Share-Based Compensation

9 Months Ended

Sep. 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						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Cost of revenues	$	270		$	274		$	784		$	840
Research and development	704			646			2,008			2,203
Selling, general and administrative	789			719			2,284			2,287
Pre-tax share-based compensation expense	1,763			1,639			5,076			5,330
Less income tax benefit	(565		)	(558		)	(1,667		)	(1,863		)
After tax impact of share-based compensation on net income	$	1,198		$	1,081		$	3,409		$	3,467

During the three months ended September 30, 2013 and 2012, the Company granted 191,400 and 512,380 stock options, respectively, at weighted average fair values of $2.79 and $3.05 per share, respectively. For the nine months ended September 30, 2013 and 2012, the Company granted 535,900 and 1,296,200 stock options, respectively, at weighted average fair values of $2.91 and $2.99 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,
	2013		2012		2013		2012
Expected term (years)	5.8		5.8		5.9		5.8
Stock volatility	35.0	%	36.0	%	34.8	%	36.1	%
Risk free interest rates	1.7	%	0.8	%	1.4	%	1.0	%
Dividends during expected terms	2.2	%	1.5	%	1.8	%	1.6	%

The Company also grants Restricted Stock Units (“RSUs”) to its employees. In the three months ended September 30, 2013 and 2012, the Company granted 207,520 and 123,537 RSUs, respectively, at weighted average fair values of $9.14 and $9.73, respectively. During the nine months ended September 30, 2013 and 2012, the Company granted 434,920 and 379,623 RSUs, respectively, at weighted average fair values of $9.49 and $9.75, respectively.

As of September 30, 2013, there was $14.8 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 September 30, 2013 and December 31, 2012 was $153,000 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.