STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2011

STOCKHOLDERS EQUITY NOTE [Abstract]

STOCKHOLDERS' EQUITY NOTE DISCLOSURE [Text Block]

13.    STOCKHOLDERS' EQUITY

Stock Incentive Plans

Under its stock incentive plans, the Company may grant stock awards or options to purchase the Company's common stock to employees, officers, directors (subject to certain restrictions) and consultants. Options generally allow the purchase of common stock at the market price on the date of grant. The options become exercisable over various periods, typically four years for employees and one year for non-employee directors, and have a maximum term of seven years. Restricted stock and restricted stock unit awards typically vest over four years. Shares available for issuance under the Company's Amended and Restated 2005 Stock Incentive Plan totaled 3,142,485 at September 30, 2011, including 370,541 shares that may alternatively be issued as awards of restricted stock or restricted stock units.

The Company records stock-based compensation cost for stock-based awards over the requisite service periods for the individual awards, which generally equal the vesting periods. Stock-compensation expense is recognized using the straight-line attribution method. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option grants with time-based vesting. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. The fair values of restricted stock awards with time-based vesting, including restricted stock and restricted stock units, are based on the intrinsic values of the awards at the date of grant.

The Company also issues stock option grants or restricted stock unit awards with vesting based on market conditions, specifically the Company's stock price, or a combination of performance and market conditions, generally the Company's return on equity. The compensation costs and derived service periods for such grants are estimated using the Monte Carlo valuation method. For stock option grants with vesting based on a combination of performance and market conditions, the compensation costs are also estimated using the Black-Scholes valuation method factored for the estimated probability of achieving the performance goals, and compensation costs for these grants are recorded based on the higher estimate for each vesting tranche. For restricted stock unit grants with vesting based on a combination of performance and market conditions, the compensation costs are also estimated based on the intrinsic values of the awards at the date of grant factored for the estimated probability of achieving the performance goals, and compensation costs for these grants are also recorded based on the higher estimate for each vesting tranche. For each stock option grant and restricted stock award with vesting based on a combination of performance and market conditions where vesting will occur if either condition is met, the related compensation costs are recognized over the shorter of the derived service period or implicit service period.

During the first quarter of 2010, the Company modified the vesting terms of certain outstanding stock options that had vesting based on market conditions. The modifications, which affected 16 employees, provide that the vesting of the underlying shares can also occur based on the achievement of certain additional performance-based criteria and resulted in a total incremental compensation charge of $0.9 million, which is being recognized over the remaining derived service period of the stock options. The incremental compensation costs for the option modifications were based on the excess fair values of the modified options immediately after the modification, which were estimated using the Black-Scholes valuation method factored for the estimated probability of achieving the performance goals, compared to the fair values immediately before the modification estimated using the Monte Carlo valuation method.

The following table sets forth the weighted-average key assumptions and fair value results for stock options granted during the nine-month periods ended September 30, 2011 and 2010:

	Nine Months Ended September 30,
	2011	2010
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	2.06%	1.90%
Expected volatility	41.2%	46.0%
Expected life (in years)	4.48	4.44
Weighted-average fair value of options granted	$7.63	$5.50

The following table summarizes changes in the Company's stock options outstanding during the nine months ended September 30, 2011:

	Stock Options
	Shares		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2010	5,241,898		$19.76
Granted	1,133,100		$20.29
Exercised	(163,861	)	$13.16
Forfeited or expired	(576,207	)	$20.97
Options outstanding at September 30, 2011 (a)	5,634,930		$19.94	4.88 years	$8
Options vested at September 30, 2011 or expected to vest	4,797,398		$19.94	4.86 years	$8
Options exercisable at September 30, 2011	1,885,719		$21.97	4.20 years	$8

(a)   Options outstanding at September 30, 2011 included 1,734,155 options that had vesting based on either market conditions or a combination of performance and market conditions.

The aggregate intrinsic values of stock options exercised during the nine-month periods ended September 30, 2011 and 2010 were approximately $1.1 million and $0.1 million, respectively. Cash amounts received from the exercise of stock options were $2.2 million and $0.3 million for the nine-month periods ended September 30, 2011 and 2010, respectively. The Company did not realize any actual tax benefit from the tax deductions for stock option exercises during the nine-month periods ended September 30, 2011 and 2010 due to the full valuation allowance on the Company's U.S. deferred tax assets.

The following table sets forth the weighted-average key assumptions used for Monte Carlo valuations of restricted stock units with vesting based on market conditions or a combination of performance and market conditions granted during the nine-month periods ended September 30, 2011 and 2010:

	Nine Months Ended September 30,
	2011	2010
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	3.90%	4.09%
Expected volatility	41.5%	46.7%
Expected life (in years)	3.04	4.49

The following table summarizes changes in the Company's non-vested restricted stock units during the nine months ended September 30, 2011:

	Non-Vested Restricted Stock Units
	Shares		Weighted- Average Grant-Date Fair Value	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Non-vested at December 31, 2010	573,264		$18.15
Granted (a)	567,000		$21.36
Vested	(204,536	)	$25.16
Forfeited	(44,196	)	$16.45
Non-vested at September 30, 2011 (b)	891,532		$19.44	2.15 years	$6,892
Expected to vest	719,349		$19.64	2.01 years	$5,561

(a)   Restricted stock units granted during the nine months ended September 30, 2011 included 262,500 units that had vesting based on either market conditions or a combination of performance and market conditions.

