XML 30 R12.htm IDEA: XBRL DOCUMENT

CAPITAL STOCK

12 Months Ended

Dec. 31, 2011

Common Stock

The Company completed a 1-for-10 reverse stock split which was effective on December 30, 2010. Except as otherwise indicated, all related amounts reported in the consolidated financial statements, including common share quantities, earnings per share amounts and exercise prices of options, have been retroactively adjusted for the effect of this reverse stock split.

Stock Option Plans

The Company has two stock option plans which authorize granting of stock options and stock purchase rights to employees, officers, directors and consultants of the Company to purchase shares of common stock. In 1997, the board of directors adopted the 1997 Stock Incentive Plan (the "1997 Plan") and terminated two prior option plans. All shares that remained available for grant under the terminated plans were incorporated into the 1997 Plan. In addition, all shares subsequently cancelled under the prior plans are added back to the 1997 Plan on a quarterly basis as additional options available to grant. In May 2009, the stockholders approved an amendment to the 1997 Plan allowing for the continued issuance of incentive stock options and a 25,000 reduction in shares which may be issued under the 1997 Plan. In May 2003, the stockholders approved a new plan, the 2003 Stock Incentive Plan, which allows for the granting of options for up to 239,050 shares of the Company's common stock. The number of shares reserved for issuance under all plans as of January 1, 2012 was 105,386.

The stock options granted by the board of directors may be either incentive stock options ("ISOs") or non-qualified stock options ("NQs"). The exercise price for options under all of the plans may be no less than 100% of the fair value of the underlying common stock for ISOs or 85% of fair value for NQs. Options granted will expire no later than the tenth anniversary subsequent to the date of grant or three months following termination of employment, except in cases of death or disability, in which case the options will remain exercisable for up to twelve months. Under the terms of the 1997 Plan, in the event the Company is sold or merged, outstanding options will either be assumed by the surviving corporation or vest immediately.

There are four key inputs to the Black-Scholes model which the Company uses to estimate fair value for options which it issues: expected term, expected volatility, risk-free interest rate and expected dividends, all of which require the Company to make estimates. The Company's estimates for these inputs may not be indicative of actual future performance and changes to any of these inputs can have a material impact on the resulting estimated fair value calculated for the option. The Company's expected term input was estimated based on the Company's historical experience for time from option grant to option exercise for all employees in 2011, 2010 and 2009; the Company treated all employees in one grouping in all three years. The

Company's expected volatility input was estimated based on the Company's historical stock price volatility in 2011, 2010 and 2009. The Company's risk-free interest rate input was determined based on the U.S. Treasury yield curve at the time of option issuance in 2011, 2010 and 2009. The Company's expected dividends input was zero in 2011, 2010 and 2009. Weighted average assumptions used in 2011, 2010 and 2009 for each of these four key inputs are listed in the following table:

	2009	2010	2011
Risk-free interest rate	1.41%	1.10%	0.64%
Expected lives	3.0 years	3.0 years	3.0 years
Expected volatility	64%	66%	70%
Expected dividend yield	0%	0%	0%

A summary of the Company's stock option plans, with options to purchase fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split included in the "cancelled" row in 2010, is as follows:

		Year Ended December 31,
		2009					2010					2011
		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of period			1,283,382		$	12.835		1,291,634		$	11.846		1,341,876		$	11.003
	Granted at Market		107,499		$	4.529		104,900		$	5.945		187,750		$	6.962
	Cancelled		(99,247	)	$	16.713		(53,459	)	$	21.572		(73,871	)	$	12.684
	Exercised		—		$	—		(1,199	)	$	5.834		(7,080	)	$	4.564
Outstanding at end of period			1,291,634		$	11.846		1,341,876		$	11.003		1,448,675		$	10.425
Exercisable at end of period			1,098,560		$	12.648		1,142,209		$	11.871		1,175,731		$	11.427

The total estimated fair value of stock options granted during the years ended December 31, 2011, 2010 and 2009 were computed to be approximately $602 thousand, $274 thousand and $205 thousand, respectively. The amounts are amortized ratably over the vesting periods of the options. The weighted average estimated fair value of options granted during the years ended December 31, 2011, 2010 and 2009 was computed to be approximately $3.21, $2.57 and $1.91, respectively. The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $10 thousand, $2 thousand and $0, respectively. The cash proceeds from options exercised during the years ended December 31, 2011, 2010 and 2009 was $32 thousand, $7 thousand and $0.

The following table summarizes information about stock options outstanding and exercisable at December 31, 2011, excluding outstanding options to purchase an aggregate of 121.0 fractional shares resulting from the Company's December 2010 1-for-10 reverse stock split with a weighted average remaining contractual life of 2.69 years, a weighted average exercise price of $13.21 and exercise prices ranging from $3.40 to $31.50. The Company intends to issue whole shares only from option exercises.

	Options Outstanding						Options Exercisable
Exercise Prices	Number of Options Outstanding at December 31, 2011		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Number of Options Exercisable at December 31, 2011		Weighted Average Exercise Price
$ 2.70 - $ 4.96		301,019		6.92	$	4.4736		188,949	$	4.3349
$ 5.00 - $ 7.00		296,272		6.25	$	6.8599		148,023	$	6.8846
$ 7.01 - $ 10.60		305,539		2.96	$	9.1850		294,296	$	9.1882
$ 10.61 - $ 15.90		294,864		3.14	$	13.3321		294,614	$	13.3316
$ 15.91 - $ 31.50		250,981		4.02	$	19.8659		249,849	$	19.8730
$ 2.70 - $ 31.50		1,448,675		4.67	$	10.4251		1,175,731	$	11.4270

As of December 31, 2011, there was $716 thousand of total unrecognized compensation expense related to outstanding stock options. That cost is expected to be recognized over a weighted-average period of 2.1 years with all cost to be recognized by the end of December 2015, assuming all options vest according to the vesting schedules in place at December 31, 2011. As of December 31, 2011, the aggregate intrinsic value of outstanding options was $981 thousand and the aggregate intrinsic value of exercisable options was $621 thousand.

Employee Stock Purchase Plan (the "ESPP")

Under the 1997 Employee Stock Purchase Plan, the Company is authorized to issue up to 325,000 shares of common stock to its employees, of which 300,087 had been issued as of December 31, 2011. Employees of the Company and its U.S. subsidiaries who are expected to work at least 20 hours per week and five months per year are eligible to participate. Under the terms of the plan, employees can choose to have up to 10% of their annual base earnings withheld to purchase the Company's common stock. Each offering period is five years, with six-month accumulation periods ending June 30 and December 31. The purchase price of the stock for June 30 and December 31 was 85% of the end-of-measurement-period market price.

For the years ended December 31, 2009, 2010 and 2011, the weighted-average fair value of the purchase rights granted was $0.51, $0.95 and $1.09 per share, respectively.