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Employee Benefit Plans and Stock-based Compensation | 6 Months Ended
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Jun. 28, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Employee Benefit Plans and Stock-based compensation | EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION Equity Award Plans The Company’s stock benefit plans include the 2002 Employee Stock Purchase Plan (“ESPP”) and current active stock plans adopted in 1995 and 2002. See Note 12, “Employee Benefit Plans and Stock-based Compensation” of Notes to Consolidated Financial Statements in the 2018 Form 10-K for details pertaining to each plan. The Company’s stockholders approved an amendment to the ESPP at the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) to increase the number of shares of common stock reserved for issuance under the ESPP by 1,000,000 shares. The Company’s stockholders also approved an amendment to the 1995 Stock Plan at the 2019 Annual Meeting to increase the number of shares of common stock reserved for issuance thereunder by 3,500,000 shares. As of June 28, 2019, there were 1.8 million and 5.2 million shares of common stock reserved for future grants under the Company’s ESPP and active stock plans, respectively. Stock Option Activities The following table summarizes the Company’s stock option activities and related information during the six months ended June 28, 2019 (in thousands, except per share amounts and terms):
|  | Stock Options Outstanding
|  | Number of Shares |  | Weighted Average Exercise Price Per Share |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Balance at December 31, 2018 |  | 3,068 |  |  | $ | 5.76 |  |  |  |  |
Exercised |  | (39 | ) |  | 3.75 |  |  |  |  |
Canceled or expired |  | (379 | ) |  | 6.14 |  |  |  |  |
Balance at June 28, 2019 |  | 2,650 |  |  | 5.73 |  |  | 2.2 |  | $ | 1,690.3 |
As of June 28, 2019 |  |  |  |  |  |  |  |
Vested and expected to vest |  | 2,650 |  |  | 5.73 |  |  | 2.2 |  | $ | 1,690.3 |
Exercisable |  | 2,645 |  |  | 5.74 |  |  | 2.2 |  | $ | 1,684.4 |
The aggregate intrinsic value disclosed above represents the difference between the exercise price of the options and the fair value of the Company’s common stock. There were no employee stock options granted in the six months ended June 28, 2019. There were no realized tax benefits attributable to stock options exercised in jurisdictions where this expense is deductible for tax purposes for the six months ended June 28, 2019 and June 29, 2018, respectively. Restricted Stock Units (“RSUs”) Activities The following table summarizes the Company’s RSUs activities and related information during the six months ended June 28, 2019 (in thousands, except per share amounts):
|  | Restricted Stock Units Outstanding
|  | Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
Balance at December 31, 2018 |  | 3,403 |  |  | $ | 3.99 |
Granted |  | 2,501 |  |  | 5.67 |
Vested |  | (1,600 | ) |  | 3.97 |
Forfeited |  | (45 | ) |  | 4.72 |
Balance at June 28, 2019 |  | 4,259 |  |  | 4.99 |
Performance- and Market-based awards In the second quarter of 2019, the Company granted 85,000 performance-based RSUs (“PRSUs”) to certain key executives that are expected to vest during a period of one to two years from the date of grant. The vesting condition for the PRSUs include achievement of certain financial operating goals. The stock-based compensation recognized for the PRSUs for the three months ended June 28, 2019 was $0.1 million. The unrecognized stock-based compensation of the PRSUs as of June 28, 2019 was $0.4 million. No PRSUs had vested as of June 28, 2019. In the second quarter of 2019, the Company granted 200,000 market-based RSUs (“MRSUs”) under the 1995 Stock Plan to a key executive that is expected to vest during a three-year period. The vesting condition for the MRSUs include performance of the Company’s total shareholder return (“TSR”) relative to the TSR of the NASDAQ Telecommunication Index. The aggregate grant-date fair value of these shares was estimated to be $1.1 million using a Monte-Carlo simulation valuation method. The stock-based compensation recognized for the MRSUs for the three months ended June 28, 2019 was $0.1 million. The unrecognized stock-based compensation of the MRSUs as of June 28, 2019 was $1.0 million. No MRSUs had vested as of June 28, 2019. French Retirement Benefit Plan The Company assumed obligations under a defined benefit pension plan in connection with the acquisition of TVN in 2016. The plan is unfunded and there are no contributions required by laws or funding regulations, discretionary contributions or non-cash contributions expected to be made. The table below presents the components of net periodic benefit costs (in thousands):
| Three months ended |  | Six months ended
| June 28, 2019 |  | June 29, 2018 |  | June 28, 2019 |  | June 29, 2018
Service cost | $ | 57 |  |  | $ | 63 |  |  | $ | 114 |  |  | $ | 126 |
Interest cost | 19 |  |  | 19 |  |  | 39 |  |  | 38 |
Net periodic benefit cost | $ | 76 |  |  | $ | 82 |  |  | $ | 153 |  |  | $ | 164 |
The present value of the Company’s pension obligation as of June 28, 2019 was $5.0 million, of which $0.1 million was reported as a component of “Accrued and other current liabilities” and $4.9 million was reported as a component of “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. The present value of the Company’s pension obligation as of December 31, 2018 was $4.9 million. 401(k) Plan The Company has a retirement/savings plan for its U.S. employees, which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. This plan allows participants to contribute up to the applicable Internal Revenue Code limitations under the plan. The Company has made discretionary contributions to the plan of 25% of the first 4% contributed by eligible participants, up to a maximum contribution per participant of $1,000 per year. The contributions for the six months ended June 28, 2019 and June 29, 2018 were $208,000 and $214,000, respectively. Stock-based Compensation The following table summarizes stock-based compensation for all plans (in thousands):
| Three months ended |  | Six months ended
| June 28, 2019 |  | June 29, 2018 |  | June 28, 2019 |  | June 29, 2018
Stock-based compensation in: |  |  |  |  |  |  |
Cost of revenue | $ | 195 |  |  | $ | 448 |  |  | $ | 420 |  |  | $ | 963 |
Research and development expense | 582 |  |  | 818 |  |  | 1,198 |  |  | 2,622 |
Selling, general and administrative expense | 1,733 |  |  | 1,746 |  |  | 3,005 |  |  | 5,184 |
Total stock-based compensation in operating expense | 2,315 |  |  | 2,564 |  |  | 4,203 |  |  | 7,806 |
Total stock-based compensation | $ | 2,510 |  |  | $ | 3,012 |  |  | $ | 4,623 |  |  | $ | 8,769 |
As of June 28, 2019, total unrecognized stock-based compensation cost related to unvested RSUs was $18.3 million and is expected to be recognized over a weighted-average period of approximately 1.66 years. Valuation Assumptions The Company estimates the fair value of employee stock options and stock purchase rights under the ESPP using a Black-Scholes option valuation model. The value of the stock purchase rights under the ESPP consists of: (1) the 15% discount on the purchase of the stock; (2) 85% of the fair value of the call option; and (3) 15% of the fair value of the put option. The call option and put option were valued using the Black-Scholes option pricing model.
| ESPP Purchase Period Ending
| July 1, 2019 |  | July 2, 2018
Expected term (years) | 0.5 |  |  | 0.5 |
Volatility | 43 | % |  | 60 | %
Risk-free interest rate | 2.5 | % |  | 1.7 | %
Expected dividends | 0.0 | % |  | 0.0 | %
Estimated weighted average fair value per share at purchase date | $1.31 |  | $1.34
The expected term of the stock purchase rights under the ESPP represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has not paid and does not plan to pay any cash dividends in the foreseeable future.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI http://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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