STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2011

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

9. STOCKHOLDERS' EQUITY

The Company has two stock incentive plans:  a Long-Term Incentive Plan (the “LTIP”) and a Non-Employee Directors Restricted Stock Plan (the “Non-Employee Directors Plan”).

Under the LTIP, certain employees received awards of restricted shares of common stock based on service and performance.  The number of shares granted to each employee is based on the fair market value of a share of common stock on the date of grant.

All service restricted shares granted prior to February 23, 2011 vest ratably on the first through fifth anniversaries of the grant date.  However, service restricted shares granted on or after February 23, 2011 vest ratably on the grant date and the first through fourth anniversaries of the grant date.

On April 29, 2011, performance-based shares were granted which vest over four years based upon the attainment of (i) a specified operating income margin during any one or more of the fiscal years in the period beginning January 1, 2011 and ending December 31, 2014 and (ii) the attainment of earnings before interest, taxes, depreciation and amortization targets during each of the fiscal years ended December 31, 2011, 2012, 2013 and 2014.  There is no vesting period on the right to vote or the right to receive dividends on any of the restricted shares.

As of December 31, 2011, there were a total of 785,691 restricted shares awarded and 318,508 shares vested under the LTIP.  During 2011, there were 364,691 restricted shares granted and 127,908 shares that vested with a weighted average grant price of $15.63 and $14.03, respectively.  The recognized restricted stock expense for the years ended December 31, 2011, 2010 and 2009 was $2.5 million, $1.4 million and $0.9 million, respectively. The deferred compensation or unrecognized restricted stock expense under the LTIP as of December 31, 2011, 2010 and 2009 was $6.6 million, $3.4 million and $4.8 million, respectively.  As of December 31, 2011, outstanding restricted shares under the LTIP had aggregate intrinsic value of $3.7 million.

Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock on the date of the Company's annual meeting of shareholders.  The number of shares granted to each non-employee director is based on the fair market value of a share of common stock on that date.  The restricted shares vest ratably on the first through third anniversary of the grant date; however, there is no vesting period on the right to vote or the right to receive dividends on these restricted shares.  Beginning in 2010, all new awards of restricted shares of common stock granted under the Non-Employee Directors Plan vest fully on the first anniversary of the grant date.

As of December 31, 2011, there were a total of 155,641 shares awarded less 5,035 shares canceled and 116,238 shares vested under the Non-Employee Directors Plan.  During 2011, there were 28,740 restricted shares granted and 31,284 shares that vested with a weighted average grant price of $16.70 and $20.24, respectively.  The recognized restricted stock expense for the years ended December 31, 2011, 2010 and 2009 was $0.6 million, $0.6 million and $0.3 million, respectively.  The deferred compensation or unrecognized restricted stock expense under the Non-Employee Directors Plan as of December 31, 2011, 2010 and 2009 was $0.2 million, $0.3 million and $0.4 million, respectively.  As of December 31, 2011, outstanding restricted shares under the Non-Employee Directors Plan had aggregate intrinsic value of $0.3 million.

In 2011 and 2010, the Company completed a net share settlement for 68,250 and 52,214 restricted shares and stock options exercised, respectively, on behalf of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP or exercise of the stock options.  The net share settlement was in connection with income taxes incurred on restricted shares or stock option exercises that vested and were transferred to the employee during 2011 and/or 2010, creating taxable income for the employee.   The Company has agreed to pay these taxes on behalf of the employees in return for the employee returning an equivalent value of restricted shares or stock options to the Company.  This transaction resulted in a decrease of approximately $0.9 million and $1.0 million in 2011 and 2010, respectively, to equity on the consolidated balance sheets as the cash payment of the taxes effectively was a repurchase of the restricted shares or stock options granted in previous years.

On June 9, 2010, the Company's Board of Directors approved the repurchase of up to $50.0 million of its common stock over the period of one year.  As of December 31, 2010, the Company had repurchased 4,040,234 shares of its common stock for approximately $50.0 million at an average price of $12.38 per share.  In addition, during 2010, the Company's Board of Directors approved the repurchase of 5,307 shares of its common stock, which was repurchased at an average price of $16.77 per share.

