Stock-based Compensation

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Stock-based Compensation

Stock-based Compensation

Stock-based compensation expense and related tax benefit recognized in the Consolidated Statements of Income are as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Cost of goods sold	$	917		$	881		$	1,621		$	1,522
Research and development	1,298			1,358			2,474			2,844
Selling, general and administrative	5,650			5,349			9,305			9,510
Stock-based compensation expense before income taxes	7,865			7,588			13,400			13,876
Income tax benefit	(2,389		)	(2,201		)	(4,063		)	(3,991		)
Total stock-based compensation expense after income taxes	$	5,476		$	5,387		$	9,337		$	9,885

Stock-based compensation costs capitalized in inventory are as follows (in thousands):

	June 30,
	2012		2011
Capitalized in inventory	$	697	$	943

As of June 30, 2012, the Company had $52.1 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of 2.3 years.

Note 2. Stock-based Compensation - (Continued)

The fair value of the stock-based awards, as determined under the Black-Scholes model, granted in the three and six months ended June 30,2012 and 2011 was estimated with the following weighted-average assumptions:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Stock option awards:
Risk-free interest rate	0.4	%	1.0	%	0.4	%	1.0	%
Expected dividend yield	1.3	%	0.7	%	1.3	%	0.7	%
Expected term	4.2 years		4.3 years		4.2 years		4.3 years
Expected volatility	39.7	%	42.3	%	39.7	%	42.3	%
Employee stock purchase plan:
Risk-free interest rate	0.2	%	0.1	%	0.2	%	0.1	%
Expected dividend yield	1.3	%	0.7	%	1.3	%	0.7	%
Expected term	6 months		6 months		6 months		6 months
Expected volatility	27.4	%	21.3	%	27.4	%	21.3	%

The fair value of stock-based compensation awards granted and vested, and the intrinsic value of options exercised during the period were (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Stock Option Awards:
Weighted average grant date fair value per share	$	6.43	$	11.68	$	6.43	$	11.68
Total fair value of awards granted	$	4,104	$	4,513	$	4,104	$	4,513
Total fair value of awards vested	$	5,970	$	5,030	$	5,985	$	7,962
Total intrinsic value of options exercised	$	939	$	5,798	$	2,358	$	13,153
Restricted Stock Unit Awards:
Weighted average grant date fair value per share	$	17.21	$	34.50	$	17.22	$	34.48
Total fair value of awards granted	$	30,471	$	21,337	$	30,522	$	21,524
Total fair value of awards vested	$	11,763	$	18,083	$	12,103	$	18,933
Employee Stock Purchase Plan:
Weighted average grant date fair value per share	$	5.02	$	7.36	$	5.02	$	7.36
Total fair value of shares estimated to be issued	$	1,106	$	1,051	$	1,106	$	1,051

The total amount of cash received from the exercise of stock options in the three months ended June 30,2012 and 2011 was $0.8 million and $3.2 million, respectively, and the related tax impact realized from the exercise of the stock options was an expense of $1.0 million and a benefit of $2.4 million, respectively. The total amount of cash received from the exercise of stock options in the six months ended June 30,2012 and 2011 was $1.7 million and $10.3 million, respectively, and the related tax impact realized from the exercise of the stock options was an expense of $0.7 million and a benefit of $4.1 million, respectively.

Note 2. Stock-based Compensation - (Continued)

 Information with respect to stock option activity is as follows:

	Shares (in  thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2011	6,570		$	20.73	5.0
Granted	638		22.30
Exercised	(169	)	9.90
Forfeited	(97	)	26.10
Outstanding at June 30, 2012	6,942		$	21.06	5.1	$	17,527
Exercisable at June 30, 2012	6,027		$	20.17	4.4	$	17,526
Vested and expected to vest at June 30, 2012	6,896		$	21.02	5.1	$	17,527

Information with respect to restricted stock unit activity is as follows:

	Shares (in  thousands)		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2011	1,305		$	30.89
Granted	1,775		17.22
Vested and distributed	(548	)	29.27
Forfeited	(70	)	32.58
Outstanding at June 30, 2012	2,462		$	21.44

During the six months ended June 30,2012 and 2011, the Company granted approximately 980,000 and 624,000 time-vested restricted stock units, respectively. The fair value of time-vested restricted stock units is fixed and determined on the date of grant based upon the Company's stock price on the date of grant. The weighted average fair values of the time-vested restricted stock units granted during the six months ended June 30,2012 and 2011 were $21.68 and $34.50, respectively.

During the six months ended June 30, 2012, the Company also granted approximately 795,000 market-based restricted stock units. These units may be earned based upon the Company's total shareholder return compared to the total shareholder return of the S&P 500 Index over a three year period. The fair value of the market-based restricted units was determined and fixed on the date of the grant using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation and considered the likelihood of the Company achieving the market-based condition. The fair value of the market-based restricted stock units granted during the six months ended June 30, 2012 was $11.73.

There were 208,383 shares issued under the 2011 Employee Stock Purchase Plan ("ESPP") during the six months ended June 30, 2012 and 4,072,134 shares remain available under the ESPP at June 30, 2012 for future issuance. Shares issued for ESPP purchases are new shares.