Stockholders equity

3 Months Ended

Mar. 31, 2012

Stockholders' equity [Abstract]

Stockholders' equity

7. Stockholders’ equity

Stock Repurchase

During 2011, the Company repurchased 7,464,583 shares at an average cost, including commissions, of $4.35 per share, or a total cost of $32.5 million. The Company repurchased approximately 1.25 million of these shares during the three months ended March 31, 2011 at a weighted average cost, including commissions, of $4.05 per share and a total cost of $5.1 million. This share repurchase was completed as of December 31, 2011. On April 25, 2012, the board of directors approved an additional $20.0 million share repurchase program. Through May 9, 2012, the Company has repurchased a total of 454,576 shares at a weighted average cost of $4.74 per share and a total cost of $2.2 million under this authorization. Repurchases may take place from time to time on the open market, will be financed with available cash and are subject to market and business conditions.

Stock Option and Restricted Stock Unit Activity

At March 31, 2012, the Company had four stock-based compensation plans, which are described more fully in the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. There are approximately 1.1 million shares available for grant under the Plans as of March 31, 2012. During the first quarter of 2012, the Company granted restricted stock units and performance restricted stock units that vest over one to three years, or upon the achievement of certain performance criteria, respectively. Under the terms of the restricted stock unit award grant, the grantee has no voting rights or any other rights as a stockholder until the units vest. Upon vesting, the grantee will receive in exchange for each unit, a share of unrestricted stock.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the three months ended March 31, 2012:

	Number of Units		Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value
Balance, December 31, 2011		1,096	$	4.76
Granted		553,548		5.29
Vested		—		—
Forfeited		—		—
Balance, March 31, 2012		554,644	$	5.29	$	2,407,155

Aggregate intrinsic value represents the Company’s closing stock price on the last trading day of the period, which was $4.34 per share, multiplied by the number of restricted stock units outstanding. As of March 31, 2012, there was $2.4 million in unrecognized compensation costs related to restricted stock units granted under our stock plans. We expect to recognize those costs over a weighted average period of 15 months.

The Company has granted approximately 180,000 units of performance restricted stock units (included in the table above), the vesting of which is contingent upon the achievement of certain performance criteria related to new product sales as well as the future sales and operating performance of the Company. Compensation expense is recognized over the implicit service period (the date the performance condition is expected to be achieved) based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. As of March 31, 2012, all performance restricted stock units remained unvested.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2012:

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Balance at December 31, 2011		7,576,493		$	5.75
Granted		—			—
Exercised		(9,284	)		1.58
Expired/terminated		(22,390	)		4.70
Balance at March 31, 2012		7,544,819		$	5.75		5.28	$	2,850,330
Exercisable at March 31, 2012		6,553,224		$	6.00		4.50	$	2,794,997
Expected to vest after March 31, 2012		932,099		$	4.70		8.14	$	55,332

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $4.34 per share, and the exercise price multiplied by the number of options outstanding. Aggregate intrinsic value of options exercised for the three months ended March 31, 2012 and 2011, was approximately $26,000 and $13,000, respectively. As of March 31, 2012, total unrecognized stock-based compensation expense related to unvested stock options was approximately $2.6 million, which is expected to be recognized over a remaining weighted average period of approximately 20 months. Options expected to vest are presented net of expected forfeitures.

The Company has granted a cumulative of 950,800 performance-based stock options from 2008 through December 31, 2011, the vesting of which is contingent upon the achievement of certain performance criteria related to the successful and timely development and market acceptance of future product introductions, as well as the future sales and operating performance of the Company. Compensation expense is recognized over the implicit service period (the date the performance condition is expected to be achieved) based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. At March 31, 2012, approximately 183,000 unvested performance options with a grant date fair value of approximately $420,000 remain outstanding. No performance-based options were forfeited during the three months ended March 31, 2012.

Share-Based Compensation Expense

Share-based compensation cost for restricted stock units is measured based upon the market price of the Company’s common stock on the date of grant. Share-based compensation cost for stock options is estimated at the grant-date, based upon the fair value as calculated by the Black-Scholes-Merton option pricing valuation model, which incorporates various assumptions including volatility, expected life, and interest rates. There were no stock options granted during the three months ended March 31, 2012. The assumptions used for the three-month-period ended March 31, 2011, and the resulting estimates of weighted-average fair value per share of options granted during this period, are as follows:

	Three Months Ended March 31, 2011
Expected life of options		4.5 years
Weighted average volatility		56.3	%
Weighted average risk-free interest rate		1.8	%
Dividend rate		0.0	%
Weighted average fair value of options granted	$	2.22

The expected life of options represents the estimated period of time until exercise and is based on the Company’s historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of employee behavior. The risk-free interest rate is based on the implied yield available on United States Treasury zero-coupon issues with an equivalent remaining term. The Company has not paid dividends in the past and does not plan to pay any dividends in the near future. The estimated fair value of stock-based compensation awards and other options is amortized to expense on a straight line basis over the relevant service period. As share-based compensation expense is recognized on awards ultimately expected to vest, it is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company’s forfeiture rate was calculated based on its historical experience of awards which ultimately vested.

Share-based compensation was classified as follows:

	Three Months Ended March 31,
	2012		2011
Cost of Products Sold	$	67,144	$	53,004
Sales, general and administrative expenses		547,133		723,179
Research and development expenses		143,777		186,734
Total stock-based compensation	$	758,054	$	962,917

Total share-based compensation expense recognized in the statements of operations for the three months ended March 31, 2012 and 2011, includes approximately $89,000 and $495,000, respectively, related to Incentive Stock Options (“ISOs”) for which no tax benefit is recognized. The Company did not tax effect the share-based compensation expense for tax purposes related to the non-qualified disposition of ISOs exercised and sold as the benefit will be recorded when the Company is in a position to realize the benefit with an offset to taxes payable in future periods. The total unrecognized tax benefit related to the non-qualified disposition of stock options in the three months ended March 31, 2012 and 2011, was approximately $26,000 and $13,000, respectively.