4. Stock-Based Compensation Plans

Employee Stock Purchase Plan

Under the Company’s 1999 Employee Stock Purchase Plan, as amended (the “ESPP”), a total of 1,500,000 shares of the Company’s common stock have been reserved for issuance to eligible employees. Participating employees are permitted to designate up to the lesser of $25,000 or 10% of their annual base compensation for the purchase of common stock under the ESPP. Purchases under the ESPP are made one calendar month after the end of each fiscal quarter. The price for shares of common stock purchased under the ESPP is 85% of the stock’s fair market value on the last business day of the three-month participation period. Shares issued under the ESPP during the nine months ended September 30, 2011 and 2010 totaled 30,021 and 45,642, respectively.

Stock-Based Payments

A summary of stock options issued pursuant to the Company’s stock incentive plans is as follows:

		September 30,			September 30,		September 30,		September 30,
	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the-Money Options
Outstanding as of December 31, 2010		3,510,538		$	21.55
Granted		70,000			29.00
Exercised		(232,499	)		11.95
Forfeited		(22,351	)		20.19

Outstanding as of September 30, 2011		3,325,688		$	22.38		5.14	$	21,022,107


Exercisable as of September 30, 2011		2,267,032		$	22.40		4.55	$	15,405,992

As of September 30, 2011, the Company expects that 94.9% of the options will vest over the vesting period.

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2011 and 2010 was $13.69 and $9.39, respectively. The Company issued treasury shares for the exercise of stock options during the nine months ended September 30, 2011 and 2010. The total intrinsic value of stock options exercised during the nine months ended September 30, 2011 and 2010 was $4.5 million and $1.2 million, respectively.

There were no options granted during the three months ended September 30, 2011. The fair value of options granted during the nine months ended September 30, 2011 and 2010 was estimated on the date of grant using the Black-Scholes option-pricing model, a pricing model acceptable under U.S. GAAP, with the following weighted-average assumptions:

		September 30,			September 30,
	Nine Months Ended			Nine Months Ended
	September 30, 2011			September 30, 2010
Expected life (years)		5.50			5.63
Interest rate		1.6	%		2.3	%
Volatility		50.8	%		51.7	%
Dividend yield		—			—

Expected volatilities are based on the Company’s historical common stock volatility derived from historical stock price data for historical periods commensurate with the options’ expected life. The expected life of options granted represents the period of time that options granted are expected to be outstanding. The Company used the simplified method for determining the expected life. The simplified method was used as the historical data did not provide a reasonable basis upon which to estimate the expected term due to the extended period during which individuals were unable to exercise options while the Company was not current with its filings with the Securities and Exchange Commission (“SEC”). The risk-free interest rate is based on the implied yield currently available on United States Treasury zero coupon issues with a term equal to the expected term at the date of grant of the options. The expected dividend yield is zero as the Company has historically paid no dividends and does not anticipate dividends to be paid in the future.

A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) outstanding as of September 30, 2011 and changes during the period are as follows:

		September 30,			September 30,
Nonvested LTIP Performance Shares	Number of Shares at Expected Attainment			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2010		499,035		$	20.57
Forfeited		(27,274	)		18.69

Nonvested as of September 30, 2011		471,761		$	20.72

A summary of nonvested restricted share awards (“RSAs”) as of September 30, 2011 and changes during the period are as follows:

		September 30,			September 30,
Nonvested Restricted Share Awards	Number of Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2010		192,298		$	18.42
Awarded		1,300			29.00
Vested		(79,550	)		18.06
Forfeited		(9,000	)		17.36

Nonvested as of September 30, 2011		105,048		$	18.92

During the nine months ended September 30, 2011, 79,550 of the RSAs vested. The Company withheld 23,370 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of September 30, 2011, there were unrecognized compensation costs of $4.5 million related to nonvested stock options, $1.3 million related to the nonvested RSAs, and $5.1 million related to the LTIP performance shares, which the Company expects to recognize over weighted-average periods of 1.6 years, 1.3 years and 1.9 years, respectively.

The Company recorded stock-based compensation expenses for the three months ended September 30, 2011 and 2010 related to stock options, LTIP performance shares, RSAs, and the ESPP of $2.2 million and $1.9 million, respectively, with corresponding tax benefits of $0.7 million and $0.7 million, respectively. The Company recorded stock-based compensation expenses for the nine months ended September 30, 2011 and 2010 related to stock options, LTIP performance shares, RSAs, and the ESPP of $6.7 million and $5.5 million, respectively, with corresponding tax benefits of $2.4 million and $2.0 million, respectively. Tax benefits in excess of the option’s grant date fair value are classified as financing cash flows. No stock-based compensation costs were capitalized during the nine months ended September 30, 2011 and 2010. Estimated forfeiture rates, stratified by employee classification, have been included as part of the Company’s calculations of compensation costs. The Company recognizes compensation costs for stock option awards that vest with the passage of time with only service conditions on a straight-line basis over the requisite service period.

Cash received from option exercises for the nine months ended September 30, 2011 and 2010 was $2.8 million and $2.5 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $1.6 million and $0.4 million for the nine months ended September 30, 2011 and 2010, respectively.