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Stock-Based Compensation | 12 Months Ended
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Jun. 26, 2011
Stock-Based Compensation |
Stock-Based Compensation | Note 11 – Stock-Based Compensation Overview of Employee Stock-Based Compensation Plans The Company currently has one equity-based compensation plan from which stock-based compensation awards can be granted to employees and directors. In addition, the Company has one plan that has been terminated as to future grants, but under which options are currently outstanding. The Company also assumed options that were initially granted pursuant to plans adopted by companies acquired by the Company. The Company's plans are as follows: 2004 Long-Term Incentive Compensation Plan - This plan provides for awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, stock units and performance units. Currently, this is the only plan under which awards can be granted. As approved by the Company's shareholders on November 4, 2004, the plan authorized issuance of up to 1,200,000 shares of common stock plus the number of shares then authorized for issuance under the Company's Equity Compensation Plan and not thereafter used for awards.The Company's shareholders have approved amendments increasing the shares authorized for issuance under the plan as follows:
Date of Amendment |  | Additional Shares Authorized |
November 3, 2005 |  |  | 2,000,000 |
November 1, 2007 |  |  | 2,000,000 |
October 30, 2008 |  |  | 3,000,000 |
October 29, 2009 |  |  | 3,000,000 |
October 26, 2010 |  |  | 3,000,000 |
Awards issued under the plan to date include non-qualified stock options, restricted stock and performance units. Equity Compensation Plan - This plan provided for grants in both the form of incentive stock options and nonqualified stock options to eligible employees and directors. The plan was terminated as to future grants in November 2004. The Company also has an Employee Stock Purchase Plan (the "2005 ESPP") that provides employees with the opportunity to purchase common stock through payroll deductions. The Company established its original ESPP in 1999 and terminated it on October 31, 2005. As approved by the Company's shareholders on November 3, 2005, the 2005 ESPP authorized issuance of up to 600,000 shares of common stock. On October 30, 2008, the Company's shareholders approved an amendment to the 2005 ESPP, increasing the shares authorized for issuance under the plan by an additional 900,000 shares. Under the 2005 ESPP, the purchase price is reduced by 15% of the fair market value of common stock on the purchase date. The 2005 ESPP also limits employee contributions to 15% of each employee's compensation (as defined in the plan). Participation periods have a six month duration beginning in May and November of each year. Stock Option Awards The following table summarizes option activity as of June 26, 2011 and changes during the fiscal year then ended (total and shares in thousands):
|  | Number of Shares |  |  | Weighted- Average Exercise price |  |  | Weighted Average Remaining Contractual Term |  |  | Total Intrinsic Value |
Outstanding at June 27, 2010 |  |  | 5,638 |  |  | $ | 31.23 |  |  |  |  |  |  |  |  |
Granted |  |  | 2,374 |  |  |  | 55.23 |  |  |  |  |  |  |  |  |
Exercised |  |  | (1,244 | ) |  |  | 27.64 |  |  |  |  |  |  |  |  |
Forfeited or expired |  |  | (301 | ) |  |  | 56.39 |  |  |  |  |  |  |  |  |
Outstanding at June 26, 2011 |  |  | 6,467 |  |  | $ | 39.56 |  |  |  | 4.88 |  |  | $ | 21,341 |
Vested and expected to vest at June 26, 2011 |  |  | 6,348 |  |  | $ | 39.34 |  |  |  | 4.86 |  |  | $ | 21,318 |
Exercisable at June 26, 2011 |  |  | 2,093 |  |  | $ | 28.52 |  |  |  | 3.50 |  |  | $ | 14,637 |
The total intrinsic value in the table above represents the total pretax intrinsic value, which is the total difference between the closing price of the Company's common stock on June 24, 2011 (the last trading day of fiscal 2011) of $33.96 and the exercise price for in-the-money options that would have been received by the holders if all instruments had been exercised on June 26, 2011. As of June 26, 2011, there was $53.9 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.63 years. The following table summarizes information about stock options outstanding and exercisable at June 26, 2011 (shares in thousands):
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Price |  | Number |  |  | Wgtd. Avg. Remaining Contractual Life (Years) |  |  | Wgtd. Avg. Exercise Price |  |  | Number |  |  | Wgtd. Avg. Exercise Price |
$ 0.01 to $25.47 |  |  | 1,388 |  |  |  | 3.55 |  |  | $ | 21.52 |  |  |  | 848 |  |  | $ | 20.82 |
25.53 to 35.35 |  |  | 904 |  |  |  | 3.02 |  |  |  | 29.46 |  |  |  | 696 |  |  |  | 28.95 |
35.89 to 35.89 |  |  | 1,674 |  |  |  | 5.15 |  |  |  | 35.89 |  |  |  | 447 |  |  |  | 35.89 |
37.57 to 55.30 |  |  | 2,227 |  |  |  | 6.15 |  |  |  | 54.29 |  |  |  | 48 |  |  |  | 46.29 |
55.30 to 75.55 |  |  | 274 |  |  |  | 5.86 |  |  |  | 66.99 |  |  |  | 54 |  |  |  | 67.10 |
Total |  |  | 6,467 |  |  |  | 4.88 |  |  | $ | 39.56 |  |  |  | 2,093 |  |  | $ | 28.52 |
Other information pertaining to stock-based awards of options is as follows (in thousands, except per share data):
