Share Capital

9 Months Ended

Sep. 30, 2011

Share Capital [Abstract]

SHARE CAPITAL

7. SHARE CAPITAL

(a) Share Buy-Back Programs

On December 8, 2010, we announced that our Board of Directors authorized the repurchase of up to 3,615,285 of our issued and outstanding common shares, being 10% of our public float as of December 9, 2010, over a 12-month period commencing December 16, 2010 under a normal course issuer bid. All purchases are to be effected in the open market through the facilities of the TSX or NASDAQ, and in accordance with regulatory requirements. The actual number of common shares which are purchased and the timing of such purchases will be determined by management, subject to compliance with applicable law. All common shares repurchased will be cancelled. Cumulative purchases under this program through September 30, 2011, were 2,191,817 shares at an average price of $7.02, for a total cost of $15.4 million.

On October 27, 2009, we announced that our Board of Directors authorized the repurchase of up to 2,731,534 of our common shares, being 5% of our issued and outstanding common shares, over a 12-month period commencing November 3, 2009 under a normal course issuer bid. In May 2010, the normal course issuer bid was increased to repurchase up to 4,700,060 shares, representing 10% of our public float. All purchases under the bid were effected in the open market through the facilities of the NASDAQ, and in accordance with all regulatory requirements. Total purchases under this program were 3,744,972 shares at an average price of $5.59 per share, for a total cost of $20.9 million.

(b) Stock Options

We use the Black-Scholes option pricing model to estimate the value of the options at each grant date, using the following weighted average assumptions (no dividends are assumed):

	Three months ended					Nine months ended
	September 30,					September 30,
	2011		2010			2011			2010
Annualized volatility		—		55.4	%		48.8	%		53.8	%
Risk-free interest rate		—		2.1	%		2.1	%		2.3	%
Expected life (years)		—		3.7			3.7			3.7

The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility. We project expected volatility and expected life of our stock options based upon historical and other economic data trended into future years. The risk-free interest rate assumption is based upon observed interest rates appropriate for the terms of our stock options.

There were no stock options granted during the three months ended September 30, 2011. The weighted average grant date fair value of stock options granted during the three months ended September 30, 2010 was CAD $2.79. The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2011 and 2010 was CAD $2.79 and CAD $2.61, respectively.

The impact on our results of operations of recording stock-based compensation for the three and nine months ended September 30, 2011 and 2010 was as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
(In thousands of U.S. dollars)	2011			2010			2011			2010
Cost of sales	$	58		$	5		$	69		$	158
Research and development		369			338			1,100			957
Selling, general and administrative		263			275			1,114			757
Stock-based compensation expense before income taxes		690			618			2,283			1,872
Related income tax benefits		(22	)		(13	)		(58	)		(32	)
Stock-based compensation, net of income taxes	$	668		$	605		$	2,225		$	1,840

At September 30, 2011, total unrecognized estimated compensation cost related to non-vested stock options was $4.8 million, which is expected to be recognized over 36 months with a weighted average period of 2.1 years.

The intrinsic value of stock options exercised and the related cash from exercise of stock options during the three and nine months ended September 30, 2011 and 2010 was as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands of U.S. dollars)	2011		2010		2011		2010
Intrinsic value of stock options exercised	$	113	$	342	$	841	$	558
Cash from exercise of stock options	$	188	$	490	$	1,968	$	763

Upon option exercise, we issue new shares of stock. The share-based compensation capitalized as part of inventory and the related tax benefits recorded were negligible for all periods presented above.