Share-Based Compensation

3 Months Ended

Mar. 31, 2015

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

Share-based compensation expense 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 Statements of Income (in thousands):



	Three Months Ended
	March 31,
	2015			2014
Cost of revenues	$	274		$	234
Research and development	861			690
Selling, general and administrative	982			798
Pre-tax share-based compensation expense	2,117			1,722
Less income tax effect	(741		)	(549		)
Net share-based compensation expense	$	1,376		$	1,173

During the three months ended March 31, 2015 and 2014, the Company granted 0.4 million and 0.2 million stock options, respectively, at weighted average fair values of $4.04 and $2.79 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,
	2015		2014
Expected term (years)	6.1		6.1
Stock volatility	30.1	%	31.0	%
Risk-free interest rate	1.6	%	2.1	%
Dividends during expected term	1.3	%	1.8	%

The Company also grants RSUs to its employees. In the three months ended March 31, 2015 and 2014, the Company granted 0.4 million and 0.2 million RSUs, respectively, at weighted average fair values of $14.39 and $9.81 per share, respectively.

At March 31, 2015, there was $5.1 million of total unrecognized share-based compensation expense related to non-vested stock option awards and $14.5 million related to non-vested RSUs, which are expected to be recognized over a weighted-average period of 2.7 and 3.1 years, respectively. Total share-based compensation expense capitalized as part of inventory at both March 31, 2015 and December 31, 2014 was $0.2 million.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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