EQUITY-BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

EQUITY-BASED COMPENSATION

NOTE I—EQUITY-BASED COMPENSATION

Grants for the Three Months Ended March 31, 2013 and March 31, 2012:

The weighted average estimated fair value of employee stock options, share appreciation rights (“SAR”) and restricted stock units (“RSU”) granted during the three months ended March 31, 2013 and 2012 was $4.30 and $2.36 per share, respectively, using the binomial model, with the following weighted average assumptions (annualized percentages):

	Three months ended March 31, 2013			Three months ended March 31, 2012
Volatility (1)		46.23	%		48.30	%
Risk-free interest rate (1)		1.40	%		2.24	%
Dividend yield (1)		0	%		0	%
Pre-vest cancellation rate		3.75	%		3.62	%
Post-vest cancellation rate (1)		1.31	%		2.69	%
Suboptimal exercise factor (1)		1.75			1.57

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 options and SARs granted during the three months ended March 31, 2013 and 2012 derived from the binomial model was 4.53 and 4.14 years, respectively.

(1) The RSUs granted during the three months ended March 31, 2013 were not included in the average calculated numbers in the table above since those parameters were not used in the RSU calculation.

Employee Stock Benefit Plans

As of March 31, 2013, the Company had five equity incentive plans and one employee stock purchase plan. As of March 31, 2013, approximately 398,000 shares of common stock remain available for grant under the Company’s employee stock purchase plan and 291,420 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, RSU and SAR grants pursuant to its equity incentive plans:

	Number of Options/SARs / RSUs			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years) (3)		Aggregate Value (*)
	in thousands							in thousands
Outstanding at January 1, 2013		9,622		$	10.72
Options granted		434		$	6.07
RSUs granted		350			—
Options / SARs / RSUs cancelled/forfeited/expired		(497	)	$	12.45
Options / SARs / RSUs exercised		(408	)	$	6.22
Outstanding at March 31, 2013 (1)		9,501		$	10.21		3.44		10,876
Exercisable at March 31, 2013 (2)		7,022		$	11.83		2.67		4,855

(*) Calculation of aggregate intrinsic value is based on the share price of the Company’s common stock on March 31, 2013 ($8.07 per share).

(1) Due to the ceiling imposed on the SAR grants, the outstanding amount above can be exercised for a maximum of 6,763 shares of the Company’s common stock as of March 31, 2013. 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 SARs 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 SARs 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 SARs 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 SARs subject to the grant.

(2) Due to the ceiling imposed on the SAR grants, the exercisable amount above can be exercised for a maximum of 4,856 shares of the Company’s common stock as of March 31, 2013.

(3) Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have indefinite contractual term.

Additional information about stock options, SARs and RSUs outstanding and exercisable at March 31, 2013 with exercise prices above $8.07 per share (the closing price of the Company’s common stock on March 31, 2013) is as follows:

	Exercisable				Unexercisable				Total
Exercise Prices	Number of Options/ SARs / RSUs (in thousands)		Weighted Average Exercise Price		Number of Options/ SARs / RSUs (in thousands)		Weighted Average Exercise Price		Number of Options/ SARs / RSUs (in thousands)		Weighted Average Exercise Price
Above $8.07		3,503	$	16.99		56	$	8.25		3,560	$	16.85
Less than $8.07		3,519	$	6.69		2,423	$	5.58		5,942	$	6.24
Total		7,022	$	11.83		2,479	$	5.65		9,501	$	10.21

The Company’s aggregate equity-based compensation expense for the three months ended March 31, 2013 and 2012 totaled $1,043 and $1,486, respectively. The Company did not recognize any income tax benefit relating to the Company’s equity-based compensation expense for the three months ended March 31, 2013 and 2012.

As of March 31, 2013, there was $4,686 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 2013 through 2017.