Stockholders' Equity and Equity Incentive Programs (Tables)

9 Months Ended

Sep. 30, 2013

Stock Option

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

The fair values of option awards were estimated at each grant date using the Black-Scholes option valuation model. The Black-Scholes model requires the input of assumptions, including the expected stock-price volatility and estimated option life. The expected volatilities utilized were based on the actual volatility of similar entities due to the limited history of the trading of the Company’s common stock since the initial public offering in February 2011. The expected lives of options granted were estimated using the Company’s historical and expected future exercise behavior. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. No dividends were assumed in estimated option values. Assumptions used in the Black-Scholes model are presented below:

	Three Months Ended September 30,						Nine Months Ended September 30,
Stock Options	2013			2012			2013			2012
Weighted-average expected term (years)		6.55			6.78			6.48			6.77
Weighted-average volatility		71	%		71	%		72	%		71	%
Risk-free interest rate		1.82-1.82	%		1.07-1.07	%		1.08-1.82	%		1.07-1.83	%
Expected dividends		0	%		0	%		0	%		0	%

Stock Appreciation Rights (SARs)

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

The fair values of SAUs were estimated at each grant date using the Black-Scholes option valuation model. The expected volatilities utilized were based on the actual volatility of similar entities. Vested SAUs first become exercisable upon the expiration of the lock-up period associated with the initial public offering. Therefore, the Company estimated the term of the SAUs based on an average of the weighted-average exercise period and the remaining contractual term. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. No dividends were assumed in estimated option values. Assumptions used in the Black-Scholes model are presented below:

	Three Months Ended September 30,						Nine Months Ended September 30,
Stock Appreciation Units	2013			2012			2013			2012
Weighted-average expected term (years)		1.92			3.10			2.29			3.27
Weighted-average volatility		52	%		65	%		57	%		68	%
Risk-free interest rate		0.15-0.66	%		0.30-0.57	%		0.14-0.66	%		0.30-1.04	%
Expected dividends		0	%		0	%		0	%		0	%

Employee Stock Purchase Plan

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

Employees purchased 262,860 shares in the first nine months of 2013 for $1.2 million and 257,335 shares in the first nine months of 2012 for $0.9 million under the ESPP. The value of the ESPP 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. The expected volatilities utilized were based on the actual volatility of similar entities. The expected term represents the period of time from the beginning of the offering period to the purchase date. The risk-free interest rates utilized were based on the U.S. Treasury yield in effect at each grant date. No dividends were assumed in estimated option values. Assumptions used in the Black-Scholes model are presented below:

	Three months ended September 30,						Nine months ended September 30,
ESPP	2013			2012			2013			2012
Weighted-average expected term (years)		0.73			0.75			0.73			0.75
Weighted-average volatility		48	%		71	%		48	%		71	%
Risk-free interest rate		0.09-0.16	%		0.04-0.15	%		0.09-0.16	%		0.04-0.15	%
Expected dividends		0	%		0	%		0	%		0	%

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 September 30,				Nine Months Ended September 30,
(in thousands)	2013		2012		2013		2012
Cost of goods sold	$	471	$	228	$	845	$	553
Research and development		417		404		1,435		1,268
Sales and marketing		253		242		835		656
General and administrative		449		408		1,150		958
	$	1,590	$	1,282	$	4,265	$	3,435