Stock Based Compensation

9 Months Ended

Jun. 30, 2011

Stock Based Compensation [Abstract]

Stock Based Compensation [Text Block]

Stock-based Compensation

Stock-Based Benefit Plans

The Company grants stock-based compensation awards under its 2007 Incentive Compensation Plan (the 2007 Plan) which permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSUs), performance shares and performance units. The Company has outstanding grants under prior plans, though no further grants can be made under these prior plans. At June 30, 2011, 625,000 shares were available for future grant under the 2007 Plan. Options generally vest ratably over a four-year period with a 6-month or 1-year cliff vest and then vesting ratably over the remaining period. Options granted prior to October 1, 2005 expire ten years after the date of grant; options granted after October 1, 2005 expire seven years after the date of the grant. RSUs generally vest annually over periods ranging from two years to four years based upon continued employment with the Company.

In addition, the Company has an Employee Stock Purchase Plan (ESPP) that is available to employees. The ESPP permits eligible employees to purchase the Company’s common stock through payroll deductions. Offering periods prior to August 1, 2010 under the ESPP had a duration of six months and the purchase price was equal to 85% of the fair value of the common stock on the purchase date. As approved by the Board of Directors, effective August 1, 2010, shares under the ESPP will be purchased at a price equal to 85% of the lesser of the fair market value of the Company’s common stock as of the first day or the last day of each six-month offering period. The offering periods under the ESPP commence on approximately February 1 and August 1 of each year. At June 30, 2011, 1,085,000 shares were available for future issuance under the ESPP.

Stock-Based Compensation

The following table outlines the effects of total stock-based compensation.

	Three Months Ended June 30,				Nine Months Ended June 30,
	2011		2010		2011		2010
	(In thousands)
Stock-based compensation
Cost of sales	$	34	$	41	$	130	$	98
Research and development	255		206		796		567
Selling, general and administrative	694		354		2,040		1,015
Total stock-based compensation	$	983	$	601	$	2,966	$	1,680
Tax effect on stock-based compensation	—		—		—		—
Net effect on net income	$	983	$	601	$	2,966	$	1,680

As of June 30, 2011, there was approximately $7.1 million of total unrecognized stock-based compensation expense under the Company’s stock option plans that will be recognized over a weighted-average period of approximately 2.45 years. Future stock option grants will add to this total whereas quarterly amortization and the vesting of the existing stock option grants will reduce this total. In addition, as of June 30, 2011, there was approximately $38,000 of total unrecognized stock-based compensation expense under the Company’s ESPP that will be recognized over a weighted-average period of approximately 1 month.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the options granted and rights to acquire stock granted under the ESPP. The weighted average estimated fair values of stock option grants and rights granted under the ESPP, as well as the weighted average assumptions used in calculating these values during the three and nine months ended June 30, 2011 and 2010 were based on estimates at the date of grant as follows:

	Three Months Ended June 30,						Nine Months Ended June 30,
	2011			2010			2011			2010
Options
Weighted-average fair value of grants	$	4.28		$	4.48		$	3.87		$	1.92
Expected term in years	4.37			4.54			4.37			4.54
Estimated volatility	58		%	52		%	58		%	48		%
Risk-free interest rate	1.39		%	2.18		%	1.21		%	2.24		%
Dividend yield	—		%	—		%	—		%	—		%
ESPP
Weighted-average fair value of grants	—			—			$	3.18		—
Expected term in years	—			—			0.50			—
Estimated volatility	—			—			53		%	—
Risk-free interest rate	—			—			0.18		%	—
Dividend yield	—			—			—		%	—

During the nine months ended June 30, 2011, employees purchased a total of 81,000 shares for $0.6 million under the Company’s ESPP. During the nine months ended June 30, 2010, employees purchased a total of 67,000 shares for $0.3 million under the Company’s ESPP.

A summary of the Company’s stock option activity and related information for the nine months ended June 30, 2011 follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 30, 2010	4,275		$	4.77
Granted	1,168		$	8.26
Exercised	(465	)	$	4.12		$	2,721
Cancelled/Expired	(83	)	$	12.37
Outstanding at June 30, 2011	4,895		$	5.54	4.53	$	20,631
Exercisable at June 30, 2011	2,662		$	5.25	3.62	$	11,890
Vested and expected to vest after June 30, 2011	4,757		$	5.51	4.49	$	20,167

A summary of the Company’s RSU activity and related information for the nine months ended June 30, 2011 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at September 30, 2010	69		$	7.21
Granted	360		$	7.81
Vested	(28	)	$	5.69	$	335
Forfeited	—		$	—
Outstanding at June 30, 2011	401		$	7.86	$	3,876

On July 20, 2011, the Company's stockholders approved an amendment and restatement of the 2007 Plan to (i) increase the number of shares available for issuance thereunder by 2,000,000 shares, (ii) limit the number of awards other than options or stock appreciation rights than may be granted thereunder on or after July 20, 2011 to an aggregate of 263,100 and (iii) make certain other changes as set forth therein. The Company's board of directors had previously approved the amendment and restatement of the 2007 Plan, subject to stockholder approval.