Equity

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Equity

9. EQUITY

Equity Incentive Plans

On August 15, 2005, we adopted the 2005 Equity Incentive Plan (the “2005 Plan”), which permitted the issuance of up to 14.0 million common shares in connection with the grant of non-qualified stock options, incentive stock options, and restricted stock to eligible employees, consultants and members of our Board of Directors. As of December 31, 2012 and 2011,  0.9 million and 1.0 million stock options, respectively, were outstanding under the 2005 Plan. No shares are available for future issuance under the 2005 Plan.

On July 9, 2007, we adopted and on June 28, 2011 we amended the 2007 Equity Incentive Plan (the “2007 Plan”) which increased the allowable number of shares of our common stock reserved for issuance under the 2007 Plan  from  9.0million to 15.3 million (subject to adjustment for future stock splits, stock dividends and similar changes in our capitalization) in connection with the grant of non-qualified stock options, incentive stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, common stock or any other share-based award to eligible employees, consultants and members of our Board of Directors. As of December 31, 2012 and 2011,  3.5 million and 3.6 million stock options, restricted stock awards and restricted stock units were outstanding under the 2007 Plan, respectively. As of December 31, 2012,  5.7 million shares were available for future issuance under the 2007 Plan.

Stock options under both the 2005 Plan and the 2007 Plan generally vest ratably over four years with the first year vesting on a “cliff” basis followed by monthly vesting for the remaining three years. Restricted stock awards and units generally vest annually on a straight-line basis over three or four years depending on the terms of the award agreement.

Stock Option Activity

The following table summarizes stock option transactions for the years ended December 31, 2012, 2011 and 2010.

				Weighted
				Average
			Weighted	Remaining		Aggregate
			Average	Contractual		Intrinsic
			Exercise	Life		Value
	Shares		Price	(Years)		($ thousands)
Outstanding at December 31, 2009	7,755,254	$	7.67	7.48	$	15,920
Granted	342,250		12.68
Exercised	(2,133,806)		3.37
Forfeited or expired	(956,361)		11.56
Outstanding at December 31, 2010	5,007,337		9.10	6.36		47,009
Granted	468,000		19.81
Exercised	(1,738,741)		6.28
Forfeited or expired	(405,565)		10.46
Outstanding at December 31, 2011	3,331,031		11.91	6.35		18,468
Granted	208,400		16.84
Exercised	(613,691)		6.04
Forfeited or expired	(304,054)		17.55
Outstanding at December 31, 2012	2,621,686	$	13.03	5.55	$	11,373
Exercisable at December 31, 2012	1,992,151	$	12.36	4.75	$	10,000
Vested and expected to vest at December 31, 2012	2,485,086	$	12.78	5.37	$	11,330

During the years ended December 31, 2012, 2011 and 2010, options issued were valued using the Black Scholes option pricing model using the following assumptions.

	Year Ended December 31,
	2012	2011	2010
Expected volatility	50 - 70%	50 - 60%	60%
Dividend yield	-	-	-
Risk-free interest rate	0.62% - 1.20%	0.87% - 2.31%	1.64% - 2.27%
Expected life (in years)	4.00 - 4.27	4.35 - 4.89	5.66 - 6.49

The weighted average fair value of options granted during the years ended December 31, 2012, 2011 and 2010 was approximately $7.76,  $9.19 and $7.10, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $6.9 million, $27.3 million and $21.0 million, respectively. During the year ended December 31, 2012, we received $3.7 million in cash in connection with the exercise of stock options with no income tax benefit due to our use of Accounting Standard Codification 740 – ‘Income Taxes’ (“ASC 740”) ordering for purposes of determining when excess benefits have been realized (see Note 11—Income Taxes). The total grant date fair value of stock options vested during the years ended December 31, 2012, 2011 and 2010was $2.8 million,$2.7 million and $5.4 million, respectively.

As of December 31, 2012, we had $4.3 million of total unrecognized share-based compensation expense related to unvested options, net of expected forfeitures, which is expected to be amortized over the remaining weighted average period of 2.3 years.

Restricted Stock Shares and Units

From time to time, we grant restricted stock shares (RSAs) and restricted stock units (RSUs) to our employees. Unvested RSAs have the same rights as those of common shares including voting rights and non-forfeitable dividend rights. However, ownership of unvested RSAs cannot be transferred until they are vested. An unvested RSU is a contractual right to receive a share of common stock only upon its vesting. RSUs have dividend equivalent rights which accrue over the term of the award and are paid if and when the RSUs vest, but they have no voting rights.

