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Shareholders' Equity
12 Months Ended
Dec. 31, 2011
Shareholders' Equity [Abstract]  
Shareholders' Equity
(8) Shareholders' Equity

Stock-Based Compensation Plans

We compensate officers, directors and key employees with stock-based compensation under three stock plans approved by our shareholders in 1997, 2004 and 2010 and administered under the supervision of our Board of Directors (“Board”). At December 31, 2011, a total of 1,587,000 shares were available for future grant under the 2010 stock plan.

Stock Options

Stock option awards are granted at exercise prices equal to the closing price of our stock on the date of grant. Generally, options vest proportionally over periods of two to four years from the dates of the grant and expire after ten years. Compensation expense is recognized ratably over the vesting period.

A summary of our stock option activity for the year ended December 31, 2011, was as follows (in thousands, except per share amounts):
 
   
Stock
Options
  
Weighted-
Average
Exercise
Price per
Share
  
Weighted-
Average
Remaining 
Contractual
Term (years)
  
Aggregate
Intrinsic
Value (1)
 
Outstanding at January 1, 2011
  3,985  $11.72   5.8  $8,830 
Granted
  249   17.27         
Exercised
  (725 )  6.04         
Canceled/Forfeited
  (204 )  12.09         
Outstanding at December 31, 2011
  3,305  $13.36   5.4  $29,907 
                  
Exercisable at December 31, 2011
  1,883  $11.67   4.4  $19,584 


(1)
Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.

Other information pertaining to options for the years ended December 31, 2011; January 1, 2011; and January 2, 2010; is as follows (in thousands, except per share amounts):

   
2011
  
2010
  
2009
 
Weighted-average grant date fair value of stock options granted
 $10.91  $6.18  $1.17 
Total intrinsic value (at exercise) of stock options exercised
 $8,295  $5,860  $140 
Cash received from the exercise of stock options
 $4,356  $1,014  $130 
Stock-based compensation expense recognized in the consolidated statements of operations
 $2,721  $2,491  $2,184 
Excess income tax benefits from exercise of stock options
 $2,001  $1,358  $- 

At December 31, 2011, there was $6.5 million of total stock option compensation expense related to non-vested awards not yet recognized, which is expected to be recognized over a weighted-average period of 3.2 years.
 
Determining Fair Value

We estimated the fair value of stock options granted using the Black-Scholes-Merton option-pricing model and a single option award approach. Forfeitures are estimated using historical experience and projected employee turnover. A description of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected terms is as follows:

Expected Volatility – Expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price.

Risk-Free Interest Rate – The risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term.

Expected Term – Expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards.

The assumptions used to calculate the fair value of awards granted during 2011, 2010 and 2009 using the Black-Scholes-Merton option-pricing model were as follows:

Valuation Assumptions
 
2011
  
2010
  
2009
 
Expected dividend yield
  0 %  0 %  0 %
Expected volatility
  78 %  78 %  89 %
Risk-free interest rate
  1.9 %  2.0 %  2.4 %
Expected term (in years)
  5.0   4.9   4.8 

Stock Awards

We issue stock awards to certain employees in conjunction with our stock-based compensation plan. The stock awards generally cliff-vest from two to four years based on continued employment (“time based”). Compensation expense related to stock awards is determined on the grant-date based on the publicly quoted fair market value of our common stock and is charged to earnings on a straight-line basis over the vesting period. Performance stock awards are time based, however, the final number of shares earned (and related compensation expense) may be adjusted up or down depending upon the extent to which the target performance is met as of the last day of the performance cycle.

Total compensation expense related to stock awards was $2.2 million, $1.5 million, and $1.1 million, for the years ended December 31, 2011; January 1, 2011; and January 2, 2010, respectively. Excess income tax benefits from stock awards was $0.2 million for the year ended December 31, 2011. There were no excess income tax benefits related to stock awards for the years ended January 1, 2011, and January 2, 2010.

Stock award and performance stock award activity was as follows for the year ended December 31, 2011 (in thousands, except per share amounts):

   
Time-
Based
Stock
Awards
  
Weighted-Average
Grant Date
Fair Value
  
Performance
Stock
Awards
  
Weighted-Average
Grant Date
Fair Value
  
Outstanding at January 1, 2011
  447  $7.83   688  $5.48 
Granted
  100   16.76   142   17.34 
Vested
  (112)  11.72   (18)  19.85 
Canceled/Forfeited
  (44)  7.34   (86)  3.76 
Outstanding at December 31, 2011
  391  $9.06   726  $7.65 

At December 31, 2011, there was $5.2 million of unrecognized compensation expense related to non-vested stock awards, which is expected to be recognized over a weighted-average period of 2.7 years.
 
Repurchases of Common Stock

On April 20, 2007, our Board authorized the repurchase of up to an additional $250.0 million of our common stock, bringing the total availability under our share repurchase program to $290.0 million. During 2011, 2010 and 2009, we did not repurchase any shares of common stock under this share repurchase program. As of December 31, 2011, the remaining authorization under our share repurchase program was $206.8 million. There is no expiration date governing the period over which we can repurchase shares.

Equity Financing

In May 2009 we entered into a securities purchase agreement with a private equity firm. During a special meeting of shareholders held August 27, 2009, our shareholders did not approve the May 2009 securities purchase agreement. During the third quarter of 2009, we expensed $3.3 million of direct, incremental costs incurred in connection with the terminated equity financing.

During the fourth quarter of 2009, we obtained $26.3 million in net proceeds from the issuance of 8.6 million shares of our common stock through a private equity placement and a public equity offering.

Dividends

We are not restricted from paying cash dividends under our credit agreement other than customary legal and contractual restrictions. However, we have not historically paid, and have no current plans to pay, cash dividends on our common stock.

Net Income per Common Share

The following computations reconcile net income per share – basic with net income per share – diluted (in thousands, except per share amounts):

   
2011
  
2010
  
2009
 
Net income
 $60,478  $31,568  $35,552 
              
Reconciliation of weighted-average shares outstanding:
            
Basic weighted-average shares outstanding
  55,081   54,005   45,682 
Effect of dilutive securities:
            
Options
  821   817   219 
Restricted shares
  530   442   269 
Warrants
  -   -   28 
Diluted weighted-average shares outstanding
  56,432   55,264   46,198 
              
Net income per share – basic
 $1.10  $0.58  $0.78 
Net income per share – diluted
  1.07   0.57   0.77 

Additional potentially dilutive stock options totaling 1,537,000, 2,486,000 and 4,405,000 for the years 2011, 2010 and 2009, respectively, have been excluded from diluted EPS because these securities' exercise prices were greater than the average market price of our common shares.