Stock-Based Compensation Plans

Total stock-based compensation cost recognized in the statements of operations as a component of selling, general and administrative expenses for 2011, 2010 and 2009 was $5.5 million, $4.8 million and $5.1 million, respectively. Total unrecognized compensation cost related to non-vested share-based compensation arrangements was $4.8 million at December 31, 2011. This balance is expected to be recognized over a weighted-average period of 1.7 years.

Employee stock-based compensation expense recognized in 2011 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Our forfeiture experience since inception of our plans has been approximately 3% of the total grants. The historical rate of forfeiture is a component of the basis for predicting the future rate of forfeitures, which are also dependent on the remaining service period related to grants and on the limited number of approximately 84 plan participants that have been awarded grants since the inception of our plans. We issue new shares to satisfy stock option exercises.

Historically, we have maintained five stock-based compensation plans: the 2004 Long-Term Incentive Plan, the 2004 Directors' Equity Incentive Plan, the 2005 Long-Term Incentive Plan, the 2005 Directors' Equity Incentive Plan and the 2007 Long-Term Incentive Plan. During 2010, the 2010 Long-Term Incentive Plan was established. All shares available for issuance under our historical five plans have been transferred to the 2010 Long-Term Incentive Plan, from which all future awards will be

made. The following table summarizes the number of securities to be issued and remaining available for future issuance under all of the plans as of December 31, 2011:



	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1)
2004 Long-Term Incentive Plan
-Restricted stock units and options	41,265	$	34.92	—
2005 Long-Term Incentive Plan
-Restricted stock units	3,053	$	0.01	—
2005 Directors' Equity Incentive Plan	7,500	$	27.03	—
2007 Long-Term Incentive Plan⁽¹⁾	363,814	$	19.37	—
2010 Long-Term Incentive Plan ⁽¹⁾	173,224	$	1.43	584,665

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(1)	Includes non-qualified stock options, restricted stock units and performance shares.

2004 Long-Term Incentive Plan

The 2004 Long-Term Incentive Plan (“2004 LTIP”) provided for issuance of up to 1,314,444 shares of non-qualified stock options and restricted stock units to officers and key employees. For option grants, the exercise price equals the fair value of the Company's common stock on the date of grant. For restricted stock grants, the exercise price is fixed at $0.01. Options and restricted stock units vest over a three-year period; one-third of the options and restricted stock units cliff-vest on the first anniversary of the vesting commencement date and the remaining options and restricted stock units vest in equal monthly and quarterly installments, respectively, over the two-year period following the first anniversary of the vesting commencement date. Stock options expire seven years after the date of grant. Restricted stock units do not have an expiration date. Stock-based compensation is being recognized ratably over the three-year vesting period of the stock options or restricted stock units using the straight-line method. No further grants will be made under the 2004 LTIP.

2004 Directors' Equity Incentive Plan

The 2004 Directors' Equity Incentive Plan (“2004 Directors' Plan”) consists of 30,000 non-qualified stock options that have been granted to non-employee Directors of the Company. This plan has terms and vesting requirements similar to those of the 2004 LTIP, except options vest quarterly after the first anniversary of the vesting commencement date. No stock options are available for future issuance.

2005 Long-Term Incentive Plan

The 2005 Long-Term Incentive Plan (“2005 LTIP”) provided for the granting of restricted stock units to officers and key employees. The majority of restricted stock units issued under the 2005 LTIP generally vest over three years: one-third of the restricted stock units cliff vest on the first anniversary of the vesting commencement date and the remaining restricted stock units vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date. Restricted stock units do not have an expiration date. No further grants will be made under the 2005 LTIP.

2005 Directors' Equity Incentive Plan

The 2005 Directors' Equity Incentive Plan (“2005 Directors' Plan”) consists of 15,000 non-qualified stock options that have been granted to non-employee Directors of the Company. The terms of the 2005 Directors' Plan are similar to the 2004 Directors' Plan. No stock options are available for future issuance.

2007 Long-Term Incentive Plan

The 2007 Long-Term Incentive Plan (“2007 LTIP”) provided for the granting of stock options, restricted stock units and performance share awards of up to 1,202,350 shares of our common stock (including treasury shares) to officers, employees and non-employee directors. The majority of awards issued under the 2007 LTIP generally vest over three years: one-third of the restricted stock units cliff vest on the first anniversary of the vesting commencement date and the remaining restricted stock units vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date. Stock options expire seven years after the date of grant. Restricted stock units do not have an expiration date. No further grants will be made under the 2007 LTIP.

2010 Long-Term Incentive Plan

The 2010 Long-Term Incentive Plan (“2010 LTIP”) provides for the granting of awards of up to 1,115,952 shares of our common stock to officers, employees and non-employee directors. The 2010 LTIP became effective on April 1, 2010. Awards may be made under the 2010 LTIP through March 31, 2020, which is 10 years from the effective date of the 2010 LTIP. The available awards under the 2010 LTIP include: stock options, stock appreciation rights, restricted stock units, other stock-based awards and performance shares. The annual award limits of the 2010 LTIP provide for awards which are limited in any one plan year to 100,000 shares to any one participant. The majority of awards issued under the 2010 LTIP have been restricted stock units which generally vest over three years: one-third of the restricted stock units cliff vest on the first anniversary of the vesting commencement date and the remaining restricted stock units vest in equal quarterly installments over the two-year period following the first anniversary of the vesting commencement date.

Assumptions Used for Fair Value

We use the Black-Scholes option-pricing model to determine the grant date fair value for each stock option. Option-pricing models require the input of assumptions that are estimated at the date of grant.

