Share-Based Compensation

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

MRV records share-based compensation expense in accordance with ASC Topic 718Compensation - Stock Compensation. The following table summarizes the impact on MRV's results of operations of recording share-based compensation for the three months ended March 31, 2013 and 2012 (in thousands):

	Three months ended
	March 31,
	2013		2012
Cost of goods sold		$17		$12
Product development and engineering	10		11
Selling, general and administrative	192		189
Total share-based compensation expense (1)		$219		$212

(1) Income tax benefits realized from stock option exercises and similar awards were immaterial in both periods.

The Company did not grant stock options during the three months ended March 31,2013 and March 31, 2012. The fair value of 18,702 restricted shares granted during the three months ended March 31, 2013 was $9.55 per share. The fair value of 17,500 restricted shares granted during the three months ended March 31, 2012 was $19.40 per share. As of March 31, 2013, the total unrecorded deferred share-based compensation balance for unvested securities, net of expected forfeitures, was$0.6 million, which is expected to be amortized over a weighted-average period of1.0 years.

Valuation Assumptions

MRV uses the Black-Scholes option pricing model to estimate the fair value of stock option awards or related modifications. The Black-Scholes model requires the use of subjective and complex assumptions including the option's expected life and the underlying stock price volatility. MRV expects future volatility to approximate historical volatility. The following weighted average assumptions were used for estimating the fair value of options modified during the three months ended March 31, 2012:

	Three months ended
	March 31,
	2012
Risk-free interest rate	0.5	%
Dividend yield	—
Volatility	79.7	%
Expected life (in years)	3.0