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Note 4 - Stockholders' Equity
6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Shareholders' Equity and Share-based Payments [Text Block]
4. STOCKHOLDERS’ EQUITY
 
Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years
.
Stock-based compensation expense before taxes related to the Company’s stock plans and employee stock purchase plan was allocated as follows (in thousands): 
 
 
 
 
Three Months
Ended June 30,
 
 
Six Months
Ended June 30,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Cost of design-to-silicon yield-solutions
  $ 956     $ 914     $ 2,041     $ 1,801  
Research and development
    651       510       1,357       1,001  
Selling, general and administrative
    684       931       1,559       1,752  
Stock-based compensation expense
  $ 2,291     $ 2,355     $ 4,957     $ 4,554  
 
On June 30, 2016, the Company had the following stock-based compensation plans:
 
Stock Plans —
All new equity awards are issued by the Company under its 2011 Stock Incentive Plan, as amended and restated from time to time (the “2011 Plan”). The 2011 Plan was initially approved by the Company’s stockholders at the annual meeting of stockholders on November 16, 2011, and then again – as amended and restated each time –at the 2013 annual meeting of stockholders on May 28, 2013, the 2014 annual meeting of stockholders on May 27, 2014, and most recently at the annual meeting of stockholders on May 31, 2016. Under the 2011 Plan, the Company may award stock options, stock appreciation rights, stock grants or stock units covering shares of the Company's common stock to employees, directors, non-employee directors and contractors. The aggregate number of shares reserved for awards under this plan is 7,800,000 shares, plus up to 3,500,000 shares previously issued under the 2001 Plan that are forfeited or repurchased by the Company or shares subject to awards previously issued under the 2001 Plan that expire or that terminate without having been exercised or settled in full on or after November 16, 2011. In case of awards other than options or stock appreciation rights, the aggregate number of shares reserved under the plan will be decreased at a rate of 1.33 shares issued pursuant to such awards. The exercise price for stock options must generally be at prices no less than the fair market value at the date of grant. Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period.
 
 In 2001, the Company adopted a 2001 Stock Plan (the “2001 Plan”). In 2003, in connection with its acquisition of IDS Systems Inc., the Company assumed IDS’ 2001 Stock Option / Stock Issuance Plan (the “IDS Plan”).  Both the 2001Plan and the IDS Plan expired in 2011.  Stock options granted under the 2001 and IDS Plans generally expire ten years from the date of grant and become vested and exercisable over a four-year period. Although no new awards may be granted under the 2001 or IDS Plans, awards made under the 2001 and IDS Plans that are currently outstanding remain subject to the terms of each plan, as applicable.
 
 
The Company estimated the fair value of share-based awards granted under the Stock Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values: 
 
 
 
Three Months
Ended June 30,
 
 
Six Months
Ended June 30,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Expected life (in years)
    4.42       4.51       4.42       4.51  
Volatility
    43.58
%
    46.8
%
    44.26
%
    46.7
%
Risk-free interest rate
    1.30
%
    1.41
%
    1.25
%
    1.34
%
Expected dividend
                       
Weighted average fair value per share of options granted during the period
  $ 5.00     $ 6.61     $ 4.46     $ 6.50  
  
As of June 30, 2016, 8.3 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 4.5 million shares were available for future grant. The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after adoption of the 2011 Plan through June 30, 2016.  As of June 30, 2016, there were no outstanding awards that had been granted outside of the 2011, 2001 or the IDS Plans (collectively, the "Stock Plans").  
  
Stock option activity under the Company’s Stock Plans during the six months ended June 30, 2016, was as follows:
 
 
 
Number of
Options
(in
thousands)
 
 
Weighted
Average
Exercise
Price
per Share
 
 
Weighted
Average
Remaining
Contractual
Term
(years)
 
 
Aggregate
Intrinsic
Value
(in
thousands)
 
Outstanding, January 1, 2016
    1,764     $ 7.88                  
Granted (weighted average fair value of $4.46 per share)
    50     $ 11.87                  
Exercised
    (63
)
  $ 7.20                  
Canceled
    (7
)
  $ 15.01                  
Expired
    (75
)
  $ 13.79                  
Outstanding, June 30, 2016
    1,669     $ 7.73       4.87     $ 10,719  
Vested and expected to vest, June 30, 2016
    1,660     $ 7.70       4.84     $ 10,704  
Exercisable, June 30, 2016
    1,523     $ 7.17       4.49     $ 10,539  
   
The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $13.99 per share as of June 30, 2016. The total intrinsic value of options exercised during the six months ended June 30, 2016, was $0.4 million.
 