(b)   Non-vested restricted stock units at September 30, 2011 included 480,800 units that had vesting based on either market conditions or a combination of performance and market conditions.

The weighted-average fair value of restricted stock units granted during the nine-month period ended September 30, 2010 was $13.75.

The following table summarizes changes in the Company's non-vested restricted stock during the nine months ended September 30, 2011:

	Non-Vested Restricted Stock
	Shares		Weighted- Average Grant-Date Fair Value	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Non-vested at December 31, 2010	25,000		$25.41
Granted	-		-
Vested	(18,750	)	$25.41
Forfeited	-		-
Non-vested at September 30, 2011	6,250		$25.41	0.22 years	$48

Employee Stock Purchase Plan

The Company's Second Amended and Restated 1996 Employee Stock Purchase Plan (the "ESPP") offers the Company's shares for purchase at a price equal to 85% of the closing price on the applicable offering period termination date. Shares issued under the ESPP are considered compensatory under FASB ASC Subtopic 718-50, Compensation-Stock Compensation: Employee Stock Purchase Plans. Accordingly, the Company is required to assign fair value to, and record compensation expense for, share purchase rights granted under the ESPP.

The following table sets forth the weighted-average key assumptions and fair value results for share purchase rights granted under the ESPP during the nine-month periods ended September 30, 2011 and 2010:

	Nine Months Ended September 30,
	2011	2010
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	0.42%	1.24%
Expected volatility	42.1%	45.7%
Expected life (in years)	0.24	0.24
Weighted-average fair value per right granted	$2.55	$2.19

Under the ESPP, the Company issued 67,342 shares at an average price per share of $13.46 and 78,889 shares at an average price per share of $11.33 during the nine months ended September 30, 2011 and 2010, respectively. A total of 669,384 shares remained available for issuance under the ESPP at September 30, 2011.

Stock-Based Compensation

The Company estimates forfeiture rates at the time awards are made based on historical turnover rates and applies these rates in the calculation of estimated compensation cost. At September 30, 2011, the Company's annualized estimated forfeiture rates were 0% for non-employee director awards, and 10% for both executive management and other employee awards.

Stock-based compensation was included in the following captions in the Company's condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Cost of product revenues	$	168	$	176	$	417	$	562
Cost of services revenues		63		287		608		822
Research and development expenses		435		506		1,334		1,704
Marketing and selling expenses		1,051		1,078		3,625		3,153
General and administrative expenses		1,788		1,581		5,783		4,373
Total stock-based compensation	$	3,505	$	3,628	$	11,767	$	10,614

The increase in stock-based compensation expense for the nine-month period ended September 30, 2011, compared to the same period in 2010, was primarily the result of incremental expense related to the reversal of the forfeiture rate applied to certain grant tranches recorded during the 2011 period. At September 30, 2011, the Company had $27.6 million of unrecognized compensation costs before forfeitures related to non-vested stock-based compensation awards granted under its stock-based compensation plans.

Stock Repurchases

In April 2007, the Company initiated a stock repurchase program that ultimately authorized the repurchase of up to $200 million of the Company's common stock through transactions on the open market, in block trades or otherwise. At September 30, 2011, $80.3 million remained available for future stock repurchases under the program. The stock repurchase program is funded through working capital and has no expiration date. No shares of common stock have been repurchased under this program since March 2008.

During the nine months ended September 30, 2011, the Company acquired upon surrender 7,196 shares of restricted stock from an employee in exchange for approximately $113 thousand for the payment of the minimum required withholding taxes upon the vesting of restricted stock.

At September 30, 2011 and December 31, 2010, treasury shares held by the Company totaled 3,798,032 shares and 4,163,765 shares, respectively.

Comprehensive Loss

Total comprehensive loss, net of taxes, consists of net loss, net changes in the foreign-currency translation adjustment and net unrealized gains and losses on defined benefit plans, foreign-currency derivatives and marketable securities. The following is a summary of the Company's comprehensive loss for the three- and nine-month periods ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net loss	$	(8,019	)	$	(9,995	)	$	(24,998	)	$	(36,383	)
Net changes in:
Foreign currency translation adjustment		(8,195	)		9,241			(635	)		(1,012	)
Unrealized gains from defined benefit plan		-			-			445			-
Unrealized losses on marketable securities		-			-			-			(4	)
Unrealized losses on foreign-currency derivatives		-			(2,314	)		-			(2,314	)
Total comprehensive loss	$	(16,214	)	$	(3,068	)	$	(25,188	)	$	(39,713	)