Share-Based Compensation

6 Months Ended

Jan. 28, 2012

Share-Based Compensation

3. Share-Based Compensation

The following table presents share-based compensation expense included in the Company’s consolidated statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	January 28, 2012		January 29, 2011		January 28, 2012		January 29, 2011
Cost of product revenue	$	44	$	73	$	78	$	106
Cost of service revenue		116		28		233		75
Research and development		381		60		764		207
Sales and marketing		182		109		392		278
General and administrative		224		108		454		256
Share-based compensation expense	$	947	$	378	$	1,921	$	922

Stock option activity under all of the Company’s stock plans since July 31, 2011 is summarized as follows:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (Years)
Outstanding at July 31, 2011		2,993,840		$	20.33		5.59
Options granted		17,875			18.37
Options exercised		(35,349	)		17.26
Options cancelled		(441,971	)		24.35
Outstanding at January 28, 2012		2,534,395		$	19.65		5.81
Options vested and expected to vest		2,459,419		$	19.63		5.72
Options exercisable at end of period		1,454,076		$	19.07		3.51
Weighted average fair value of options granted for the six months ended January 28, 2012	$	8.21

The intrinsic value of options exercised during the six months ended January 28, 2012 was $0.1 million.

As of January 28, 2012, there was $6.7 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company’s stock plans. That cost is expected to be recognized over a weighted-average period of 2.1 years.