Note 12. Share-Based Compensation

The following table presents details of share-based compensation expenses by functional line item (in thousands):


	Three Months Ended				Six Months Ended
	July 30,		August 1,		July 30,			August 1,
	2016		2015		2016			2015
Cost of goods sold	$	2,832	$	2,012	$	4,634		$	3,559
Research and development		28,581		27,808		52,977			52,589
Selling and marketing		3,315		2,707		6,257			5,284
General and administrative		2,468		4,147		(2,219	)		8,463

	$	37,196	$	36,674	$	61,649		$	69,895

Share-based compensation capitalized in inventory was $1.4 million at July 30, 2016 and $1.5 million at January 30, 2016.

Upon the termination of certain members of our executive management in April 2016, it was determined that the vesting in certain of their unvested stock awards was not probable. As a result, the Company recorded a $6.9 million reversal of the previously recognized related share-based compensation expense in the six months ended July 30, 2016.

Valuation Assumptions

The following weighted average assumptions were used for each respective period to calculate the fair value of each time-based stock option award on the date of grant using the Black-Scholes valuation model:


	Three Months Ended						Six Months Ended
	July 30,			August 1,			July 30,			August 1,
	2016			2015			2016			2015
Time-based Stock Options:
Weighted average fair value	$	2.88		$	3.97		$	2.87		$	3.98
Expected volatility		40	%		34	%		40	%		34	%
Expected term (in years)		5.2			5.4			5.2			5.4
Risk-free interest rate		1.2	%		1.6	%		1.3	%		1.6	%
Expected dividend yield		2.4	%		1.7	%		2.5	%		1.7	%


	Three and Six Months Ended
	July 30,			August 1,
	2016			2015
Employee Stock Purchase Plan:
Estimated fair value	$	—		$	3.78
Volatility		—	%		31	%
Expected term (in years)		—			1.3
Risk-free interest rate		—	%		0.4	%
Dividend yield		—	%		1.7	%

The Company had no new grants under the ESPP in the three and six months ended July 30, 2016 because enrollment for new participants in the offering period that would have started in June 2016 was delayed due to the delay in the Company’s timely filing of its periodic reports with the SEC (see “Note 11 – Shareholders’ Equity”).