NOTE 10 — SHARE INCENTIVE PLANS:

The Company has seven option plans: the 1999 United States Equity Incentive Plan, 1999 Israeli Share Option Plan, 2003 Israeli Share Option Plan (collectively, the “Prior Plans”), the 2006 Global Share Incentive Plan (the “Global Plan”), the Global Share Incentive Assumption Plan 2010 (the “Assumption Plan”), the Kotura, Inc. Second Amended and Restated 2003 Stock Plan (the “Kotura Plan”) and the IPtronics, Inc. 2013 Restricted Stock Unit Plan (the “IPtronics Plan”).

The number of ordinary shares reserved for issuance under the Company’s Global Plan will increase automatically on the first day of each fiscal year, beginning in 2008, by a number of ordinary shares equal to the lower of: (i) 2% of total number of ordinary shares outstanding on a fully diluted basis on the date of the increase, (ii) 685,714 ordinary shares, or (iii) a smaller number determined by the board of directors. In any event, the maximum aggregate number of ordinary shares that may be issued or transferred under the Global Plan during the term of the Global Plan may in no event exceed 15,474,018 ordinary shares. The Global Plan was automatically increased by 685,714 ordinary shares on January 1, 2014, 2013 and 2012, respectively.

The number of ordinary shares reserved for issuance under the Company’s Assumption Plan will increase automatically on the first day of each fiscal year, beginning in 2012, by a number of ordinary shares equal to the lower of: (i) 281,625 ordinary shares or (ii) an amount determined by the Board. The Assumption Plan was automatically increased by 281,625 ordinary shares on January 1, 2014, and 2013, respectively.

The following table summarizes the share option awards activity under all equity incentive plans:

	Options Outstanding
	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2010	5,434,974		$	10.56
Options granted	1,060,938		$	21.80
Options exercised	(1,586,577	)	$	8.83
Options canceled	(202,986	)	$	16.46
Outstanding at December 31, 2011	4,706,349		$	13.42
Options granted	879,160		$	70.72
Options exercised	(2,161,628	)	$	10.96
Options canceled	(137,959	)	$	28.33
Outstanding at December 31, 2012	3,285,922		$	29.74
Options granted	31,653		$	18.30
Options exercised	(376,588	)	$	14.08
Options canceled	(134,763	)	$	62.47
Outstanding at December 31, 2013	2,806,224		$	30.14

The weighted average fair value of options granted was approximately $8.91, $38.66 and $18.51 for the years ended December 31, 2013, 2012 and 2011, respectively. The options grant of 31,653 shares in 2013 are related to the assumption plan for the Kotura acquisition.

The total pretax intrinsic value of options exercised in 2013 was $12.9 million. This intrinsic value represents the difference between the fair market value of the Company’s ordinary shares on the date of exercise and the exercise price of each option. Based on the closing price of the Company’s ordinary shares of $39.97 on December 31, 2013, the total pretax intrinsic value of all outstanding options awards was $51.8 million. The total pretax intrinsic value of exercisable options at December 31, 2013 was $48.6 million.

The total pretax intrinsic value of options exercised in 2012 was $136.1 million. Based on the closing price of the Company’s ordinary shares of $59.38 on December 31, 2012, the total pretax intrinsic value of all outstanding options awards was $112.4 million. The total pretax intrinsic value of exercisable options at December 31, 2012 was $88.4 million.

The following tables provide additional information about all options outstanding and exercisable at December 31, 2013:

	Options Outstanding at				Options Exercisable at
	December 31, 2013				December 31, 2013
		Weighted
		Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual	Exercise		Number	Exercise
Range of Exercise Price	Outstanding	Life (Years)	Price		Exercisable	Price
$ 3.13 - $ 8.23	323,962	4.44	$	7.83	323,962	$	7.83
$ 8.45 - $ 9.19	286,867	3.51	$	9.04	286,867	$	9.04
$ 10.23 - $ 10.23	556,177	5.19	$	10.23	556,177	$	10.23
$10.50 - $ 18.87	295,314	5.63	$	14.43	273,517	$	14.27
$18.97 - $ 27.72	299,958	6.54	$	23.06	229,353	$	23.08
$29.03 - $34.00	312,905	7.54	$	31.22	175,519	$	31.08
$35.12 - $57.41	274,664	8.10	$	46.39	125,973	$	45.52
$66.07 - $66.07	162,188	8.44	$	66.07	62,250	$	66.07
$79.38 - $79.38	20,700	8.83	$	79.38	5,909	$	79.38
$101.37 - $101.37	273,489	8.39	$	101.37	95,126	$	101.37
$3.13 - $101.37	2,806,224	6.20	$	30.14	2,134,653	$	21.28

