Share-Based Compensation

3 Months Ended

Mar. 31, 2012

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

3. SHARE-BASED COMPENSATION

Share-based compensation is measured at the grant date, based on the fair value of the award and is recognized over the employee’s requisite service period. For further details regarding the Company’s share-based compensation arrangements, refer to Note 7 of Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The following table summarizes total share-based compensation expense included in the Condensed Consolidated Statement of Operations (in thousands):

	Three Months Ended March 31,
	2012			2011
Cost of revenues	$	284		$	242
Research and development		745			526
Selling, general and administrative		753			605
Pre-tax share-based compensation expense		1,782			1,373
Less income tax effect		(626	)		(543	)
Net share-based compensation expense	$	1,156		$	830

During the three months ended March 31, 2012 and 2011, the Company granted 138,420 and 957,900 stock options, respectively, at weighted average fair values of $3.11 and $5.22 per share, respectively. The fair value of the Company’s stock options granted under the Company’s option plans was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Three Months Ended March 31,
	2012			2011
Expected term (years)		5.8			5.8
Stock volatility		36.5	%		40.3	%
Risk free interest rates		1.3	%		2.5	%
Dividends during expected terms		1.6	%		1.0	%

As of March 31, 2012, there was $15.8 million of total unrecognized share-based compensation related to non-vested stock option awards which is expected to be recognized over a weighted-average period of 4.1 years. Total share-based compensation capitalized as part of inventory as of March 31, 2012 and December 31, 2011 was $165,000 and $174,000, respectively.

The Company also grants Restricted Stock Units (“RSU”s) to its employees. In the three months ended March 31, 2012 and 2011, the Company granted 45,000 and 95,000 RSUs, respectively, at weighted average fair values of $9.91 and $12.52, respectively.

Under the Company’s Employee Stock Purchase Plan (“ESPP”), eligible employees are permitted to have salary withholdings to purchase shares of Common Stock at a price equal to 95% of the market value of the stock at the end of each three-month offer period, subject to an annual limitation. The ESPP is considered non-compensatory per current share-based compensation accounting guidelines.