Employee Stock Purchase Plan

12 Months Ended

Dec. 31, 2011

Employee Stock Purchase Plan [Text Block]

(16) Employee Stock Purchase Plan

          The 2007 Employee Stock Purchase Plan (ESPP) permits eligible employees to purchase common stock through payroll deductions which may not exceed 15 percent of the employee’s compensation, as defined, at a price equal to 85 percent of the fair market value of the shares at the beginning of the offering period (grant date) or at the end of the offering period (purchase date), whichever is lower. There are two six-month offering periods in each plan fiscal year, beginning April 1 and October 1. The ESPP is intended to qualify under section 423 of the Internal Revenue Code. Individual participant purchases within a given calendar year are limited to $25,000 ($21,250 based on the 15-percent discount) and no more than 2,500 shares on any single purchase date. An additional one million shares were reserved for issuance under the plan. All benefit-eligible employees of the Company may participate in the ESPP other than those who own shares or hold options or nonvested shares representing a combined 5 percent or more of the voting power of the Company’s outstanding stock. Unless terminated sooner, the ESPP will terminate on January 25, 2017.

          The fair value of shares to be issued under the ESPP is estimated at the grant date and is comprised of two components: the 15 percent discount to fair value of the shares at grant date and the value of the option granted to participants pursuant to which they may purchase shares at the lower of either the grant date or the purchase date fair value. The option component is valued using the Black-Scholes option pricing model.

          The initial assumptions used in the valuation for each offering period, April 1 and October 1, are reflected in the following table (no dividends were assumed):

	2011					2010					2009
		October		April			October		April			October		April
Expected volatility		32.02	%	22.17	%		30.31	%	31.80	%		39.52	%	95.62	%
Expected term (in years)		0.5		0.5			0.5		0.5			0.5		0.5
Risk-free interest rate		0.12	%	0.20	%		0.24	%	0.19	%		0.19	%	0.39	%

          Increases in individual withholding rates within the offering period could have the effect of establishing a new measurement date for that individual’s future contributions. Compensation expense recognized for the ESPP was approximately $66,000, $99,000, and $172,000 for the years ended December 31, 2011, 2010 and 2009, respectively. Amounts withheld from participants are classified as cash from financing activities in the cash flow statement and as a liability in the balance sheet until such time as shares are purchased. There were two stock purchases under the ESPP during the year ended December 31, 2011. Based upon the purchase price established as of March 31, 2011 and September 30, 2011, 41,346 shares were allocated under the plan in the year.

          Cash received from ESPP for the years ended December 31, 2011, 2010 and 2009 was $0.3 million, $0.4 million, and $0.5 million, respectively.

          The breakdown of stock-based compensation expense by major line caption in the statement of operations is shown below (in thousands).

	Year Ended December 31,
	2011		2010		2009
Research and development	$	36	$	67	$	43
General and administrative		30		32		129
	$	66	$	99	$	172