The following table summarizes the restricted share unit activity under all equity incentive plans:

	Restricted Share Units Outstanding
	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested restricted share units at December 31, 2010	414,945		$	19.86
Restricted share units granted	1,143,142		27.00
Restricted share units vested	(224,005	)	20.02
Restricted share units canceled	(142,409	)	24.97
Non-vested restricted share units at December 31, 2011	1,191,673		$	26.05
Restricted share units granted	1,110,230		42.88
Restricted share units vested	(480,150	)	24.65
Restricted share units canceled	(58,593	)	30.39
Non-vested restricted share units at December 31, 2012	1,763,160		$	36.29
Restricted share units granted	1,162,133		49.05
Restricted share units vested	(778,084	)	31.16
Restricted share units canceled	(172,755	)	42.49
Non-vested restricted share units at December 31, 2013	1,974,454		$	43.81

The weighted average fair value of restricted share units granted was $49.05, $42.88 and $27.00 for the years ended December 31, 2013, 2012 and 2011, respectively. The total intrinsic value of all outstanding restricted share units was $78.9 million as of December 31, 2013.

The Employee Share Purchase Plan, (“ESPP”), is designed to allow eligible employees to purchase the Company’s ordinary shares, at semi-annual intervals, with their accumulated payroll deductions. A participant may contribute up to 15% of his or her base compensation through payroll deductions, and the accumulated deductions will be applied to the purchase of shares on the purchase date, which is the last trading day of the offering period. The purchase price per share will be equal to 85% of the fair market value per share on the start date of the offering period in which the participant is enrolled or, if lower, 85% of the fair market value per share on the purchase date. In any event, the maximum aggregate number of ordinary shares that may be issued over the term of the ESPP may in no event exceed 2,585,712 shares. 1,085,712 shares were initially reserved for issuance pursuant to purchase rights under the ESPP. In August 2012, the Company reserved for issuance 1,500,000 additional shares under the ESPP. No participant in the ESPP may be issued or transferred more than $25,000 worth of ordinary shares pursuant to purchase rights under the ESPP per calendar year. During the years ended December 31, 2013 and 2012, 248,486 and 219,442 shares, respectively, were issued under the ESPP at weighted average per share prices of $37.56 and $28.57, respectively.

The Company had the following ordinary shares reserved for future issuance under its equity incentive plans as of December 31, 2013:

		Number of Shares
Share options outstanding		2,806,224
Restricted share units outstanding		1,974,454
Share authorized for future issuance		1,236,003
ESPP shares available for future issuance		1,245,974
Total shares reserved for future issuance as of December 31, 2013		7,262,655

Share-based compensation

The Company accounts for share-based compensation expense based on the estimated fair value of the share option awards as of the grant dates.

The following weighted average assumptions are used to value share options granted in connection with the Company’s share incentive plans for the years ended December 31, 2013, 2012 and 2011:

	Employee Share Options			Employee Share Purchase Plan
	Year Ended December 31,			Year Ended December 31,
	2013	2012	2011	2013	2012	2011
Dividend yield, %	—	—	—	—	—	—
Expected volatility, %	57.5	56.6	55.9	56.18	68.05	41.8
Risk free interest rate, %	1.54	1.02	1.72	0.07	0.12	0.10
Expected life, years	4.72	6.25	6.25	0.53	0.53	0.53

The following table summarizes the distribution of total share-based compensation expense in the Consolidated Statements of Operations:

	Year Ended December 31,
	2013		2012		2011
	(in thousands)
Share-based compensation expense by caption:
Cost of goods sold	$	1,828	$	1,621	$	980
Research and development	25,956		19,356		11,906
Sales and marketing	9,198		8,055		4,894
General and administrative	8,156		5,987		3,632
Total share-based compensation expense	$	45,138	$	35,019	$	21,412

Share-based compensation expense by type of award:
Share options	$	12,460	$	14,104	$	12,568
ESPP	3,938		2,851		1,686
RSU	28,740		18,064		7,158
Total share-based compensation expense	$	45,138	$	35,019	$	21,412

At December 31, 2013, there was $89.8 million of total unrecognized share-based compensation costs related to non-vested share-based compensation arrangements. The costs are expected to be recognized over a weighted average period of approximately 2.32 years.