Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation

Note 12 — Stock-Based Compensation

We issue stock-based awards from our equity incentive plans, which are more fully described in Note 9. Stock-based compensation expense was recognized as follows (in thousands):

	Year Ended December 31,
	2012		2011		2010
Cost of goods sold	$	1,496	$	1,266	$	915
Research and development		7,082		7,944		7,218
General and administrative		7,621		9,675		9,266
Total stock-based compensation	$	16,199	$	18,885	$	17,399

As of December 31, 2012, total unrecognized compensation costs of $25.0 million related to unvested stock-based compensation arrangements are expected to be recognized as expense over a weighted-average period of 1.6 years.

Black-Scholes Assumptions

The following tables list the Black-Scholes option-pricing model assumptions used to calculate the fair value of employee and director stock options and ESPP purchases.

	Year Ended December 31, 2012						Year Ended December 31, 2011						Year Ended December 31, 2010
	Stock Options			ESPP			Stock Options			ESPP			Stock Options			ESPP
Average risk-free interest rate		0.9	%		0.1	%		1.6	%		0.1	%		1.8	%		0.2	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Volatility factor		62.2	%		45.6	%		63.8	%		53.6	%		62.7	%		47.8	%
Weighted average expected life		5.0 years			0.5 years			4.9 years			0.5 years			4.9 years			0.5 years

The average risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods commensurate with the expected life of the stock-based award. We have never paid dividends, nor do we expect to pay dividends in the foreseeable future; therefore, we used a dividend yield of 0.0%. Our estimate of expected volatility is based on the daily historical trading data of our common stock over a historical period commensurate with the expected life of the stock-based award.

For the years ended December 31, 2012, 2011, and 2010, we estimated the weighted-average expected life based on the contractual and vesting terms of the stock options, as well as historic cancellation and exercise data.

Summary of Stock Option Activity

The table below presents a summary of stock option activity under our equity incentive plans (in thousands, except for price per share and contractual life information):

	Number of Shares			Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value(1)
Outstanding at December 31, 2011		17,046		$	9.29
Options granted		3,435			7.46
Options exercised		(631	)		5.48
Options forfeited and canceled		(852	)		10.34
Outstanding at December 31, 2012		18,998		$	9.03		4.73	$	10,972
Vested and expected to vest at December 31, 2012		18,688		$	9.04		4.70	$	10,916
Exercisable at December 31, 2012		13,449		$	9.05		4.04	$	9,874

(1) Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2012.

The weighted-average grant-date fair value per share of options granted during the years ended December 31, 2012, 2011, and 2010 was $3.92, $5.22, and $6.30, respectively. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2010 was $1.9 million, $3.7 million, and $6.8 million, respectively. The estimated fair value of options vested during the years ended December 31, 2012, 2011, and 2010 was $15.7 million, $18.1 million, and $14.7 million, respectively.

RSU Awards

We issued RSU awards to certain officers and employees. The RSU awards granted in 2006 vest upon achievement of pre-determined performance milestones, while the RSU awards granted in 2007 through 2010 have a time-based vesting schedule. There were no RSU awards granted in 2011 and 2012. There were 120,580 and 136,080 RSU awards outstanding at December 31, 2012 and 2011, respectively. We expense the grant date fair value of the RSU awards ratably over the expected service or performance period.