STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

STOCK BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

10. STOCK-BASED COMPENSATION

The following table summarizes employee stock-based compensation expense, net of income tax, as it relates to the Company's statement of operations for the three months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended March 31,
	2013		2012
Cost of sales	$	112	$	34
Research and development		500		97
Sales and marketing		587		322
General and administrative		399		258
Total stock-based compensation expense	$	1,598	$	711

Stock-based compensation in the three months ended March 31, 2013 includes a one-time $660,000 charge associated with the accelereation of Vineyard option grants at the closing of the acquisition. 

No income tax benefits were recognized in the three months ended March 31, 2013 and 2012 due to current period operating loss carry-forwards available to offset income in the previous three month period.  No stock-based compensation has been capitalized in inventory due to the immateriality of such amounts.

As of March 31, 2013, total unrecognized compensation cost related to unvested stock options was $9.9 million, net of estimated forfeitures, which is expected to be recognized over an estimated weighted average period of 3.50 years, and total unrecognized compensation cost related to non-vested RSAs was $2.8 million, net of estimated forfeitures, which is expected to be recognized over an estimated weighted average period of 2.99 years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of each RSA is calculated based upon the closing stock price of the Company's common stock on the date of the grant. The expense for stock-based awards is recognized over the requisite service period using the straight-line attribution approach.

The following assumptions were used in determining the fair value of stock options granted during the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
	2013			2012
Expected term (years)		4.75			4.80
Expected volatility		78.1	%		72.0	%
Risk-free interest rate		0.85	%		1.02	%
Expected dividend yield		—	%		—	%

The weighted average grant date fair value of options granted during the three months ended March 31, 2013 and 2012 was $10.18 and $9.54, respectively.

The Company calculated the expected term of stock options granted using historical exercise data.  The Company used the number of days between the grant and the exercise dates to calculate a weighted average of the holding periods for all awards (i.e., the average interval between the grant and exercise or post-vesting cancellation dates) adjusted as appropriate. Expected volatilities were estimated using the historical share price performance over a period equivalent to the expected term of the option.  The risk-free interest rate for a period equivalent to the expected term of the option was extrapolated from the U.S. Treasury yield curve in effect at the time of the grant. The Company has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future.