The following table presents the assumptions used in the Black-Scholes option-pricing model to value the stock options granted during 2009 and 2011. There were no stock options granted in 2010. Restricted stock units and performance shares were valued at the fair market value of our stock at date of grant.



	Year Ended December 31,
	2011			2010			2009
Expected life (years)	5.3			—			4.0
Risk-free interest rate	0.48		%	—		%	1.12		%
Volatility	41		%	—		%	44		%
Dividend yield	2		%	—			—
Weighted-average fair value per share of grants:
Stock options	$	9.88		$	—		$	7.14
Restricted stock units	$	34.12		$	31.57		$	19.18
Performance shares	$	34.12		$	—		$	19.18

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The expected volatility is based on the historical implied volatility of our stock price. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term of options granted represents the period of time we estimate that options granted are expected to be outstanding.

The following table summarizes the activity for all stock options, restricted stock units and performance shares under all of the plans for the year ended December 31, 2011:



		December 31, 2010			Activity during 2011													December 31, 2011
		Outstanding			Granted					Exercised				Canceled				Outstanding			Exercisable
Plans	Securities	Number	Price		Number			Price		Number		Price		Number		Price		Number	Price		Number	Price
2004 LTIP	RSUs	1,221	$	0.01	—			$	—	(1,032	)	$	0.01	(1	)	$	0.01	188	$	0.01	188	$	0.01
	Options	218,255	20.44		—			—		(172,982	)	16.70		(4,196	)	31.40		41,077	35.08		41,077	35.08
2004 Directors’ Plan	Options	30,000	15.50		—			—		(30,000	)	15.50		—		—		—	—		—	—
2005 LTIP	RSUs	15,772	0.01		—			—		(12,719	)	0.01		—		—		3,053	0.01		3,053	0.01
2005 Directors’ Plan	Options	15,000	27.03		—			—		(7,500	)	27.03		—		—		7,500	27.03		7,500	27.03
2007 LTIP ⁽¹⁾	RSUs	217,949	0.01		—			—		(139,440	)	0.01		—		—		78,509	0.01		31,164	0.01
	Options	308,783	25.28		—			—		(34,749	)	21.87		—		—		274,034	25.71		274,034	25.71
	Perf. shares	32,454	0.01		—			—		(21,183	)	0.01		—		—		11,271	0.01		11,271	0.01
2010 LTIP ⁽¹⁾	RSUs	—	—		137,532			0.01		—		—		—		—		137,532	0.01		—	—
	Options	—	—		7,500			32.78		—		—		—		—		7,500	32.78		—	—
	Perf. shares	—	—		28,192	⁽²	⁾	0.01		—		—		—		—		28,192	0.01		—	—
Total		839,434			173,224					(419,605	)			(4,197	)			588,856			368,287

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Note: Price is weighted-average price per share.


(1)	The 2007 and 2010 LTIPs are for officers, employees and non-employee directors.


(2)	All 28,192 performance shares granted during 2011 were earned based upon achievement of performance criteria. One-third of those shares vested on January 19, 2012, and the balance will vest in equal quarterly installments over a subsequent two-year period.

The aggregate intrinsic value of stock options exercised in 2011, 2010 and 2009 was approximately $4.3 million, $4.7 million and $1.4 million, respectively. The aggregate intrinsic value of restricted stock units exercised in 2011, 2010 and 2009 was approximately $5.3 million, $4.2 million and $2.9 million, respectively. The aggregate intrinsic value of performance shares exercised in 2011, 2010 and 2009 was approximately $0.7 million, $1.5 million and $0.4 million, respectively.

The following table summarizes stock options, restricted stock units and performance shares that have vested and are expected to vest as of December 31, 2011:



		December 31, 2011
		Outstanding		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value⁽¹⁾ (dollars in thousands)
Plans	Securities	Vested	Expected to vest⁽²⁾	Vested	Expected to vest⁽²⁾	Vested		Expected to vest⁽²⁾
2004 LTIP	RSUs	188	—	—	—	$	7	$	—
	Options	41,077	—	2.3	—	186		—
2005 LTIP	RSUs	3,053	—	—	—	121		—
2005 Directors’ Plan	Options	7,500	—	0.6	—	94		—
2007 LTIP	RSUs	31,164	45,702	—	—	1,234		1,809
	Options	274,034	—	3.3	—	3,807		—
	Perf. shares	11,271	—	—	—	446		—
2010 LTIP	RSUs	—	132,760	—	—	—		5,256
	Options	—	7,240	—	6.8	—		49
	Perf. shares	—	27,214	—	—	—		1,077
Total		368,287	212,916			$	5,895	$	8,191

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(1)

Aggregate intrinsic value is calculated based upon the difference between the exercise prices of options or restricted stock units and our closing common stock price on December 30, 2011 of $39.60, multiplied by the number of instruments that are vested or expected to vest. Options and restricted stock units having exercise prices greater than the closing stock price noted above are excluded from this calculation.


(2)	Options, restricted stock units and performance shares that are expected to vest are net of estimated future forfeitures.

The aggregate fair value of options vested in 2011, 2010 and 2009 was approximately $1.7 million, $5.5 million and $4.3 million, respectively. The aggregate fair value of restricted stock units vested in 2011, 2010 and 2009 was approximately $6.1 million, $4.7 million and $3.6 million, respectively. The aggregate fair value of performance shares vested in 2011, 2010 and 2009 was approximately $0.8 million, $2.0 million and $0.6 million, respectively.