Share-Based Compensation

9 Months Ended

Sep. 30, 2013

Share Based Compensation [Abstract]

Share-Based Compensation [TextBlock]

NOTE J – Share-Based Compensation

The following table shows the total compensation expensed for share-based compensation plans, including stock options and share grants, recognized in the statements of operations (in thousands):

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013		2012		2013		2012
Cost of sales	$	136	$	126	$	385	$	331
Selling and administrative expense		2,958		3,170		8,679		9,417
Research and development expense		398		299		989		931
Total share-based compensation expense	$	3,492	$	3,595	$	10,053	$	10,679

Stock Options.Stock options under the Company's 2001 Omnibus Equity Incentive Plan (“2001 Plan”) generally vest in equal annual installments over a four-year period and expire ten years after the grant date, and expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model.

In May 2013, the Company's stockholders approved the Company's 2013 Equity Incentive Plan (“2013 Plan”). Since the approval of the 2013 Plan, all stock options have been granted under the 2013 Plan, and the Company will not grant any further stock options under its 2001 Plan. Stock options under the 2013 Plan generally vest in equal annual installments over a four-year period and expire eight years after the grant date, and expense was estimated on the date of grant using the Black-Scholes-Merton option pricing model. For additional information on the 2013 Plan, see the Company's definitive Proxy Statement filed with the SEC on April 19, 2013.

The total net cash proceeds received from stock option exercises during the nine months ended September 30, 2013 was approximately $2 million. Stock option expense was approximately $1 million for both the three months ended September 30, 2013 and 2012. Stock option expense was approximately $3 million and $4 million for the nine months ended September 30, 2013 and 2012, respectively.

A summary of the stock option plans is as follows:

Stock Options	Shares (000)		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2013	3,713	$	17.85	5	$	9,744
Granted	186		23.35
Exercised	(310)		7.43			5,334
Forfeited or expired (1)	(420)		20.34
Outstanding at September 30, 2013	3,169	$	18.85	4	$	20,164
Exercisable at September 30, 2013	2,542	$	17.91	4	$	18,369

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• The Compensation Committee of the Board of Directors reviewed the grants of stock options to the Company's Chief Executive Officer in 2009, 2010, 2011 and 2012 (each such annual grant, an “Option Grant”), and approved a Confirmation Agreement, dated April 1, 2013, in which the Company and the Company's Chief Executive Officer agreed and confirmed that the Company's Chief Executive Officer will assert no claim that any Option Grant in 2009, 2010, 2011 or 2012 provided for the purchase of more than 100,000 shares of the Company's Common Stock, and that each Option Grant document be deemed amended to reflect the foregoing 100,000 share limitation.

The aggregate intrinsic value in the table above is before applicable income taxes and represents the amount option holders would have received if all options had been exercised on the last business day of the period indicated, based on the Company's closing stock price.

As of September 30, 2013, total unrecognized share-based compensation expense related to unvested stock options, net of forfeitures, was approximately $7 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.

Share Grants. Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period.

Since the approval of the 2013 Plan, all share grants have been granted under the 2013 Plan, and the Company will not grant any further share grants under its 2001 Plan.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2013 was approximately $6 million. Share grant expense for the three months ended September 30, 2013 and 2012 was approximately $3 million and $2 million, respectively. Share grant expense for the nine months ended September 30, 2013 and 2012 was approximately $8 million and $7 million, respectively.

A summary of the Company's non-vested share grants is as follows:

Share Grants	Shares (000)		Weighted Average Grant-Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested at January 1, 2013	1,164	$	20.42	$
Granted	449		24.66
Vested	(319)		20.09		6,415
Forfeited	(43)		21.24
Non-vested at September 30, 2013	1,251	$	22.03	$	28,186

As of September 30, 2013, total unrecognized share-based compensation expense related to non-vested stock awards, net of forfeitures, was approximately $23 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 3 years.