Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Stock Based Compensation Expense

Stock-Based Compensation Expense Recorded

The Company’s stock-based compensation expense was recorded as follows (in thousands):

	Three months ended March 31,
(in thousands)	2013		2012
Cost of goods sold	$	243	$	188
Research and development		418		469
Sales and marketing		238		209
General and administrative		303		278
	$	1,202	$	1,144

Stock Option

Stock-Based Compensation Expense Recorded

The following tables summarize the components of stock-based compensation expense for stock options for the three months ended March 31, 2013 and 2012, respectively (in thousands):

	Three months ended March 31,
	2013		2012
Cost of goods sold	$	79	$	61
Research and development		174		209
Sales and marketing		78		94
General and administrative		173		174
	$	504	$	538

Estimated Fair Value of All Employee Stock Options Using Black-Scholes Valuation Model

The Company estimated the fair value of all employee stock options using a Black-Scholes valuation model with the following assumptions:

	Three months ended March 31,
Stock Options	2013			2012
Weighted-average expected term (years)		6.55			6.71
Weighted-average volatility		76	%		71	%
Risk-free interest rate		1.08	%		1.81	%
Expected dividends		0	%		0	%

Stock Appreciation Rights (SARs)

Stock-Based Compensation Expense Recorded

Stock appreciation units are remeasured each period at fair value. The following table summarizes the expense (credit) recognized for stock appreciation units for the three months ended March 31, 2013 (in thousands):

	Three months ended March 31,
	2013			2012
Cost of goods sold	$	(24	)	$	(5	)
Research and development		(32	)		(9	)
Sales and marketing		(13	)		(4	)
General and administrative		(9	)		(3	)
	$	(78	)	$	(21	)

Estimated Fair Value of All Employee Stock Options Using Black-Scholes Valuation Model

Based on the fair value of the stock appreciation units as of March 31, 2013, the Company had $0.05 million of unrecognized stock-based compensation expense that would be recognized over the remaining weighted-average period of 1.10 years. The Company estimated the fair value of all employee stock appreciation units using a Black-Scholes valuation model with the following assumptions:

	Three months endedMarch 31,
Stock appreciation units	2013	2012
Weighted-average expected term (years)	2.61	3.39
Weighted-average volatility	63%	69%
Risk-free interest rate	0.20 - 0.46%	0.42 - 1.04%
Expected dividends	0%	0%

Employee Stock Purchase Plan

Stock-Based Compensation Expense Recorded

The following tables summarize the components of ESPP expense for the three months ended March 31, 2013 and 2012, respectively (in thousands):

	Three months endedMarch  31,
	2013		2012
Cost of goods sold	$	80	$	67
Research and development		120		176
Sales and marketing		38		40
General and administrative		40		37
	$	278	$	320

Estimated Fair Value of All Employee Stock Options Using Black-Scholes Valuation Model

The value of the stock purchase right consists of: (1) the 15% discount on the purchase of the stock, (2) 85% of the call option and (3) 15% of the put option. The call option and put option were valued using the Black-Scholes option pricing model with the following assumptions:

	Three months ended March 31,
Stock purchase rights	2013	2012
Weighted-average expected term (years)	0.74	0.72
Weighted-average volatility	48%	71%
Risk-free interest rate	0.13 - 0.16%	0.04 - 0.11%
Expected dividends	0%	0%

Restricted Stock Units (RSUs)

Stock-Based Compensation Expense Recorded

The following table summarizes the stock-based compensation expense recognized for restricted stock units for the three months ended March 31, 2013 (in thousands):

	Three months endedMarch  31,
	2013		2012
Cost of goods sold	$	108	$	65
Research and development		156		93
Sales and marketing		135		79
General and administrative		99		70
	$	498	$	307