ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2015

Annual Depreciation Rates of Property, Plant and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates:


		%
Computers, software and equipment		10-33
Office furniture and equipment		7-33
Leasehold improvements		10-25
		(the shorter of the expected lease term or useful economic life)

Assumptions Used to Estimate Fair Value of Stock Options Granted

The fair value for the Company’s stock options and SARs (other than share issuances in connection with the employee stock purchase plan, as detailed below) granted to employees and non-employees directors was estimated using the following assumptions:


	2013	2014	2015
Expected dividend yield	0%	0%	0%
Expected volatility	38%-54%	33%-52%	33%-49%
Risk-free interest rate	0.1%-2.5%	0.1%-2.5%	0.2%-2.4%
Expected forfeiture (employees)	10%	10%	10%
Expected forfeiture (executives)	5%	5%	5%
Contractual term of up to	10 years	10 years	10 years
Suboptimal exercise multiple (employees)	2.1	2.1	2.1
Suboptimal exercise multiple (executives)	2.4	2.4	2.4

Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plan

The fair value for rights to purchase shares of common stock under the Company’s employee stock purchase plan was estimated on the date of grant using the following assumptions:


	2013	2014	2015
Expected dividend yield	0%	0%	0%
Expected volatility	34%-53%	29%-52%	35%-36%
Risk-free interest rate	0.1%-0.2%	0.1%-0.2%	0.1%-0.3%
Expected forfeiture	0%	0%	0%
Contractual term of up to	24 months	24 months	24 months

Equity-Based Compensation Expenses Related to Stock Options, SARs, RSUs and Employee Stock Purchase Plan

During the years ended December 31, 2013, 2014 and 2015, the Company recognized equity-based compensation expense related to stock options, SARs, RSUs and employee stock purchase plan as follows:


	Year ended December 31,
	2013		2014		2015
Cost of revenue	$	312	$	193	$	155
Research and development, net		2,014		2,027		1,838
Sales and marketing		1,311		909		568
General and administrative		2,283		1,882		1,454

Total equity-based compensation expense	$	5,920	$	5,011	$	4,015

Calculation of Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during each year. Diluted net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during each year, plus dilutive potential shares of common stock considered outstanding during the year, in accordance with FASB ASC No. 260, “Earnings Per Share.”


	Year ended December 31,
	2013		2014			2015
Numerator:
Net income (loss)	$	6,685	$	(819	)	$	6,267
Denominator (in thousands):
Basic weighted-average common stock outstanding		22,009		20,622			20,480
Effect of stock options, stock appreciation rights and restricted stock units		456		—			509

Diluted weighted-average common stock outstanding		22,465		20,622			20,989

Basic net income (loss) per share	$	0.30	$	(0.04	)	$	0.31

Diluted net income (loss) per share	$	0.30	$	(0.04	)	$	0.30