Stock-Based Compensation

9 Months Ended

Oct. 02, 2011

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				Nine Months Ended
(In thousands)	October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
Cost of sales	$	119	$	90	$	320	$	220
Research, development, and engineering	434		255		1,050		595
Selling, general and administrative expenses	2,105		1,005		4,820		2,387
Total stock-based compensation expense	$	2,658	$	1,350	$	6,190	$	3,202

Compensation cost capitalized as part of inventory was $0.1 million and $0.2 million during the three month and nine month periods ended October 1, 2011, respectively. The amounts capitalized for the three month and nine month periods ended October 2, 2010 were immaterial.

As required by ASC 718, we estimate expected forfeitures and recognize compensation costs only for those equity awards expected to vest. As of October 1, 2011, there was $29.1 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 4.3 years, respectively.

On July 19, 2011, our stockholders approved amendments to our 1993 Stock Option/Stock Issuance 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, increase the share reserve, alter share-counting procedures, make changes to the non-employee director automatic grant program and enable 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 October 1, 2011, there were 3.6 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 month and nine month periods ended October 1, 2011 and October 2, 2010, respectively:

	Three Months Ended				Nine Months Ended
	October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
Expected life (in years)	7.9		8.2		8.2		8.1
Risk-free interest rate	2.6	%	2.8	%	3.0	%	3.2	%
Volatility	49	%	51	%	48	%	51	%
Dividend yield	—		—		—		—

A majority of our stock options granted during the three month period ended October 1, 2011 were granted with a vesting term of 100 months and the remaining were granted with a vesting term of 50 months. The weighted-average expected life of our stock options granted during the three months ended October 1, 2011 was 7.9 years.