Stockholder's Equity

(a) Stock Equity and Incentive Plan

The Company adopted ASC Update No. 2016-09, Compensation- Stock Compensation (ASC Topic 718): Improvements to Employee Share-Based Payment Accounting on January 1, 2017. Although, this ASC update did not impact the Company’s results of operations, financial position or cash flows for any periods prior to the adoption, the adoption of this ASC update had the following impact on the date of adoption:

•

The adoption of ASC Update No. 2016-09 requires all income tax adjustments to be recorded in the consolidated statements of operations. The cumulative adjustment upon adoption to accumulated earnings was zero since the increase in net deferred tax assets was fully offset by a corresponding increase in the deferred tax asset valuation allowance. The amount of deferred tax assets that had not been previously recognized due to the recognition of excess tax benefits was $1,571.


•	The tax benefit or expense is required to be classified as a cash flow provided by (used in) operating activities. It was previously required to be presented as a cash flow provided by (used in) financing activities in the Consolidated Statements of Cash Flows, with a corresponding adjustment to operating cash flows.

•

In the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefit. This provision, which is only applicable on a prospective basis, did not have an impact on the Company's diluted net earnings per share calculation for the three and nine months ended September 30, 2017.

•

The Company has elected to account for forfeitures on share-based payments as these forfeitures occur, which represents a change from the accounting previously required under ASC Topic 718. As a result, future forfeitures could result in a significant reversal of stock-based compensation expense recognized in the period in which such forfeitures occur. During the three and nine months ended September 30, 2017, as a result of share-based award forfeitures, the Company recorded a reversal of previously recognized stock-based compensation expense of $71 and $128, respectively. In addition, had the Company continued to account for stock-based compensation expense related to forfeitures of share-based payments based on estimating the number of awards expected to be forfeited and recognizing only stock-based compensation expense on awards expected to vest, the Company would have recognized $866 and $2,571 of stock-based compensation expense, or $81 more and $6 less than what was actually recorded, during the three and nine months ended September 30, 2017, respectively.

The Company recognizes stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation--Stock Compensation. Stock-based compensation expense, excluding compensation charges related to our employee stock purchase plan, or the ESPP, was $785 and $911 for the three months ended September 30, 2017 and 2016, respectively, and $2,577 and $2,792 for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was $1,511 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 3.02 years. As of September 30, 2017, there was $4,540 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.39 years.

Stock Options

During the three months ended September 30, 2017, 7 stock options were exercised for common stock. Additionally, during the three months ended September 30, 2017, no stock options were granted and 38 stock options were forfeited.

During the nine months ended September 30, 2017, 121 stock options were exercised for common stock, none of which was delivered to the Company as payment for the exercise price or related minimum tax withholding obligations. Additionally, during the nine months ended September 30, 2017, 531 stock options were granted with a weighted average grant date fair value of $2.47 per share and 49 stock options were forfeited. The Company has estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model. The weighted average assumptions utilized to determine the fair value of options granted during the nine months ended September 30, 2017 and 2016 were as follows:




	Nine Months Ended September 30,
	2017		2016
Risk-free interest rate	1.96	%	1.43	%
Expected volatility	35.53	%	38.22	%
Expected life (in years)	4.22		4.17
Dividend yield	0	%	0	%

As of September 30, 2017, there were 968 options outstanding with a weighted average exercise price of $9.79 per share and 320 options exercisable with a weighted average exercise price of $12.25 per share.

Restricted Stock

During the three months ended September 30, 2017, 40 shares of restricted stock were granted with a weighted average grant date fair value of $10.80 per share and 16 shares of restricted stock were forfeited. Additionally, during the three months ended September 30, 2017, 13 shares of restricted stock vested, of which no shares of common stock were surrendered to the Company as payment by employees in lieu of cash to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock.

During the nine months ended September 30, 2017, 263 shares of restricted stock were granted with a weighted average grant date fair value of $8.75 per share and 33 shares of restricted stock were forfeited. Additionally, during the nine months ended September 30, 2017, 256 shares of restricted stock vested, of which 43 shares of common stock were surrendered to the Company as payment by employees in lieu of cash to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock and these shares were immediately retired.

As of September 30, 2017, there were 619 shares of restricted stock outstanding still subject to service-based vesting conditions.

As of September 30, 2017, the Company had no shares of restricted stock that were subject to performance-based or market-based vesting conditions.

