Note 7 – Stock Plans

The Company has two active stock-based compensation plans as of March 31, 2012: the 2004 Employee Stock Purchase Plan ("ESPP") and the 2005 Omnibus Equity Incentive Plan ("Incentive Plan") under which incentive stock options, non-qualified stock options, restricted stock awards and restricted stock units may be granted to employees and non-employee directors.

Stock Options

Compensation expense recognized for employee stock options for the three months ended March 31, 2012 and 2011 was $544,000 and $480,000, respectively. Beginning in 2011, the Company ceased granting stock options and began granting restricted stock awards to employees as part of its annual equity incentive award program. The Company may determine to grant stock options in the future under the Incentive Plan.

Restricted Stock Awards

During the three months ended March 31, 2012 and 2011, the Company issued 249,366 and 213,016 shares, respectively, upon granting of restricted stock awards, which had an average grant date fair value per share of $20.89 and $18.97, respectively. The following table summarizes the amount of compensation expense recognized for the three months ended March 31, 2012 and 2011 (in thousands):


	Three Months Ended March 31,
	2012		2011
Service-based restricted stock	$	479	$	288
Performance-based restricted stock		63		60

Total compensation expense recognized for restricted stock awards	$	542	$	348

Restricted Stock Units

Non-employee directors of the Company were granted an aggregate amount of restricted stock units during the three months ended March 31, 2012 and 2011 of 20,342 and 22,036, respectively, with an average grant date fair value per share of $20.65 and $19.06, respectively. These restricted stock unit awards were granted as part of the annual retainer compensation for non-employee directors, and vest one year from the date of grant.

Total compensation expense recognized for service-based restricted stock unit awards was $106,000 and $58,000 during the three months ended March 31, 2012 and 2011, respectively.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan ("ESPP") permits substantially all employees to purchase common stock through payroll deductions, at 85% of the lower of the trading price of the stock at the beginning or at the end of each six-month offering period commencing on January 1 and July 1. The number of shares purchased is based on participants' contributions made during the offering period.

Compensation expense recognized for the ESPP for the three months ended March 31, 2012 and 2011 was $94,000 and $89,000, respectively. The fair value of the ESPP shares issued during the offering period is estimated using the Black-Scholes valuation model for a call and a put option, and by using the following assumptions:


	For the offering period beginning January 1 and ending June 30,
	2012			2011
Expected dividends	$	—		$	—
Stock price on valuation date		16.24			18.89
Expected volatility		62.5	%		48.1	%
Average risk-free interest rate		0.06	%		0.19	%
Expected life (in years)		0.5			0.5
Fair value per share	$	5.26		$	5.51

Stock-based Compensation Expense

Compensation cost for restricted stock, restricted stock units, employee stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):


	Three Months Ended March 31,
	2012		2011
Cost of revenue	$	142	$	119
Selling, general and administrative		962		646
Research and development		182		152

Total stock-based compensation expense	$	1,286	$	917