Common Stock and Stock Based Compensation Plans

6 Months Ended

Jun. 30, 2011

Common Stock and Stock Based Compensation Plans [Abstract]

COMMON STOCK AND STOCK-BASED COMPENSATION PLANS

NOTE 7: COMMON STOCK AND STOCK-BASED COMPENSATION PLANS

The Company grants stock options to employees and non-employee directors of the Company and its subsidiaries and provides the right to purchase common stock pursuant to the Company’s 2002 employee stock purchase plan to employees of the Company and its subsidiaries. Most of the options granted under these plans have been granted at the fair market value of the Company’s common stock on grant date. A summary of the Company’s stock option activity and related information for the three months ended June 30, 2011, are as follows:

				Weighted
	Number of			average exercise
	options			price
Outstanding as of March 31, 2011		2,383,854		$	12.31
Granted		137,000			30.26
Exercised		(522,009	)		8.59
Forfeited or expired		(1,731	)		8.02
Outstanding as of June 30, 2011		1,997,114		$	14.52
Exercisable as of June 30, 2011		701,378		$	8.36

During the three and six months ended June 30, 2011, the Company issued 0 and 95,252 shares of common stock under its employee stock purchase plan for an aggregate consideration of 0 and $590, respectively.

The following table shows the total equity-based compensation expense included in the interim condensed consolidated statement of operations:

	Six months ended				Three months ended
	June 30,				June 30,
	2011		2010		2011		2010
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Cost of revenue	$	110	$	33	$	61	$	15
Research and development, net		862		306		484		139
Sales and marketing		456		208		255		96
General and administrative		697		577		371		290
Total equity-based compensation expense	$	2,125	$	1,124	$	1,171	$	540

The fair value for the Company’s stock options granted to employees and non-employee directors was estimated using the following assumptions:

	Three months ended
	June 30,
	2011			2010
	(unaudited)			(unaudited)
Expected dividend yield		0	%		0	%
Expected volatility		39%-56	%		38%-62	%
Risk-free interest rate		0.2%-2.5	%		0.3%-2.6	%
Expected forfeiture (employees)		10	%		10	%
Expected forfeiture (executives)		5	%		5	%
Contractual term of up to	10 Years			7 Years
Suboptimal exercise multiple (employees)		2.0			1.5
Suboptimal exercise multiple (executives)		2.3			1.3

The Company did not grant new purchase rights under the 2002 employee stock purchase plan during the three months ended June 30, 2011 and 2010.

As of June 30, 2011 and 2010, there were balances of $6,613 and $1,845, respectively, of unrecognized compensation expense related to unvested awards. The impact of equity-based compensation expense on basic net income per share was $0.05 and $0.09 for the three and six months ended June 30, 2011, respectively, and $0.03 and $0.05 for the corresponding periods of 2010. The impact of equity-based compensation expense on diluted net income per share was $0.05 and $0.09 for the three and six months ended June 30, 2011, respectively, and $0.02 and $0.05 for the corresponding periods of 2010. To the extent the actual forfeiture rate is different from what the Company has estimated, equity-based compensation related to these awards will be different from the Company’s expectations.