Note 2. Long-Term Incentive Plans

6 Months Ended

Jun. 30, 2012

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

2.             LONG-TERM INCENTIVE PLANS

Pursuant to the 2008 Long-term Incentive Plan (the “Plan”), the Company may grant stock options (non-qualified or incentive), stock appreciation rights, restricted stock, restricted stock units and other share-based awards to employees, directors and other persons who serve the Company. The Plan is overseen by the Compensation Committee of the Board of Directors, which approves the timing and circumstances under which share-based awards may be granted. At June 30, 2012 there were 0.7 million shares available to be granted under the Plan. The Company issues new shares to satisfy the exercise or release of share-based awards. Under the provisions of Accounting Standards Codification Topic for Stock Compensation, all share-based payments are required to be recognized in the statement of operations based on their fair values at the date of grant.

The fair value of each option award is estimated using a Black-Scholes option valuation model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. Options generally have a life of 10 years and have either time-based or performance-based vesting features. Time-based awards generally vest over a three year period, while the performance-based awards vest upon the achievement of specific performance targets. Included in awards granted during the six months ended June 30, 2012 are one million options that will vest upon the achievement of certain financial conditions in 2013 or will expire if the performance criteria are not met. No expense was recognized for these awards. If in the future it is probable that these awards will be earned, the Company will commence recording an expense for them. The fair values of the options granted during the three and six months ended June 30, 2012 and 2011, were estimated based on the following weighted average assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Expected volatility		68.49	%		71.48	%		69.44	%		71.51	%
Risk-free interest rate		0.94	%		2.17	%		1.32	%		2.18	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected life (in years)		6.0			6.0			6.0			6.0
Estimated fair value per option granted	$	0.85		$	1.37		$	0.97		$	1.37

The following table presents a summary of the Company's stock option activity for the six months ended June 30, 2012:

	Number of Options
Outstanding at January 1, 2012		3,224,879
Granted		1,419,500
Forfeited and cancelled		(160,031	)
Outstanding at June 30, 2012		4,484,348

The Company also grants restricted stock units, or RSUs, that entitle the holder to a share of Company common stock. The fair value of an RSU is equal to the market value of a share of common stock on the date of grant. All RSUs that are currently outstanding have time-based vesting features over a one to three year period.

The following table presents a summary of the Company’s RSUs for the six months ended June 30, 2012:

	Shares
Nonvested at January 1, 2012		528,443
Granted		152,328
Vested		(278,143	)
Forfeited and cancelled		(394	)
Nonvested at June 30, 2012		402,234

In addition, the Company also has a 2012 Management Incentive Compensation Plan (“the 2012 Incentive Plan”) that entitles recipients to a combination of cash and equity awards based on achievement of certain performance and service conditions in fiscal 2012. No expense was recorded for these awards during the six months ended June 30, 2012 as it is not yet probable that the performance conditions will be met.

The Company amortizes share-based compensation expense over the vesting period on a straight line basis. The impact on the Company’s results of operations of recording share-based compensation expense is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Cost of sales	$	19	$	28	$	38	$	52
Research and development		69		99		165		186
Selling, general and administrative		87		150		276		280
	$	175	$	277	$	479	$	518