Note 2 - Long Term Incentive Plans

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

2. LONG-TERM INCENTIVE PLANS

Pursuant to the 2008 Long-term Incentive Plan (the "Plan"), we may grant stock options (non-qualified or incentive), stock appreciation rights, restricted stock, restricted stock units and other share-based awards to employees, directors and other persons who serve the Company. The Plan is overseen by the Compensation Committee of the Board of Directors, which approves the timing and circumstances under which share-based awards may be granted. At June 30, 2011, there were 1.2 million shares available to be granted under the Plan. We issue new shares to satisfy the exercise or release of share-based awards. Under the provisions of Accounting Standards Codification Topic for Stock Compensation, all share-based payments are required to be recognized in the statement of operations based on their fair values at the date of grant.

The fair value of each option award is estimated using a Black-Scholes option valuation model. Expected volatility is based on the historical volatility of the price of the Company's stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. Options generally have a life of 10 years and vest over a period of 3 years. The fair values of the options granted during the periods ended June 30, 2011 and 2010, were estimated based on the following weighted average assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Expected volatility		71.48	%		78.81	%		71.51	%		79.05	%
Risk-free interest rate		2.17	%		2.42	%		2.18	%		2.44	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected life (in years)		6.0			6.0			6.0			6.0
Estimated fair value per option granted	$	1.37		$	1.32		$	1.37		$	1.34

The following table presents a summary of the Company's stock option activity for the six months ended June 30, 2011:

	Number of Options
Outstanding at January 1, 2011	3,411,573
Granted	43,000
Exercised	(75,419)
Forfeited and cancelled	(215,717)
Outstanding at June 30, 2011	3,163,437

The Company also grants restricted stock units, or RSUs, which have either time or performance-based vesting features. RSUs are equity awards that are granted to individuals entitling the holder to a share of Company common stock. The fair value of an RSU is equal to the market value of a share of common stock on the date of grant. Time-based RSUs typically vest over a one to three year period, while performance-based RSUs vest based upon the achievement of specific performance targets. All RSUs are required to be settled in shares upon vesting. In the six months ended June 30, 2011 and 2010, we recorded an expense of $234 thousand and $184 thousand, respectively, relating to RSUs. Included in the total outstanding RSUs as of June 30, 2011 are 1,337,500 RSUs that were awarded under the Company's Key Management Medium-Term Incentive program that provides for the award of up to 1,750,000 RSUs if certain financial performance conditions are achieved in 2012, or if not in 2012, then in 2013. As of June 30, 2011, no expense was recorded in 2010 or 2011 for this program, since no RSUs have vested. If in the future it is probable that these awards will be earned, we will commence recording an expense for them.

The following table presents a summary of the Company's RSU activity for the six months ended June 30, 2011:

	Shares
Nonvested at January 1, 2011	1,869,991
Granted	467,262
Vested and settled in shares	(205,486)
Forfeited and cancelled	(283,143)
Nonvested at June 30, 2011	1,848,624

In addition, the Company also has a 2011 Management Incentive Compensation Plan ("the 2011 Incentive Plan") that entitles recipients to a combination of cash and equity awards based on achievement of certain performance and service conditions in 2011. No expense has been recorded in 2011 for the 2011 Incentive Plan.

The impact on the Company's results of operations of recording share-based compensation expense is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Cost of sales	$	28	$	41	$	52	$	80
Research and development		99		149		186		277
Selling, general and administrative		150		352		280		590
	$	277	$	542	$	518	$	947