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Non-Cash Share-Based Employee Compensation

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Non-Cash Share-Based Employee Compensation

8. Non-Cash Share-Based Employee Compensation

The Company has employee and non-employee director stock option programs. Related to these programs, and in accordance with ASC Topic 718, “Compensation-Stock Compensation”, the Company recorded non-cash share-based employee compensation expense of $40 and $131, respectively, for the three and nine months ended September 30, 2011, compared with $51 and $231 for the same periods last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products ($4 and $11 for the three and nine months ended September 30, 2011, respectively, compared with $3 and $22 for the same periods last year) and selling, general and administrative expenses ($36 and $120 for the three and nine months ended September 30, 2011, respectively, compared with $48 and $209 for the same periods last year). There was no non-cash share–based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and nine months ended September 30, 2011 was calculated using certain assumptions. For a description of such assumptions, reference is made to Note 10 (Share-Based Employee Compensation) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

A summary of stock option activity under the Company’s stock option plans as of September 30, 2011, and changes during the three months ended September 30, 2011 are presented below:

As of July 1, 2011	Stock Options	Wgt. Avg. Exercise Price ($)	Wgt. Avg. Remaining Contractual Life (Years)	Wgt. Avg. Grant Date Fair Value($)	Aggregate Intrinsic Value ($)

Outstanding	1,030,224	2.72	-	1.79	-
Vested	958,556	2.68	-	1.76	-
Nonvested	71,668	3.20	-	2.14	-

Period activity
Issued	-	-	-	-	-
Exercised	41,412	1.00	-	0.71	-
Forfeited	-	-	-	-	-
Expired	-	-	-	-	-

As of September 30, 2011
Outstanding	988,812	2.79	2.90	1.83	250
Vested	917,144	2.76	2.59	1.81	250
Nonvested	71,668	3.20	6.85	2.14	0

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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