Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation expense recognized under ASC Topic 718, Compensation – Stock Compensation (“ASC 718”), for employees and directors and the effect on our Condensed Consolidated Statements of Operations were as follows:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
Cost of sales	$	147	$	80	$	251	$	201
Research, development, and engineering	417		353		739		616
Selling, general and administrative expenses	2,305		1,623		4,035		2,715
Total stock-based compensation expense	$	2,869	$	2,056	$	5,025	$	3,532

Stock-based compensation cost capitalized as part of inventory was $0.1 million and $0.1 million during the three and six month periods ended June 30, 2012, respectively. The amount capitalized for the three and six month periods ended July 2, 2011 was $0.1 million and $0.1 million, respectively.

As required by ASC 718, we estimate expected forfeitures and recognize compensation costs only for those equity awards expected to vest. As of June 30, 2012, there was $41.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under our 1993 Stock Option Plan/Stock Issuance Plan, as amended (“1993 Plan”), and our 1998 Supplemental Stock Option/Stock Issuance Plan, as amended (“1998 Plan”). The costs related to stock options and restricted stock units are expected to be recognized over a weighted average period of 5.6 years and 4.6 years, respectively.

On July 19, 2011, our stockholders approved amendments to the 1993 Plan which increased the number of shares available for issuance pursuant to the 1993 Plan by 3.3 million shares. The amendments, which were adopted by our Board of Directors on May 31, 2011, effective as of their approval by our stockholders, increased the share reserve, altered share-counting procedures, made changes to the non-employee director automatic grant program and enabled the grant of performance-based awards under the plan. These plans provide for the grant of stock-based awards to our eligible employees, consultants and advisers and non-employee directors. There were no shares reserved for future awards under the 1998 Plan since the plan expired on October 19, 2008. However, as of June 30, 2012, there were 2.6 million shares reserved for future awards under the 1993 Plan.

We used the following weighted-average assumptions to estimate the fair value of our stock options granted during the three and six month periods ended June 30, 2012 and July 2, 2011, respectively:

	Three Months Ended				Six Months Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
Expected life (in years)	8.0		8.1		7.5		8.3
Risk-free interest rate	1.7	%	3.1	%	1.4	%	3.2	%
Volatility	49	%	48	%	48	%	48	%
Dividend yield	—		—		—		—

Our stock options granted during the three month period ended June 30, 2012 were granted with a vesting term of 50 months and 100 months. The weighted-average expected life of our stock options granted during the three months ended June 30, 2012 was 8.0 years .