v2.3.0.11
Stockholder's Equity
 6 Months Ended
Jun. 30, 2011
Stockholders' Equity Attributable to Parent [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
STOCKHOLDERS' EQUITY


Stock Plans—We grant equity compensation awards to acquire our ordinary shares from three plans, and which collectively are referred to as our stock plans below. For further discussion of these Plans, refer to Note 11, "Stock Plans," of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2010.
Common Shares Reserved for Issuance—At June 30, 2011, we had reserved 40.9 million common shares for issuance.


Stock-based compensation under ASC 718—Stock-based compensation is accounted for in accordance with ASC 718, which requires compensation costs related to share-based transactions, including employee stock options, to be recognized in the financial statements based on fair value. Under ASC 718, the fair value of each option award is estimated on the grant date using the Black-Scholes option pricing model. We determined weighted-average valuation assumptions as follows:


Expected Term—The expected term represents the period that our stock-based awards are expected to be outstanding. As we do not have sufficient historical experience for determining the expected term of the stock option awards granted, we have based our expected term on the simplified method available under ASC 718-10 (formerly referred to as Staff Accounting Bulletin 110).


Expected Volatility—The computation of expected volatility for the periods presented includes the historical and implied stock volatility of comparable companies from a representative peer group selected based on industry and market capitalization data and to a lesser extent, our weighted historical and implied volatility following our IPO in November 2009.


Fair Value of Common Stock—The fair value of our common stock is the closing sales price of the Common Stock (or the closing bid, if no sales were reported) on the effective grant date.


Risk-Free Interest Rate—We base the risk-free interest rate used in the Black-Scholes valuation model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.


Expected Dividend—The expected dividend weighted-average assumption is based on our current expectations about our anticipated dividend policy.


The following table summarizes the weighted-average assumptions relating to our stock options as follows:
 
 
Three Months Ended
 
Six Months Ended
 
June 30,

2011
 
June 30,

2010
 
June 30,

2011
 
June 30,

2010
Expected term in years
4.6


 
4.6


 
4.6


 
4.6


Volatility (%)
43.4


 
37.6


 
40.4 - 43.4


 
37.6 - 40.5


Risk-free interest rate (%)
2.0


 
2.3


 
1.8 - 2.0


 
2.3 - 2.4


Dividend rate (%)
—


 
—


 
—


 
—




Stock-based compensation expense is included in costs and expenses as follows ($ amounts in 000's):
 
 
Three Months Ended
 
Six Months Ended
 
June 30,

2011
 
June 30,

2010
 
June 30,

2011
 
June 30,

2010
Cost of product revenue
43


  
26


 
65


  
50


Cost of services revenue
362


  
234


 
560


  
442


Research and development
985


  
587


 
1,438


  
1,141


Sales and marketing
1,681


  
897


 
3,581


  
1,763


General and administrative
799


  
520


 
1,296


  
1,016


 
3,870


  
2,264


 
6,940


  
4,412
















A summary of the option activity under our stock plans and changes during the reporting periods are presented below (in 000's, except per share amounts):
 
 
 
 
Options Outstanding
 
Shares
Available
For Grant
 
Number
Of Shares
 
Weighted-
Average
Exercise
Price ($)
  
Weighted-
Average
Remaining
Contractual
Life (Years)
  
Aggregate
Intrinsic
Value ($)
Balance-December 31, 2010
15,091


 
22,490


 
4.21


  
 
  
 
Authorized
7,438


 
—


 
—


 
 
 
 
Granted
(4,206
)
 
4,206


 
21.01


  
 
  
 
Forfeited
719


 
(719
)
 
9.68


  
 
  
 
Exercised (aggregate intrinsic value of $76,061)
—


 
(4,150
)
 
2.70


  
 
  
 
Balance—June 30, 2011
19,042


 
21,827


 
7.55


  
 
  
 
Options vested and expected to vest—June 30, 2011
 
 
20,679


 
7.37


  
4.86


  
411,852


Options exercisable—June 30, 2011
 
 
10,789


 
3.11


  
4.06


  
260,853




At June 30, 2011, total compensation cost related to unvested stock-based awards granted to employees under our stock plans but not yet recognized was $44.4 million, net of estimated forfeitures. This cost is expected to be amortized on a straight-line basis over a weighted-average period of 3.2 years. Future option grants will increase the amount of compensation expense to be recorded in these periods.


The total fair value of awards vested under our stock plans was $2.2 million and $1.7 million for the three months ended June 30, 2011 and June 30, 2010, respectively. The total fair value of awards vested under our stock plans was $5.8 million and $5.0 million for the six months ended June 30, 2011 and June 30, 2010, respectively. The weighted-average fair value of options granted during the three and six months ended June 30, 2011 was $8.90 and $7.71 per share, respectively.


Non-employees—During the three months ended June 30, 2011, we granted options to purchase 3,260 shares of Common Stock, at an exercise price of $23.04 per share, to non-employees in exchange for services. During the three months ended June 30, 2010, no options were granted to non-employees in exchange for service. During the six months ended June 30, 2011 and June 30, 2010, we granted to non-employees in exchange for services, options to purchase 28,384 and 9,400 shares of Common Stock, respectively, at a range of exercise prices of $16.86 to $20.24 per share. These options vest over periods of up to 48 months, and in accordance with ASC 505-50 (formerly referred to as Emerging Issues Task Force (EITF) Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services), we accounted for these options as variable awards. The options were valued using the Black-Scholes option pricing model with the following weighted-average assumptions:
 
 
Three Months Ended
 
Six Months Ended
 
June 30,

2011
 
June 30,

2010
 
June 30,

2011
 
June 30,

2010
Expected term in years
3.9 - 6.1


 
4.8 - 6.5
 
3.9 - 6.3


 
4.8 - 6.8
Volatility (%)
43.4


 
37.6
 
40.4 - 43.4


 
37.6 - 40.5
Risk-free interest rate (%)
2.0


 
2.3
 
1.8 - 2.0


 
2.3 - 2.4
Dividend rate (%)
—


 
—
 
—


 
—