During 2012, the Board of Directors approved grants of0.4 million of RSUs to certain executives as part of a performance incentive program. Half of the these grants vest ratably on each of the first three anniversaries of the grant date; 25% will vest upon achievement of certain performance metrics; and the remaining 25% will vest one year from the date upon which certain performance metrics were achieved. If actual performance metrics exceed the targeted performance metrics by a predetermined amount, the executives are eligible to receive up to 200% of the performance-based portion of their award.Management has determined that the achievement of the performance benchmarks associated with the performance based RSUs granted in 2012 is probable and recorded $0.7 million in share-based payment expense related to such units.

During 2011, the Board of Directors approved grants of 0.4 million RSAs and RSUs to certain executives as part of a performance incentive program. The vesting period for these grants is identical to that described above for 2012.

During 2010, the Board of Directors approved grants of 0.7 million RSAs to certain employees. Half of such grants vest ratably on each of the first four anniversaries of the grant date. The remaining half vest on a cliff basis on the fourth anniversary of the grant date, provided that certain corporate performance metrics are achieved. We have not recognized any share-based payment expense related to the performanceawards as the performance metrics to date have not been met.

The following table summarizes RSA and RSU activity during the years ended December 31, 2012, 2011 and 2010.

	Restricted Stock Awards			Restricted Stock Units
			Weighted			Weighted
			Average			Average
			Grant Date			Grant Date
	Shares		Fair Value	Units		Fair Value
Nonvested at December 31, 2009	1,322,240	$	3.04	-	$	-
Granted	637,557		12.10	116,400		12.99
Vested	(688,049)		3.93	-		-
Forfeited	(318,325)		2.77	-		-
Nonvested at December 31, 2010	953,423		8.54	116,400		12.99
Granted	118,520		19.10	651,791		24.89
Vested	(352,150)		6.19	(21,150)		17.25
Forfeited	(148,618)		9.67	(35,061)		15.41
Nonvested at December 31, 2011	571,175		11.87	711,980		23.43
Granted	18,813		16.48	1,010,559		18.92
Vested	(191,779)		9.22	(133,555)		23.25
Forfeited	(42,700)		13.25	(174,323)		20.64
Nonvested at December 31, 2012	355,509	$	13.37	1,414,661	$	20.61

The total grant date fair value of RSAs vested during the years ended December 31, 2012, 2011 and 2010 was $1.8 million, $2.2 million and $2.7 million, respectively. At December 31, 2012, we had $2.0 million of total unrecognized share-based compensation expense related to non-vested restricted stock awards, net of expected forfeitures. The non-vested RSAs are expected to be amortized over the remaining weighted average period of 1.50 years.

The total grant date fair value of RSUs vested during the years ended December 31, 2012, 2011 and 2010 was $3.1 million, $0.4 million, and $0.0 million, respectively. At December 31, 2012, we had $7.4 million of total unrecognized share-based compensation expense related to non-vested restricted stock units, net of expected forfeitures. The non-vested RSUs are expected to be amortized over the remaining weighted average period of 1.54 years.

Share-based Compensation

During the year ended December 31, 2012, we recorded $11.3 million of pre-tax share-based compensation expense of which $2.0 million was recorded in Cost of sales.  No associated tax benefits were recognized in the year ended December 31, 2012, due to our use of ASC 740 ordering for purposes of determining when excess tax benefits have been realized (see Note 11—Income Taxes).

During the year ended December 31, 2011, we recorded $8.6 million of pre-tax share-based compensation expense of which $1.3 million was recorded in Cost of sales.  No associated tax benefits were recognized in the year ended December 31, 2011, due to our domestic tax loss position and valuation allowance (see Note 11—Income Taxes).

During the year ended December 31, 2010, we recorded $7.3 million of pre-tax share-based compensation expense of which $1.3 million was recorded in Cost of salesand $0.2 million of accelerated vesting charges related to the separation agreement of a former officer was recorded as restructuring charges in the consolidated statements of operations. No associated tax benefits were recognized in the year ended December 31, 2010, due to our domestic tax loss position and valuation allowance (see Note 11—Income Taxes).

Separation Agreements

On March 31, 2010, we entered into a separation agreement with a former officer pursuant to which the vesting of 0.1 million stock options and 0.1 million shares of restricted stock were accelerated as of March 31, 2010. During the year ended December 31, 2010, we recorded $0.2 million amount to restructuring charges related to these vesting accelerations. Also in connection with this separation agreement, 0.2 million stock options and 0.2 million shares of restricted stock were forfeited.