(b) Employee Stock Purchase Plan

On June 15, 2016, at the Company's 2016 Annual Meeting of Stockholders, the stockholders of the Company approved amendments to the Company's Amended and Restated 1996 Employee Stock Purchase Plan (ESPP) that, among other things, increased the number of shares of common stock reserved for issuance to a total of 1,650. As amended, the ESPP affords eligible employees the right to purchase common stock, via payroll deductions, through various offering periods at a purchase price equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the three and nine months ended September 30, 2017, 0 and 26 shares were issued under the ESPP plan, respectively. During the three and nine months ended September 30, 2016, 0 and 18 shares were issued under the ESPP plan, respectively. The Company recorded compensation charges related to the ESPP of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $44 and $0 for the nine months ended September 30, 2017 and 2016, respectively.

The following table presents stock-based compensation expense, including expense for the ESPP, in the Company's consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Cost of product sales	$	68	$	77	$	222	$	242
Cost of service sales	—		—		1		1
Research and development	155		168		514		520
Sales, marketing and support	190		263		679		787
General and administrative	396		403		1,205		1,242
	$	809	$	911	$	2,621	$	2,792

(d) Accumulated Other Comprehensive Loss

Comprehensive income (loss) includes net earnings (loss), unrealized gains and losses from foreign currency translation, unrealized gains and losses from available for sale marketable securities and changes in fair value related to interest rate swap derivative instruments, net of tax attributes, which were not material. The components of the Company’s comprehensive income (loss) and the effect on earnings for the periods presented are detailed in the accompanying consolidated statements of comprehensive income (loss).

The balances for the three months ended September 30, 2017 and 2016 are as follows:



	Foreign Currency Translation			Unrealized Gain (Loss) on Available for Sale Marketable Securities			Interest Rate Swaps			Total Accumulated Other Comprehensive Loss
Balance, June 30, 2017	$	(13,610	)	$	(3	)	$	(113	)	$	(13,726	)
Other comprehensive income before reclassifications	1,956			2			1			1,959
Amounts reclassified from AOCI to Other income, net	—			—			18			18
Net other comprehensive income, September 30, 2017	1,956			2			19			1,977
Balance, September 30, 2017	$	(11,654	)	$	(1	)	$	(94	)	$	(11,749	)



	Foreign Currency Translation			Unrealized Gain (Loss) on Available for Sale Marketable Securities		Interest Rate Swaps			Total Accumulated Other Comprehensive Loss
Balance, June 30, 2016	$	(12,511	)	$	1	$	(249	)	$	(12,759	)
Other comprehensive (loss) income before reclassifications	(2,238		)	—		11			(2,227		)
Amounts reclassified from AOCI to Other income, net	—			—		26			26
Net other comprehensive (loss) income, September 30, 2016	(2,238		)	—		37			(2,201		)
Balance, September 30, 2016	$	(14,749	)	$	1	$	(212	)	$	(14,960	)

For additional information, see Note 4, "Marketable Securities." and Note 17, "Derivative Instruments and Hedging Activities."

The balances for the nine months ended September 30, 2017 and 2016 are as follows:



	Foreign Currency Translation			Unrealized Gain (Loss) on Available for Sale Marketable Securities			Interest Rate Swaps			Total Accumulated Other Comprehensive Loss
Balance, December 31, 2016	$	(16,651	)	$	—		$	(158	)	$	(16,809	)
Other comprehensive income (loss) before reclassifications	4,997			(1		)	5			5,001
Amounts reclassified from AOCI to Other income, net	—			—			59			59
Net other comprehensive income (loss), September 30, 2017	4,997			(1		)	64			5,060
Balance, September 30, 2017	$	(11,654	)	$	(1	)	$	(94	)	$	(11,749	)



	Foreign Currency Translation			Unrealized Gain (Loss) on Available for Sale Marketable Securities		Interest Rate Swaps			Total Accumulated Other Comprehensive Loss
Balance, December 31, 2015	$	(7,363	)	$	1	$	(238	)	$	(7,600	)
Other comprehensive loss before reclassifications	(7,386		)	—		(50		)	(7,436		)
Amounts reclassified from AOCI to Other income, net	—			—		76			76
Net other comprehensive (loss) income, September 30, 2016	(7,386		)	—		26			(7,360		)
Balance, September 30, 2016	$	(14,749	)	$	1	$	(212	)	$	(14,960	)

For additional information, see Note 4, "Marketable Securities." and Note 17, "Derivative Instruments and Hedging Activities."