.68		%	0.96		%	0.89		%

(1) The expected dividend yield for fiscal 2018 includes the effect of 10,511 grants which were issued in the quarter ended September 29, 2018 with an assumed dividend yield of 1.91%

Equity-Based Compensation: Time-based RSUs

The following table reflects Time-based RSUs activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Unrecognized compensation expense (in thousands)		Average remaining service period (in years)	Weighted average grant date fair value per share
Time-based RSUs outstanding as of October 3, 2015	849		$	7,054	1.6
Granted	597					$	9.66
Forfeited or expired	(85	)
Vested	(346	)
Time-based RSUs outstanding as of October 1, 2016	1,015		$	6,440	1.5
Granted	715					$	13.32
Forfeited or expired	(50	)
Vested	(600	)
Time-based RSUs outstanding as of September 30, 2017	1,080		$	7,770	1.5
Granted	459					$	22.32
Forfeited or expired	(87	)
Vested	(542	)
Time-based RSUs outstanding as of September 29, 2018	910		$	9,038	1.4

Equity-Based Compensation: Performance-based restricted stock

The following table reflects Performance-based restricted stock activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Unrecognized compensation expense (in thousands)		Average remaining service period (in years)
Performance-based restricted stock outstanding as of October 3, 2015	57		$	285	2.2
Granted	—
Forfeited or expired	(29	)
Vested	(28	)
Performance-based restricted stock outstanding as of October 1, 2016	—		—		0

No Performance-based restricted stock were granted during fiscal 2018, 2017, and 2016.

Equity-Based Compensation: Special/Growth PSUs

The following table reflects Special/Growth PSUs activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Unrecognized compensation expense (in thousands)		Average remaining service period (in years)	Weighted average grant date fair value per share
Special/Growth PSUs outstanding as of September 30, 2017	—
Granted	60					$	22.57
Forfeited or expired	(14	)
Vested	—
Special/Growth PSUs outstanding as of September 29, 2018	46		$	702	2.1

The following table reflects employee stock option activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Weighted average exercise price		Average remaining contractual life (in years)	Aggregate intrinsic value (in thousands)
Options outstanding as of October 3, 2015	147		$	8.18
Exercised	(53	)	$	5.40		$	330
Forfeited or expired	(4	)	$	9.00
Options outstanding as of October 1, 2016	90		$	8.41
Exercised	(61	)	$	8.31		$	531
Forfeited or expired	(13	)	$	8.50
Options outstanding as of September 30, 2017	16		$	8.73
Exercised	(6	)	$	8.74		$	73
Forfeited or expired	(8	)	$	8.74
Options outstanding as of September 29, 2018	2		$	8.64	1.6	$	25
Options vested and expected to vest as of September 29, 2018	2		$	8.64	1.6	$	25
Options exercisable as of September 29, 2018	2		$	8.64	1.6
In the money exercisable options as of September 29, 2018	2					$	25

Intrinsic value of stock options exercised is determined by calculating the difference between the market value of the Company's stock price at the time an option is exercised and the exercise price, multiplied by the number of shares. The intrinsic value of stock options outstanding and stock options exercisable is determined by calculating the difference between the Company's closing stock price on the last trading day of fiscal 2018 and the exercise price of in-the-money stock options, multiplied by the number of underlying shares. During fiscal 2018, the Company received $54,800 in cash from the exercise of employee and non-employee director stock options.

As of September 29, 2018, there were no unvested employee stock options.

The following table reflects outstanding and exercisable employee stock options as of September 29, 2018:



	Options Outstanding				Options Exercisable
Range of exercise prices	Options outstanding (in thousands)	Weighted average remaining contractual life (in years)	Weighted average exercise price		Options exercisable (in thousands)	Weighted average exercise price
8.64	2	1.6	$	8.64	2	$	8.64

Equity-Based Compensation: non-employee directors

The 2017 Equity Plan provides for the grant of common shares to each non-employee director upon initial election to the board and on the first business day of each calendar quarter while serving on the board. The grant to a non-employee director upon initial election to the board is that number of common shares closest in value to, without exceeding, $120,000. The quarterly grant to a non-employee director upon the first business day of each calendar year quarter is that number of common shares closest in value to, without exceeding, $32,500.

The following table reflects shares of common stock issued to non-employee directors and the corresponding fair value for fiscal 2018, 2017, and 2016:



	Fiscal
(in thousands)	2018		2017		2016
Number of common shares issued	33		45		50
Fair value based upon market price at time of issue	$	780	$	750	$	551

The following table reflects non-employee director stock option activity for fiscal 2018, 2017, and 2016:



	Number of shares (in thousands)		Weighted average exercise price		Average remaining contractual life (in years)	Aggregate intrinsic value (in thousands)
Options outstanding as of October 3, 2015	20		$	11.20		$	225
Exercised	—		$	—
Forfeited or expired	(20	)	$	11.20
Options outstanding as of October 1, 2016	—		$	—		$	—

No non-employee director stock options were granted during fiscal 2018, 2017, and 2016.

Pension Plan

The following table reflects the Company's defined benefits pension obligations, mainly in Switzerland and Taiwan, as of September 29, 2018 and September 30, 2017:



	As of
(in thousands)	September 29, 2018		September 30, 2017
Switzerland pension obligation	$	1,980	$	1,951
Taiwan pension obligation	1,256		967

Other Plans

Some of the Company's other foreign subsidiaries have retirement plans that are integrated with and supplement the benefits provided by laws of the various countries. These other plans are not required to report nor do they determine the actuarial present value of accumulated benefits or net assets available for plan benefits as they are defined contribution plans.