Share-Based Compensation

6 Months Ended

Jun. 30, 2013

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.The following table summarizes total share-based compensation expense included in the Condensed Consolidated Statement of Operations (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Cost of revenues	$	270		$	282		$	514		$	566
Research and development	652			812			1,304			1,557
Selling, general and administrative	772			815			1,495			1,568
Pre-tax share-based compensation expense	1,694			1,909			3,313			3,691
Less income tax benefit	(552		)	(679		)	(1,102		)	(1,305		)
After tax impact of share-based compensation on net income	$	1,142		$	1,230		$	2,211		$	2,386

During the three months ended June 30, 2013 and 2012, the Company granted 166,100 and 645,400 stock options, respectively, at weighted average fair values of $3.04 and $2.92 per share, respectively. For the six months ended June 30, 2013 and 2012, the Company granted 344,500 and 783,820 stock options, respectively, at weighted average fair values of $2.97 and $2.95 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				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Expected term (years)	5.8		5.8		5.9		5.8
Stock volatility	36.0	%	35.9	%	34.7	%	36.2	%
Risk free interest rates	1.6	%	0.9	%	1.3	%	1.1	%
Dividends during expected terms	1.7	%	1.7	%	1.7	%	1.6	%

The Company also grants Restricted Stock Units (“RSUs”) to its employees. In the three months ended June 30, 2013 and 2012, the Company granted 115,068 and 211,086 RSUs, respectively, at weighted average fair values of $9.56 and $9.73, respectively. During the six months ended June 30, 2013 and 2012, the Company granted 227,400 and 256,086 RSUs, respectively, at weighted average fair values of $9.81 and $9.76, respectively.

As of June 30, 2013, there was $14.7 million of total unrecognized share-based compensation related to non-vested awards which is expected to be recognized over a weighted-average period of 2.9 years. Total share-based compensation capitalized as part of inventory as of June 30, 2013 and December 31, 2012 was $168,000 and $139,000, 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.