Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 12. Stock-based compensation

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

	Three Months EndedSeptember  30,				Nine Months EndedSeptember 30,
(in thousands)	2014		2013		2014		2013
Cost of goods sold	$	203	$	471	$	988	$	845
Research and development		339		417		1,454		1,435
Sales and marketing		417		253		1,377		835
General and administrative		229		449		993		1,150
	$	1,188	$	1,590	$	4,812	$	4,265

Determining Fair Value

The Company estimates the fair value of its stock options, stock appreciation units and employee stock purchases related to the Employee Stock Purchase Plan (the “ESPP Purchase Rights”) using a Black-Scholes-Merton model or a lattice-binomial option-pricing model (the “Lattice-Binomial Model”). The following assumptions are used in estimating the fair value of stock-based awards in the three and nine months ended September 30, 2014:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2014		2013	2014		2013
Stock options
Weighted-average expected term (years)		5.78	6.55		5.52		6.48
Weighted-average volatility		66%	71%		68%		72%
Risk-free interest rate		1.62%-1.88%	1.82%		1.62%– 1.88%		1.08%-1.82%
Expected dividends		—%	—%		—%		—%
Stock appreciation units
Weighted-average expected term (years)		2.47	1.92		2.46		2.29
Weighted-average volatility		54%	52%		56%		57%
Risk-free interest rate		0.47%-0.88%	0.15%-0.66%		0.13%–0.90%		0.14%-0.66%
Expected dividends		—%	—%		—%		—%
ESPP Purchase Rights
Weighted-average expected term (years)		—	0.73		0.69		0.73
Weighted-average volatility		—	48%		54%		48%
Risk-free interest rate		—	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 nine months ended September 30, 2014:

	Stock Options					Restricted Stock Units
	Numberofshares			Weighted average exercise price		Numberofunits			Weighted average grant date fair value
Balance at December 31, 2013		4,103,454		$	5.92		1,169,649		$	6.42
Granted		129,444			4.37		72,152			4.82
Exercised/Converted		(173,723	)		4.25		(512,807	)		6.40
Forfeited and canceled		(323,771	)		5.99		(61,469	)		6.44
Balance at September 30, 2014		3,735,404			5.94		667,525			6.27

Stock appreciation units (“SAUs”)

SAUs are liability classified share-based awards. The Company did not grant any SAUs during the nine months ended September 30, 2014. As of September 30, 2014 and December 31, 2013, there were 388,276 and 420,397SAUs 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 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 second quarter of 2014.