Employee Benefits and Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Estimate of Fair Value of Share-Based Awards, Stock Options

The following assumptions were used to estimate the fair value of share-based awards:



	Year Ended
	December 31, 2014		December 31, 2013		December 31, 2012
Stock Option Plans
Risk-free interest rate ⁽¹⁾	1.6	%	1.2	%	0.9	%
Dividend yield	—	%	—	%	—	%
Expected volatility ⁽²⁾	34.9	%	43.1	%	45.8	%
Expected life ⁽³⁾	4.8 years		5.3 years		5.2 years



	Year Ended
	December 31, 2014		December 31, 2013		December 31, 2012
Employee Stock Purchase Plan
Risk-free interest rate ⁽¹⁾	0.2	%	0.2	%	0.2	%
Dividend yield	—	%	—	%	—	%
Expected volatility ⁽²⁾	33.2	%	35.1	%	38.5	%
Expected life ⁽³⁾	0.5 - 2 years		0.5 - 2 years		0.5 - 2 years

_________________________________________________


⁽¹⁾	The risk-free interest rate for both stock options and the ESPP is based on the zero-coupon U.S. Treasury rate curve in effect at the time of the option grant or at the beginning of the ESPP offering period.

⁽²⁾

Expected volatility for both stock options and the ESPP reflects a combination of historical and market-based implied volatility consistent with ASC 718 and SEC Staff Accounting Bulletin 107. We determined that the combination of historical and market-based implied volatility provides a more accurate reflection of our market conditions and is more representative of future stock price trends than employing solely historical volatility.


⁽³⁾	Represents the period of time that options granted are expected to be outstanding, which is derived from historical data on employee exercise and post-vesting employment termination behavior.

Estimate of Fair Value of Share-Based Awards, Employee Stock Purchase Plan

The following assumptions were used to estimate the fair value of share-based awards:



	Year Ended
	December 31, 2014		December 31, 2013		December 31, 2012
Stock Option Plans
Risk-free interest rate ⁽¹⁾	1.6	%	1.2	%	0.9	%
Dividend yield	—	%	—	%	—	%
Expected volatility ⁽²⁾	34.9	%	43.1	%	45.8	%
Expected life ⁽³⁾	4.8 years		5.3 years		5.2 years



	Year Ended
	December 31, 2014		December 31, 2013		December 31, 2012
Employee Stock Purchase Plan
Risk-free interest rate ⁽¹⁾	0.2	%	0.2	%	0.2	%
Dividend yield	—	%	—	%	—	%
Expected volatility ⁽²⁾	33.2	%	35.1	%	38.5	%
Expected life ⁽³⁾	0.5 - 2 years		0.5 - 2 years		0.5 - 2 years

_________________________________________________


⁽¹⁾	The risk-free interest rate for both stock options and the ESPP is based on the zero-coupon U.S. Treasury rate curve in effect at the time of the option grant or at the beginning of the ESPP offering period.

⁽²⁾


⁽³⁾	Represents the period of time that options granted are expected to be outstanding, which is derived from historical data on employee exercise and post-vesting employment termination behavior.

Share-Based Compensation Expense Recognized in Consolidate Statements of Income

The following table sets forth the total share-based compensation expense recognized in our Consolidated Statements of Income:



	Year Ended
	December 31, 2014		December 31, 2013		December 31, 2012
	(In thousands)
Cost of product and service revenues	$	1,456	$	1,241	$	1,011
Research and development	1,655		1,359		889
Selling, general and administrative	9,674		8,551		7,314
Total share-based compensation expense	$	12,785	$	11,151	$	9,214

Stock Option Activity under the 2009 Plan

A summary of the stock option activity under the 2009 Plan is presented below:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Years	Aggregate Intrinsic Value⁽¹⁾
	(In thousands, except per share data)
Outstanding at December 31, 2013	3,143		$	15.82	5.6
Granted	641		28.11
Exercised	(1,007	)	14.74
Expired	(12	)	19.88
Forfeited	(93	)	19.97
Outstanding at December 31, 2014	2,672		$	19.02	6.5	$	37,692
Exercisable at December 31, 2014	1,514		$	15.66	4.7	$	26,447
Vested and expected to vest at December 31, 2014	2,640		$	18.92	6.4	$	37,481

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⁽¹⁾	Intrinsic value is calculated as the difference between the market value or closing price of our common stock as of the last trading day of the year as reported by the NASDAQ Global Select Market, and the exercise price of the option.

Restricted Stock Units Activity under the 2009 Plan

A summary of the restricted stock activity under the 2009 Plan is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Years	Aggregate Intrinsic Value
	(In thousands, except per share data)
Restricted Stock Units
Outstanding at December 31, 2013	362		$	17.15	2.5
Granted	238		28.88
Vested	(181	)	17.51
Forfeited	(20	)	16.50
Outstanding and unvested at December 31, 2014	399		$	24.00	1.5	$	13,190
Expected to vest at December 31, 2014	387				1.5	$	12,807

Restricted Stock Units Award under the 2009 Plan



	Number of Shares		Weighted-Average Grant Date Fair Value
	(In thousands, except per share data)
Restricted Stock Awards
Outstanding at December 31, 2013	52		$	18.43
Granted	38		26.42
Vested	(54	)	18.68
Forfeited	—		—
Outstanding and unvested at December 31, 2014	36		$	26.47

Performance Shares Restricted Stock Activity under the 2009 Plan

A summary of the performance-based restricted stock activity under the 2009 Plan is presented below:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Unit
	(In thousands, except per share data)
Unvested at December 31, 2013	225		$	13.32
Granted	158		20.94
Vested	(114	)	13.32
Cancelled	(36	)	16.73
Unvested at December 31, 2014	233		$	17.96