Share-Based Compensation

9 Months Ended

Apr. 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				Nine Months Ended
	April 28, 2012		April 30, 2011		April 28, 2012		April 30, 2011
Cost of product revenue	$	43	$	32	$	121	$	138
Cost of service revenue		112		83		345		158
Research and development		392		255		1,156		462
Sales and marketing		179		185		571		463
General and administrative		225		203		679		459
Share-based compensation expense	$	951	$	758	$	2,872	$	1,680

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		(140,485	)		17.40
Options cancelled		(482,188	)		23.99
Outstanding at April 28, 2012		2,389,042		$	19.74		6.39
Options vested and expected to vest		2,350,371		$	19.73		5.79
Options exercisable at end of period		1,650,962		$	19.46		5.27
Weighted average fair value of options granted for the nine months ended April 28, 2012	$	8.21

The intrinsic value of options exercised during the nine months ended April 28, 2012 was $0.3 million.

As of April 28, 2012, there was $5.9 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 1.9 years.