Share-Based Compensation Plans

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

Share-Based Compensation Plans

All of our share-based compensation to employees is measured at fair value and expensed over the service period (generally the vesting period). The following table presents share-based compensation expense attributable to stock options and restricted shares. There is no deferred income tax benefit.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2011		2010		2011		2010
	(In thousands)
Stock options	$	497	$	591	$	1,550	$	1,850
Restricted shares	532		149		2,497		883
Total share-based compensation expense	$	1,029	$	740	$	4,047	$	2,733

The following table presents share-based compensation expense as included in the Consolidated Statements of Income:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2011		2010		2011		2010
	(In thousands)
Cost of sales	$	7	$	7	$	13	$	20
Selling, general and administrative	890		638		3,510		2,379
Research and development	132		95		524		334
Total share-based compensation expense	$	1,029	$	740	$	4,047	$	2,733

Stock Options

The following table summarizes our stock option activity for the nine months ended September 30, 2011:

	Number of Shares (In thousands)		Weighted Average Exercise Price Per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2010	7,843		$	10.26
Granted	120		6.46
Exercised	(187	)	4.99
Forfeited or expired	(1,545	)	11.63
Outstanding at September 30, 2011	6,231		$	10.00	3.10	$	109
Fully vested and expected to vest at September 30, 2011	6,195		$	10.01	3.07	$	109
Exercisable at September 30, 2011	5,678		$	10.17	2.69	$	109

There were no options granted during the three months ended September 30, 2011 and 2010. The following assumptions were used in the Black-Scholes option pricing model to calculate weighted average fair values of the options granted for the nine months ended September 30, 2011 and 2010.

	For the Nine Months Ended September 30,
	2011			2010
Expected life (in years)	6.2			6.0
Risk-free interest rate	2.4		%	3.0		%
Volatility	67		%	71		%
Dividend yield	—			—
Weighted average grant date fair value per option granted	$	4.06		$	5.00

The intrinsic value of options exercised for the three and nine months ended September 30, 2011, was less than $0.1 million and $0.4 million, respectively. The intrinsic value of options exercised for the three and nine months ended September 30, 2010, was $0.1 million and $0.2 million, respectively. For the nine months ended September 30, 2011 and 2010, cash received for stock option exercises was $0.9 million and $0.9 million, respectively. No tax benefits were realized. The related cash receipts are included in financing activities in the accompanying Condensed Consolidated Statements of Cash Flows. Total unrecognized compensation expense from stock options, including a forfeiture estimate, was approximately $1.8 million as of September 30, 2011, which is expected to be recognized over a weighted-average period of 1.4 years beginning October 1, 2011. To the extent the actual forfeiture rate is different than what we have anticipated, share-based compensation related to these awards will be different from our expectations.

Restricted Shares

The following table summarizes our restricted share activity for the nine months ended September 30, 2011:

	Number of Shares (In thousands)		Weighted Average Grant-Date Fair Value (Per share)
Nonvested at December 31, 2010	372		$	5.96
Awards granted	809		7.70
Awards vested	(306	)	6.81
Awards forfeited	(116	)	7.18
Nonvested at September 30, 2011	759		$	7.29

Awards vested include 150,000 shares granted to retirement eligible recipients whose restricted shares are treated for accounting and tax purposes as if vested when they meet the retirement eligible date. The fair value of these shares upon vesting during 2011 was $1.1 million.

The valuation of restricted shares is determined based on the fair market value of the underlying shares on the date of grant and amortized on a straight-line basis over the four-year vesting period. The unrecognized compensation cost, including a forfeiture estimate, was $3.9 million as of September 30, 2011, which is expected to be recognized over a weighted average period of approximately 2.7 years beginning October 1, 2011. To the extent that the actual forfeiture rate is different than what we have anticipated, the share-based compensation expense related to these awards will be different from our expectations.