Stock Compensation

6 Months Ended

Jun. 30, 2011

Stock Compensation

Stock Compensation

13. Stock Compensation

Overview

     The Company has stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards ("RSA"s), restricted stock units ("RSU"s), and options to purchase shares of Company common stock at exercise prices generally equal to the fair values of such stock at the dates of grant. The Company also maintains a shareholder approved Employee Stock Purchase Plan (the "ESPP") for the benefit of its employees. The ESPP allows eligible employees the right to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period.

Equity Grants

     The Compensation Committee of the Company's Board of Directors authorized awards of stock from approved stock incentive plans to non-employee Directors and certain Company officers totaling 360,000 and 215,000 shares of common stock during the six months ended June 30, 2011 and 2010, respectively, which had an aggregate market value of $1.9 million and $1.3 million, respectively.

     The Compensation Committee of the Company's Board of Directors authorized grants of stock options from approved stock incentive plans to certain Company officers and employees totaling 599,000 and 427,000 shares during the six months ended June 30, 2011 and 2010, respectively, with exercise prices equal to the stock prices on the respective grant dates.

     Employees purchased common stock totaling 33,000 and 26,000 shares in the six months ended June 30, 2011 and 2010, respectively, through the Company's ESPP.

Stock Compensation Expense

     The Company values its RSAs and RSUs based on the stock price on the date of grant and expenses the related compensation cost using the straight-line method over the vesting period. The Company uses a Black-Scholes model to value its stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of the Company's ESPP options is also determined using a Black-Scholes model and is expensed over the vesting period. The fair value of stock options and ESPP options is determined on the grant date using assumptions for the expected term, expected volatility, dividend yield, and the risk-free interest rate. The period expense is then determined based on this valuation and, at that time, an estimated forfeiture rate is used to reduce the expense recorded. The Company's estimate of pre-vesting forfeitures is primarily based on the recent historical experience of the Company and is adjusted to reflect actual forfeitures at each vesting date.

The following weighted-average assumptions were used to determine the fair value of options:

	Three Months Ended				Six Months Ended
	June 30, 2011				June 30, 2011
	Stock Options ESPP Options				Stock Options ESPP Options
Expected life of options	4.00 Years		.50 Years		4.00 Years		.50 Years
Expected stock price volatility	.650		.434		.650		.434
Risk-free interest rate	1.35	%	0.19	%	1.25	%	0.19	%

	Three Months Ended			Six Months Ended
	June 30, 2010			June 30, 2010
	Stock Options ESPP Options			Stock Options ESPP Options
Expected life of options	N/A	.25 Years		3.75 Years		.25 Years
Expected stock price volatility	N/A	.535		.650		.455
Risk-free interest rate	N/A	0.16	%	1.29	%	0.11	%

The following table summarizes stock compensation expenses (in thousands):

	Three Months Ended					Six Months Ended
		June 30,				June 30,
	2011		2010			2011		2010
RSA and RSU expense	$	328	$	279	$	669	$	552
Stock option and ESPP option expense		398		533		882		1,040
Total stock compensation expense	$	726	$	812	$	1,551	$	1,592

     Included in the total stock compensation expense were expenses related to RSAs, RSUs, and stock options issued in the current year as well as those issued in prior years that continue to vest during the period, and compensation related to the Company's ESPP. These amounts were recorded as stock compensation expense and were subject to the Company's normal allocation of expenses to inventory and deferred preservation costs. The Company capitalized $55,000 and $78,000 in the three months ended June 30, 2011 and 2010, respectively, and $107,000 and $137,000 in the six months ended June 30, 2011 and 2010, respectively, of the stock compensation expense into its deferred preservation costs and inventory costs.

     As of June 30, 2011 the Company had a total of $2.7 million, $2.4 million, and $290,000 in unrecognized compensation costs related to unvested stock options, RSAs, and RSUs, respectively, before considering the effect of expected forfeitures. As of June 30, 2011 this expense is expected to be recognized over a weighted-average period of 2.0 years for stock options, 1.9 years for RSAs, and 2.4 years for RSUs.