Share-Based Employee Compensation

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Share-Based Employee Compensation

10. 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 $172, $281and $55 of share-based employee compensation expense during the years ended December 31, 2011, 2010 and 2009, respectively, and is included as a component of cost of products and selling, general and administrative expenses in the accompanying consolidated statements of operations. No amount of share–based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2011, 2010 and 2009 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time commensurate with the expected life of the stock options. While the Company paid a one-time special cash dividend in 2007, it has never paid a cash dividend previously, nor is a cash dividend planned for the future. Accordingly, the assumed dividend yield is zero. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.

	FY 2011	FY 2010	FY 2009
Expected Volatility	86.4%	76.6% - 83.7%	72.8% - 88.8%
Expected Dividends	0.00	0.00	0.00
Expected Term (In years)	3.0	3.0 - 6.5	3.0 - 6.5
Risk-Free Rate	0.90%	2.54%	1.56%
Estimated forfeitures	0.0%	0.0%	0.0%

A summary of stock option activity under our stock option plans as of December 31, 2011, and changes during the year ended December 31, 2011 are presented below:

		Stock Options	Wgt. Avg. Exercise Price ($) Per Share	Wgt. Avg. Remaining Contractual Life (Years)	Wgt Avg. Grant Date Fair Value ($) Per Share	Aggregate Intrinsic Value ($)
As of January 1, 2011
Outstanding		1,000,224	2.74	—	1.81	—
Vested		861,889	2.65	—	1.73	—
Nonvested		138,335	3.31	—	2.26	—
Period activity
Issued		30,000	2.00	—	1.11	—
Exercised		41,412	1.00	—	0.71	—
Forfeited		—	—	—	—	—
Expired		307,900	1.10	—	0.77	—
As of December 31, 2011
Outstanding		680,912	3.56	3.90	2.31	550
Vested		609,244	3.60	3.59	2.33	550
Nonvested		71,668	3.20	6.60	2.14	—
Outstanding:
Range of  Exercise Prices ($) PerShare		Stock Options Outstanding	Wgt. Avg. Exercise Price ($) Per Share	Wgt. Avg. RemainingContractual Life (Years)
0.77	2.80	372,000	1.84	3.05
4.00	6.33	244,508	4.35	5.39
7.00	11.40	64,404	10.47	3.18
		680,912	3.56	3.90
Exercisable:
Range of Exercise Prices ($) PerShare		Stock Options Exercisable	Wgt. Avg. Exercise Price ($)
0.77	2.80	342,000	1.82
4.00	6.33	202,840	4.41
7.00	11.40	64,404	10.47
		609,244	3.60

The weighted-average grant-date fair value per option granted during the years 2011, 2010, and 2009 was $1.11, $2.59, and $0.41, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2011, 2010, and 2009, was approximately $4, $240, and $20, respectively.