|  | Fiscal Years Ended |
|  | June 26, 2011 |  |  | June 27, 2010 |  |  | June 28, 2009 |
Weighted average grant date fair value per share of options |  | $ | 22.83 |  |  | $ | 14.58 |  |  | $ | 9.29 |
Total intrinsic value of options exercised |  | $ | 40,042 |  |  | $ | 118,162 |  |  | $ | 11,906 |
Restricted Stock Awards A summary of non-vested shares of restricted stock and stock unit awards ("RSAs" and "RSUs") outstanding under the Company's 2004 Long-Term Incentive Compensation Plan as of June 26, 2011 and changes during the year then ended is as follows (in thousands, except per share data):
|  | Number of Shares/Units |  |  | Weighted-Average Grant-Date Fair Value |
Nonvested at June 27, 2010 |  |  | 418 |  |  | $ | 28.68 |
Granted |  |  | 255 |  |  |  | 54.18 |
Vested |  |  | (150 | ) |  |  | 28.38 |
Forfeited |  |  | (14 | ) |  |  | 52.55 |
Nonvested at June 26, 2011 |  |  | 509 |  |  | $ | 40.87 |
As of June 26, 2011, there was $15.2 million of unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 2.8 years. Stock-Based Compensation Valuation and Expense The Company accounts for its employee stock-based compensation plan using the fair value method. The fair value method requires the Company to estimate the grant date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. To estimate the fair value of the Company's stock option awards the Company currently uses the Black-Scholes option-pricing model. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company's financial statements. For restricted stock and stock unit awards, grant date fair value is based upon the market price of the Company's common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term. Stock-based compensation expense is recorded net of estimated forfeitures such that expense is recorded only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Total stock-based compensation expense was as follows (in thousands):
|  | Fiscal Years Ended |
Income Statement Classification |  | June 26, 2011 |  |  | June 27, 2010 |  |  | June 28, 2009 |
Cost of goods sold |  | $ | 5,454 |  |  | $ | 3,091 |  |  | $ | 4,250 |
Research and development |  |  | 8,388 |  |  |  | 5,040 |  |  |  | 5,267 |
Sales, general and administrative |  |  | 24,398 |  |  |  | 15,936 |  |  |  | 11,595 |
Total operating expenses |  |  | 32,786 |  |  |  | 20,976 |  |  |  | 16,862 |
Total |  | $ | 38,240 |  |  | $ | 24,067 |  |  | $ | 21,112 |
The weighted average assumptions used to value stock option grants were as follows:
|  | Fiscal Years Ended |
|  | June 26, 2011 |  |  | June 27, 2010 |  |  | June 28, 2009 |
Stock Option Grants: |  |  |  |  |  |  |  |  |  |  |  |
Risk-free interest rate |  |  | 0.95 | % |  |  | 1.76 | % |  |  | 2.68 | %
Expected life, in years |  |  | 3.5 |  |  |  | 3.7 |  |  |  | 4.0 |
Expected volatility |  |  | 56.7 | % |  |  | 48.4 | % |  |  | 49.7 | %
Dividend Yield |  |  | — |  |  |  | — |  |  |  | — |
The following describes each of these assumptions and the Company's methodology for determining each assumption: Risk-Free Interest Rate The Company estimates the risk-free interest rate using the U.S. Treasury bill rate with a remaining term equal to the expected life of the award. Expected Life The expected life represents the period that the stock option awards are expected to be outstanding. For grants prior to the fourth quarter of fiscal 2008, the expected term was derived using the "simplified" method as allowed under the provisions of the SEC's Staff Accounting Bulletin No. 107 as the Company did not believe it had sufficient historical data to support a more detailed assessment of the estimate. In the fourth quarter of fiscal 2008, the Company determined that it had amassed adequate historical data and as such transitioned to a more detailed assessment. In determining the appropriate expected life of its stock options, the Company now segregates its grantees into categories principally based upon employee levels that are expected to be indicative of similar option-related behavior. The expected useful lives for each of these categories are then estimated giving consideration to (1) the weighted average vesting periods, (2) the contractual lives of the stock options, (3) the relationship between the exercise price and the fair market value of the Company's common stock, (4) expected employee turnover, (5) the expected future volatility of the Company's common stock, and (6) past and expected exercise behavior, among other factors. Expected Volatility The Company estimates expected volatility giving consideration to the expected life of the respective award, the Company's current expected growth rate, implied volatility in traded options for its common stock, and the historical volatility of its common stock. Expected Dividend Yield The Company estimates the expected dividend yield by giving consideration to its current dividend policies as well as those anticipated in the future considering the Company's current plans and projections. The Company does not currently calculate a discount for any post-vesting restrictions to which its awards may be subject.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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