Accounting for Equity-Based Compensation

6 Months Ended

Jun. 30, 2012

Accounting for Equity-Based Compensation [Abstract]

ACCOUNTING FOR EQUITY-BASED COMPENSATION

NOTE I—ACCOUNTING FOR EQUITY-BASED COMPENSATION

Grants for Three Months Ended June 30, 2012 and June 30, 2011:

The weighted average estimated fair value of employee stock options and stock appreciation rights (“SARs”) granted during the three months ended June 30, 2012 and 2011 was $3.12 and $3.33, respectively, using the binomial model, with the following weighted average assumptions (annualized percentages):

	Three months ended June 30, 2012			Three months ended June 30, 2011
Volatility		46.68	%		50.65	%
Risk-free interest rate		1.30	%		2.02	%
Dividend yield		0	%		0	%
Pre-vest cancellation rate		0.82	%		4.22	%
Post-vest cancellation rate		0.17	%		3.83	%
Suboptimal exercise factor		2.30			1.44

The expected life of employee stock options and SARs is impacted by all of the underlying assumptions used in the Company’s model. The binomial model assumes that employees’ exercise behavior is a function of the remaining contractual life of the stock option or SAR and the extent to which the stock option or SAR is in-the-money (i.e., the average stock price during the period is above the exercise price of the stock option or SAR). The binomial model estimates the probability of exercise as a function of these two variables based on the history of exercises and cancellations of past option and SAR grants made by the Company. The expected life for stock options and SARs granted during the three months ended June 30, 2012 and 2011 derived from the binomial model was 5.38 years and 3.98 years, respectively.

Employee Stock Benefit Plans

As of June 30, 2012, the Company had three equity incentive plans from which the Company may grant future equity awards and two expired equity incentive plans from which no future equity may be granted but had outstanding equity awards granted prior to expiration. The Company also had one employee stock purchase plan. As of June 30, 2012, approximately 806,000 shares of common stock remain available for grant under the Company’s employee stock purchase plan and approximately 874,759 shares of common stock remain available for grant under the Company’s equity incentive plans.

The table below presents a summary of information relating to the Company’s stock option and SAR grants pursuant to its equity incentive plans:

	Number of Options/SAR Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Value (*)
	in thousands							in thousands
Outstanding at March 31, 2012		11,533		$	11.49
Options granted		60		$	5.98
SAR units granted		—			—
Options / SAR units cancelled/forfeited/expired		(520	)	$	15.95
Options / SAR units exercised		(59	)	$	5.97
Outstanding at June 30, 2012 (1)		11,015		$	11.28		3.54	$	1,120
Exercisable at June 30, 2012 (2)		7,795		$	13.17		2.58	$	617

(*) Calculation of aggregate intrinsic value is based on the share price of the Company’s common stock on June 30, 2012 ($6.34 per share).

(1) Due to the ceiling imposed on the SAR grants, the outstanding amount equals to a maximum of approximately 7,649,000 shares of the Company’s common stock issuable upon exercise. SAR grants made prior to January 1, 2009 are convertible for a maximum number of shares of the Company’s common stock equal to 50% of the SAR units subject to the grant. SAR grants made on or after January 1, 2009 and before January 1, 2010 are convertible for a maximum number of shares of the Company’s common stock equal to 75% of the SAR units subject to the grant. SAR grants made on or after January 1, 2010 and before January 1, 2012 are convertible for a maximum number of shares of the Company’s common stock equal to 66.67% of the SAR units subject to the grant. SAR grants made on or after January 1, 2012 are convertible for a maximum number of shares of the Company’s common stock equal to 50% of the SAR units subject to the grant.

(2) Due to the ceiling imposed on the SAR grants, the currently exercisable amount equals to a maximum of approximately 5,464,000 shares of the Company’s common stock exercisable.

Additional information about stock options and SAR units outstanding and exercisable at June 30, 2012 with exercise prices above $6.34 per share (the closing price of the Company’s common stock on June 30, 2012) is as follows (in thousands, except per share amounts):

	Exercisable				Unexercisable				Total
Exercise Prices	Number of Options/ SAR Units		Weighted Average Exercise Price		Number of Options/ SAR Units		Weighted Average Exercise Price		Number of Options/ SAR Units		Weighted Average Exercise Price
Above $6.34		6,276	$	14.92		1,517	$	7.43		7,793	$	13.46
Less than $6.34		1,519	$	5.93		1,703	$	6.04		3,222	$	5.99
Total		7,795	$	13.17		3,220	$	6.70		11,015	$	11.28

The Company’s aggregate equity-based compensation expense for the three months ended June 30, 2012 and 2011 totaled $1,458 and $1,873, respectively.

The Company’s aggregate equity-based compensation expense for the six months ended June 30, 2012 and 2011 totaled $2,944 and $3,712, respectively. The Company did not recognize any income tax benefit relating to its equity-based compensation expense for the three and six months ended June 30, 2012 and 2011.

As of June 30, 2012, there was $4,737 of total unrecognized equity-based compensation expense related to unvested equity-based compensation awards granted under the Company’s equity incentive plans. This amount is expected to be recognized during the period from 2012 through 2016.