STOCK-BASED COMPENSATION

6 Months Ended

Jul. 31, 2011

STOCK-BASED COMPENSATION

2. STOCK-BASED COMPENSATION

The Company granted 60,560 and 1,196,060 stock option awards during the three and six months ended July 31, 2011, respectively, and 492,055 stock option awards during both the three and six months ended July 31, 2010. The Company recorded $364 and $596 of stock compensation expense related to stock option awards in its unaudited consolidated statement of operations for the three and six months ended July 31, 2011, respectively, and $133 and $241 during the three and six months ended July 31, 2010, respectively. The impact on loss per share for the six months ended July 31, 2011 and 2010 was $0.04 and $0.23, respectively.

The Company did not grant any restricted stock awards or performance shares during the three and six months ended July 31, 2011. The Company granted 333,558 restricted stock awards and 333,558 performance shares to selected executives and other key employees under the Company’s 2007 Stock Incentive Plan during the three and six months ended July 31, 2010. The restricted stock awards were to vest ratably over a period of one to four years and the expense recognized over the related vesting period. The Company recorded $170 and $292 of compensation expense related to restricted stock awards in its unaudited consolidated statement of operations for the three and six months ended July 31, 2010, respectively. The performance shares were to vest at the end of the performance period upon the achievement of pre-established financial objectives. No compensation expense was recorded for the performance related awards for the three and six months ended July 31, 2010 since the Company, at that time, did not believe that it was probable the performance criteria established would be met.

The following table summarizes information about the stock options outstanding at July 31, 2011:

	OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
			Weighted-						Weighted-
			Average		Weighted-				Average		Weighted-
			Remaining		Average				Remaining		Average
Range of Exercise Prices	Number Outstanding		Contractual Life		Exercise Price		Number Exercisable		Contractual Life		Exercise Price
$     8.00 - $     9.45		1,196,060		6.7 Years	$	8.26		0		6.7 Years	$	8.26
$   33.13 - $   39.00		24,076		4.5 Years	$	35.94		24,076		4.5 Years	$	35.94
$ 108.31 - $ 160.56		15,697		4.3 Years	$	140.11		15,697		4.3 Years	$	140.11
$ 173.55 - $ 232.42		10,900		4.4 Years	$	197.07		10,900		4.4 Years	$	197.07
$ 249.75 - $ 363.93		2,707		3.8 Years	$	256.37		2,707		3.8 Years	$	256.37
$ 408.27 - $ 565.26		6,003		1.6 years	$	471.20		6,003		1.6 Years	$	471.20
		1,255,443		6.6 Years	$	14.83		59,383		4.1 Years	$	147.10

The estimated fair value of the options granted was calculated using the Black Scholes Merton option pricing model (“Black Scholes”). The Black Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the estimated life of the option is based on U.S. Government Securities Treasury Constant Maturities. Expected volatility is based on the historical volatility of the Company’s stock. The Company uses the shortcut method to determine the expected life assumption.

The fair value of stock options granted during the three and six months ended July 31, 2011 and 2010 was estimated on the grant date using the Black Scholes option pricing model with the following average assumptions.

	Three months ended July 31,		Six months ended July 31,
	2011	2010	2011	2010
Risk-free interest rate	1.58%	2.01%-2.63%	1.58%-2.32%	2.01%-2.63%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Volatility factor	68.4%	77.5%-86.6%	67.7%-75.2%	77.5%-86.6%
Expected lives	5.25 Years	4.0 - 5.5 Years	4.5 - 5.25 Years	4.0 - 5.5 Years