As of June 30, 2016, there was $0.6 million of total unrecognized compensation cost related to unvested stock options. That cost is expected to be recognized over a weighted average period of 3.0 years. The total fair value of shares vested during the six months ended June 30, 2016, was $0.5 million.
 
Nonvested restricted stock units activity during the six months ended June 30, 2016, was as follows:
 
 
 
Shares
(in thousands)
 
 
Weighted
Average
Grant Date
Fair Value Per
Share
 
Nonvested, January 1, 2016
    1,166     $ 17.03  
Granted
    50     $ 11.87  
Vested
    (258
)
  $ 16.70  
Forfeited
    (42
)
  $ 17.27  
Nonvested, June 30, 2016
    916     $ 16.83  
 
 
As of June 30, 2016, there was $13.6 million of total unrecognized compensation cost related to nonvested restricted stock units. That cost is expected to be recognized over a weighted average period of 2.4 years. Restricted stock units do not have rights to dividends prior to vesting.
 
In June 2016, the Company’s Compensation Committee approved 16,375 shares of stock options and 841,533 restricted stock units to be granted effective July 1, 2016. The weighted average exercise price for the options granted is $14.14 per share. The weighted average grant date fair value per share for the restricted stock units granted is $14.14. The cost is expected to be recognized over the vesting period, generally 4 years.
 
 
Employee Stock Purchase Plan
— In July 2001, the Company adopted a ten-year Employee Stock Purchase Plan (as amended, “Purchase Plan”) under which eligible employees can contribute up to 10% of their compensation, as defined in the Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85% of the lower of the fair market value at the beginning of the offering period or the end of the purchase period. The Purchase Plan consists of twenty-four-month offering periods with four six-month purchase periods in each offering period. Under the Purchase Plan, on January 1 of each year, the number of shares reserved for issuance will automatically increase by the lesser of (1) 675,000 shares, (2) 2% of the Company’s outstanding common stock on the last day of the immediately preceding year, or (3) the number of shares determined by the board of directors. At the annual meeting of stockholders on May 18, 2010, the Company’s stockholders approved an amendment to the Purchase Plan to extend it through May 17, 2020. 
  
 The Company estimated the fair value of purchase rights granted under the Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:
 
 
 
Six
months
Ended
June 30
,
 
 
 
2016
 
 
2015
 
Expected life (in years)
    1.25       1.25  
Volatility
    44.15
%
    54.21
%
Risk-free interest rate
    0.50
%
    0.26
%
Expected dividend
           
Weighted average fair value of purchase rights granted under the Purchase Plan
  $ 3.56     $ 6.19  
 
 
During the three months ended June 30, 2016 and 2015, the Company did not issue any shares under the Purchase Plan. During the six months ended June 30, 2016 and 2015, a total of 84,000 and 51,000 shares, respectively, were issued at a weighted-average purchase price of $9.21 and $13.32 per share, respectively, under the Purchase Plan. As of June 30, 2016, there was $1.1 million of unrecognized compensation cost related to the Purchase Plan. That cost is expected to be recognized over a weighted average period of 1.6 years. As of June 30, 2016, 2.7 million shares were available for future issuance under the Purchase Plan.   
  
Stock Repurchase Program
—On October 21, 2014, the Board of Directors adopted a program, effective immediately, to repurchase up to $25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions over the next two years. During the three and six months ended June 30, 2016, the Company repurchased 129,457 shares under this program. As of June 30, 2016, 1,219,230 shares had been repurchased at an average price of $13.43 per share under this program for a total purchase of $16.4 million, and $8.6 million remained available for future repurchases.