Share-Based Compensation

9 Months Ended

Sep. 30, 2012

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

SHARE-BASED COMPENSATION

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						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Cost of revenues	$	274		$	246		$	840		$	772
Research and development	646			615			2,203			1,666
Selling, general and administrative	719			629			2,287			1,737
Pre-tax share-based compensation expense	1,639			1,490			5,330			4,175
Less income tax effect	(558		)	(512		)	(1,863		)	(1,504		)
Net share-based compensation expense	$	1,081		$	978		$	3,467		$	2,671

During the three months ended September 30, 2012 and 2011, the Company granted 512,380 and 294,100 stock options, respectively, at weighted average fair values of $3.05 and $3.22 per share, respectively. For the nine months ended September 30, 2012 and 2011, the Company granted 1,296,200 and 1,929,550 stock options, respectively, at weighted average fair values of $2.99 and $4.49 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				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Expected term (years)	5.8		5.6		5.8		5.7
Stock volatility	36.0	%	41.3	%	36.1	%	40.5	%
Risk free interest rates	0.8	%	1.1	%	1.0	%	1.9	%
Dividends during expected terms	1.5	%	1.7	%	1.6	%	1.4	%

The Company also grants Restricted Stock Units (“RSUs”) to its employees. In the three months ended September 30, 2012 and 2011, the Company granted 123,537 and 323,928 RSUs, respectively, at weighted average fair values of $9.73 and $9.22, respectively. During the nine months ended September 30, 2012 and 2011, the Company granted 379,623 and 486,081 RSUs, respectively, at weighted average fair values of $9.75 and $10.10, respectively.

As of September 30, 2012, there was $17.0 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 4.6 years. Total share-based compensation capitalized as part of inventory as of September 30, 2012 and December 31, 2011 was $147,000 and $174,000, 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.