Employee Stock and Savings Plans

9 Months Ended

Oct. 31, 2011

Employee Stock and Savings Plans

(10) Employee Stock and Savings Plans

Stock Options Plans and Stock Plans

Our 2010 Omnibus Incentive Plan (Incentive Plan) is administered by the Compensation Committee of our Board of Directors and permits accelerated vesting of outstanding options, restricted stock units, restricted stock awards, and other equity incentives upon the occurrence of certain changes in control of our company. Stock options under the Incentive Plan are generally expected to vest over four years, have an expiration date of ten years from the date of grant, and an exercise price no less than the fair market value of the shares on the date of grant.

Employee Stock Purchase Plans

We have an employee stock purchase plan (ESPP) for U.S. employees and an ESPP for certain foreign subsidiary employees. The ESPPs provide for six month offerings commencing on January 1 and July 1 of each year with purchases on June 30 and December 31 of each year. Each eligible employee may purchase up to six thousand shares of stock on each purchase date (but no more than an annual offering date total fair market value of $25) at prices no less than 85% of the lesser of the fair market value of the shares on the offering date or on the purchase date.

Stock-Based Compensation Expense

For each of the years presented, we estimated the fair value of stock options and purchase rights under our ESPPs using a Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporates several subjective assumptions including expected volatility, expected term, and interest rates.

In determining expected volatility for options, we include the elements listed below at the weighted percentages presented:

• Historical volatility of our shares of common stock at 35%;

• Historical volatility of shares of comparable companies at 20%;

• Implied volatility of our traded options at 30%; and

• Implied volatility of traded options of comparable companies at 15%.

The greatest weighting was provided to our historic volatility based on the amount of consistent historic information available. A lesser weighting has been applied to the implied volatility of our traded options due to a low volume of trades and shorter terms. We have also included the historic and implied volatility of comparable companies in our industry in an effort to capture a broader view of the marketplace.

The relative weighting percentages are periodically reviewed for reasonableness and are subject to change depending on market conditions and our particular facts and circumstances.

The following table summarizes stock compensation expense recognized:

	Three months October 31,				Nine months ended October 31,
	2011		2010		2011		2010
Cost of goods sold	$	249	$	221	$	753	$	671
Research and development		2,005		1,798		6,119		6,007
Marketing		1,365		1,299		4,393		4,802
Administration		1,495		1,589		5,358		5,111
Total	$	5,114	$	4,907	$	16,623	$	16,591