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Stock-Based Compensation
 6 Months Ended
Jun. 30, 2014
Stock-Based Compensation

Note 12. Stock-based compensation

The following table summarizes the stock-based compensation expense recognized in the three and six months ended June 30, 2014 and 2013 (in thousands):

 

 

Three Months Ended
June  30,

 

  

Six Months Ended
June 30,

 

(in thousands)

2014

 

  

2013

 

  

2014

 

  

2013

 

Cost of goods sold

$

455

  

  

$

131

  

  

$

785

  

  

$

374

  

Research and development

 

408

  

  

 

600

  

  

 

1,115

  

  

 

1,018

  

Sales and marketing

 

587

  

  

 

344

  

  

 

960

  

  

 

582

  

General and administrative

 

273

  

  

 

398

  

  

 

764

  

  

 

701

  

 

$

1,723

  

  

$

1,473

  

  

$

3,624

  

  

$

2,675

  

Determining Fair Value

The Company estimated the fair value of certain stock-based awards using a Black-Scholes-Merton valuation model with the following assumptions:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

Stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average expected term (years)

 

5.12

 

 

6.30

 

 

 

5.12

 

 

 

6.34

 

Weighted-average volatility

 

69%

 

 

75%

 

 

 

70%

 

 

 

75%

 

Risk-free interest rate

 

1.73%

 

 

1.12 – 1.14%

 

 

 

1.73 – 1.75%

 

 

 

1.08 – 1.14%

 

Expected dividends

 

—

 

 

—

 

 

 

—

 

 

 

—

 

Stock appreciation units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average expected term (years)

 

2.40

 

 

2.33

 

 

 

2.27

 

 

 

2.47

 

Weighted-average volatility

 

56%

 

 

57%

 

 

 

57%

 

 

 

60%

 

Risk-free interest rate

 

0.13 - 0.90%

 

 

0.19 – 0.30%

 

 

 

0.13 – 0.90%

 

 

 

0.19 – 0.46%

 

Expected dividends

 

—

 

 

—

 

 

 

—

 

 

 

—

 

ESPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average expected term (years)

 

0.40

 

 

0.73

 

 

 

0.69

 

 

 

0.73

 

Weighted-average volatility

 

56%

 

 

48%

 

 

 

54%

 

 

 

48%

 

Risk-free interest rate

 

0.05%

 

 

0.09 – 0.16%

 

 

 

0.05 – 0.13%

 

 

 

0.09 – 0.16%

 

Expected dividends

 

—

 

 

—

 

 

 

—

 

 

 

—

 

Stock Options and Restricted Stock Units (RSUs)

The following table summarizes the Company’s stock option and RSU activity during the six months ended June 30, 2014:

 

 

Stock Options

 

  

Restricted Stock Units

 

 

Number
of
shares

 

 

Weighted
average
exercise
price

 

  

Number
of
units

 

 

Weighted
average
grant date
fair value

 

Balance at December 31, 2013

 

4,103,454

  

 

$

5.92

  

  

 

1,169,649

  

 

$

6.42

  

Granted

 

51,800

 

 

 

6.08

 

 

 

26,000

 

 

 

7.62

  

Exercised/Converted

 

(173,723

)

 

 

4.25

 

 

 

(47,682

)

 

 

6.04

  

Forfeited

 

(131,458

)

 

 

5.45

 

 

 

(35,034

)

 

 

6.42

  

Balance at June 30, 2014

 

3,850,073

 

 

 

6.01

 

 

 

1,112,933

 

 

 

6.47

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock appreciation units (“SAUs”)

SAUs are liability classified share-based awards. The Company did not grant any SAUs during the six months ended June 30, 2014. As of June 30, 2014 and December 31, 2013, there were 413,123 and 420,397 SAUs outstanding. Outstanding SAUs were re-measured each reporting period at fair value.

Employee Stock Purchase Plan (“ESPP”)

Due to the delay in filing its Annual Report on Form 10-K, in May 2014 the Compensation Committee of the Company’s Board of Directors (the “Committee”) rescheduled the May 15 purchase date under the current offering period to the date that is three business days after the later of (i) the filing of its Annual Report on Form 10-K and (ii) the Company’s general public release of its revenues for the first quarter of 2014, which occurred on June 17, 2014. Additionally, the Committee waived the existing purchase limits for the upcoming purchase date only and created a modification of the purchase price formula for the current offering period. In connection with this modification, the Company recorded an immaterial charge as stock based compensation expense in its condensed consolidated statements of operations in the three and six months ended June 30, 2014.