Note 8. Shareholders’ Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

Note 8. Shareholders’ Equity

Share-based Compensation Plans

We periodically grant stock options, restricted stock unit awards, and/or shares of common stock to our employees and directors.  We measure the fair value of compensation cost for stock options issued pursuant to our equity compensation plans using the Black-Scholes options pricing model.  Stock option grants generally vest immediately. However, grants to individual executives upon hiring or retention vest over a defined service period, with cost amortized over that period. We measure compensation cost for restricted stock units and stock grants at the closing price of our stock at the time of grant, net of estimated forfeiture.  Restricted stock unit grants vest after a named period, usually one year, with compensation cost amortized over that period.

As the result of June 9, 2011 awards granted by the board of directors, 7,968 shares of common stock were distributed to employees in June 2011, with the total $0.1 million expense related to these awards recognized in the second quarter of 2011.  On June 24, 2011 the board of directors granted 256,927 stock units that vest in June 2012 and 163,649 restricted stock units that vest in March 2014, with none of the expense related to these awards recognized as of June 30, 2011, as the expense will be recognized over the vesting periods.  The $1.9 million in expense related to the unit awards vesting in 2012 will be recognized on a straight-line basis over the next twelve months, while the $1.2 million in expense related to the awards vesting in 2014 will be recognized on a straight-line basis over the next thirty-three months.

In the second quarter of 2011, a total of 42,636 common shares were issued to nonemployee directors.  We issued a total of 48,825 common shares to nonemployee directors in the second quarter of 2010.

Share-based compensation expense for stock option and restricted stock unit grants recorded in the first six months of 2011 totaled $0.9 million, compared to $2.5 million in the same period last year.

Under the terms of our equity compensation plans, we have permitted our employees’ withholding tax obligations with respect to shares awarded thereunder which have vested, to be satisfied by net share settlement.  As a result, in the first half of 2011, we repurchased 56,688 shares for $0.5 million, or approximately $8.29 per share.

Cash received for the exercise of stock options during the first six months of 2011 and 2010 totaled $0.5 million and $0.2 million, respectively.

Preferred Stock Dividends Paid in Common Stock

In January 2010, $16.3 million in dividends declared and unpaid for the fourth quarter of 2008 and the year ended December 31, 2009 on our 6.5% Mandatory Convertible Preferred Stock were paid in 2,649,231 shares of our common stock (with cash for fractional shares).  The number of shares of common stock issued as dividends was calculated based on 97% of the average of the closing prices of our common stock over the five consecutive trading day period ending on the second day immediately preceding the dividend payment date.

On April 1, 2010, the declared regular quarterly dividend on the outstanding shares of our 6.5% Mandatory Convertible Preferred Stock of approximately $3.3 million was paid in 631,334 shares of our common stock (with cash for fractional shares).  On July 1, 2010, the declared regular quarterly dividend on the outstanding shares of our 6.5% Mandatory Convertible Preferred Stock of approximately $3.3 million was paid in 604,637 shares of our common stock (with cash for fractional shares).  In each case, the number of shares of common stock issued as dividends was calculated based on 97% of the average of the closing prices of our common stock over the five consecutive trading day period ending on the second day immediately preceding the dividend payment date.

Conversion of 6.5% Mandatory Convertible Preferred Stock to Common Stock

On January 1, 2011, all 2,012,500 outstanding shares of our 6.5% Mandatory Convertible Preferred Stock were automatically converted to shares of our common stock at a conversion rate of 9.3773 shares of Common Stock for each share of 6.5% Mandatory Convertible Preferred Stock.  We issued approximately 18.9 million shares of common stock in connection with the mandatory conversion.  The final $3.3 million quarterly dividend on the 6.5% Mandatory Convertible Preferred Stock for the quarter ended December 31, 2010 was paid in cash in January 2011.

Warrants

The following table summarizes certain information about our stock purchase warrants at June 30, 2011:

Warrants Outstanding	Warrants		Exercise Price		Expiration Date
Series 1 warrants		5,231,708	$	2.45	June 2014
Series 1 warrants		460,976		2.56	June 2014
Series 3 warrants		17,021,817		2.50	August 2014
Total warrants outstanding		22,714,501

In the first quarter of 2011, warrants to purchase approximately 1.8 million shares of our common stock were exercised, resulting in net proceeds to us of approximately $4.4 million.  Under the proposed financial terms of the potential settlement of the Coeur d’Alene Basin litigation and other claims with the Plaintiffs, the amount of proceeds from the exercise of our outstanding warrants would be paid to the Plaintiffs within 30 days after the end of the quarter when exercised.  Proceeds from Series 1 and Series 3 warrant exercises prior to April 12, 2011, totaling approximately $9.5 million, would also be paid over to the Plaintiffs within 30 days of entry of the Consent Decree (see Note 4 for more information).