On February 18, 2009, the Company issued 1.15 million shares of common stock in a public offering and received net proceeds of approximately $14.9 million, after deducting underwriting commissions and offering costs of approximately $0.3 million.  In addition, in connection with the same public offering, the Company also expensed $1.2 million of costs associated with the sale of stock by certain selling shareholders.

On December 15, 2009, the Company entered into a definitive stock repurchase agreement (the “Repurchase Agreement”) with Back to School Acquisition, L.L.C., (“BTS”) relating to the Company's repurchase of 1,250,000 shares of the Company's common stock (the “Repurchase Shares”) owned by BTS at a purchase price of $20.95 per share or an aggregate purchase price of $26,187,500 (the “Share Repurchase”).  In accordance with the terms of the Repurchase Agreement, consummation of the Share Repurchase was conditioned upon the completion of the sale by BTS of an additional 750,000 shares of the Company's common stock in a block trade pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Block Trade”). The completion of the Block Trade and the concurrent closing of the Share Repurchase occurred on December 21, 2009. The Company used cash on hand to pay the purchase price for the Repurchase Shares.

The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the Black-Scholes option pricing model. During 2011 there were no new stock option grants.  The weighted average fair values of options granted during 2010 and 2009 were $8.48 and $8.75 respectively, using the following weighted average assumptions for grants:

	At December 31,
	2010			2009
Expected volatility		45.00	%		51.95	%
Expected life (term)	4.82 Years			4.8-6 Years
Risk-free interest rate		1.95	%		2.29-2.36	%
Weighted-average exercise price during the year	$	20.78		$	18.48

The expected volatility considers the volatility of the Company common stock that has been traded for a period commensurate with the expected life.  The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate used is based on the published U.S. Treasury yield curve in effect at the time of grant for instruments with a similar life.  The 2010 dividend yield is 0% because at the time the options were granted the Company had not intended to declare or pay dividends on its common stock.

The following is a summary of transactions pertaining to the option plans:

	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding December 31, 2008		1,474,215			9.98	5.25 years	$	6,808
Granted		101,000			18.48
Cancelled		(35,166	)		14.81
Exercised		(356,128	)		6.07			4,760
Outstanding December 31, 2009		1,183,921			11.74	4.95 years		11,934
Granted		68,000			20.78
Cancelled		(108,875	)		15.15
Exercised		(422,106	)		7.46			5,668
Outstanding December 31, 2010		720,940			14.59	5.14 years		2,095
Granted		-			-
Cancelled		(74,459	)		12.80
Exercised		(113,106	)		6.29			759
Outstanding December 31, 2011		533,375			16.60	4.68 years		-
Vested or expected to vest as of December 31, 2011		524,176			16.54	4.61 years		-
Exercisable as of December 31, 2011		487,382			16.26	4.34 years	$	-

As of December 31, 2011, unrecognized pre-tax compensation expense for all unvested stock option awards is approximately $0.3 million which will be expensed over the weighted-average period of approximately 2.2 years.

The following table presents a summary of options outstanding at December 31, 2011:

		At December 31, 2011
		Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices		Shares		Contractual Weighted Average life (years)		Weighted Average Price		Shares		Weighted Exercise Price
$	4.00-$13.99		133,792		5.55	$	11.96		133,792	$	11.96
$	14.00-$19.99		277,083		4.20		16.42		259,755		16.24
$	20.00-$25.00		122,500		4.81		22.07		93,835		22.44
			533,375		4.68		16.60		487,382		16.26

During 2009, the Company transferred the $2.8 million balance in deferred compensation to additional paid-in-capital.  The Company concluded that this transfer should have been made concurrently with its previous change in accounting for stock based compensation.  The Company determined the effect of this error on its prior financial statements is immaterial.