Stockholders' Equity

6 Months Ended

Jul. 02, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

4. Stockholders’ Equity

The following is a summary of stockholders’ equity transactions for the six months ended July 2, 2011:

	Convertible									Capital in
	Preferred Stock				Common Stock					Excess of			Accumulated
	Shares		Amount		Shares			Amount		Par Value			Deficit			Total
Balance at December 31, 2010		611,523	$	1,000		27,217,408		$	28,000	$	248,500,000		$	(237,633,000	)	$	10,896,000
Issuance of common stock, net						5,443,000			5,000		12,397,000						12,402,000
Repurchase of common stock to satisfy tax withholding obligations						(179,636	)		—		(303,000	)					(303,000	)
Issuance of awards and stock based compensation						551,294			—		818,000						818,000
Net loss														(6,922,000	)		(6,922,000	)
Balance at July 2, 2011		611,523	$	1,000		33,032,066		$	33,000	$	261,412,000		$	(244,555,000	)	$	16,891,000

Equity Offering

In a registered direct offering completed in February 2011 we raised proceeds of $12.4 million, net of offering costs of $933,000, from the sale of 5,443,000 shares of common stock at $2.45 per share based on a negotiated discount to market.

Stock Options

At July 2, 2011, we had three equity award option plans, the 1998 and 1999 Stock Option Plans and the 2003 Equity Incentive Plan (collectively, the “Stock Option Plans”) although we can only grant new options under the 2003 Equity Incentive Plan. Under the 2003 Equity Incentive Plan, stock awards may be made to our directors, key employees, consultants, and non-employee directors and may consist of stock options, stock appreciation rights, restricted stock awards, performance awards, and performance share awards. Stock options must be granted at prices no less than the market value on the date of grant. There were no stock option exercises during the three or six months ended July 2, 2011 or during the three or six months ended July 3, 2010.

The impact to the condensed consolidated statements of operations was $191,000 and $362,000 and $0.01 and $0.01 on basic and diluted earnings per share for the three and six months ended July 2, 2011, respectively, compared to $135,000 and $264,000 and $0.01 and $0.01 on basic and diluted earnings per share for the three and six months ended July 3, 2010, respectively. No stock compensation cost was capitalized during either period. The total compensation cost related to nonvested awards not yet recognized was $1.3 million and the weighted-average period over which the cost is expected to be recognized was 1.5 years at July 2, 2011.

The following is a summary of stock option transactions under our stock option plans at July 2, 2011:

						Weighted				Weighted
						Average		Number of		Average
	Number of					Exercise		Options		Exercise
	Shares			Price Per Share		Price		Exercisable		Price
Balance at December 31, 2010		1,083,366		$	1.43 - $79.38	$	6.43		830,552	$	7.57
Granted		618,932			1.58 - 2.86		1.81
Exercised		—
Canceled		(48,671	)		1.58 - 79.38		7.00
Balance at July 2, 2011		1,653,627		$	1.43 - $74.50	$	4.68		918,700	$	6.89

The outstanding options expire on various dates through the end of January 2021. The weighted-average contractual term of options outstanding is 7.2 years and the weighted-average contractual term of stock options currently exercisable is 5.4 years. The exercise prices for these options range from $1.43 to $74.50 per share, for an aggregate exercise price of approximately $7.7 million. At July 2, 2011, outstanding options covering 532,000 shares, with an intrinsic value of $386,000, had an exercise price less than the current market value and 10,700 of these shares, with an intrinsic value of $6,000 were exercisable.

Restricted Stock Awards

The grant date fair value of each share of our restricted stock awards is equal to the fair value of our common stock at the grant date. Shares of restricted stock under awards all have service conditions and vest over one to four years. Some of our grants also have performance conditions. The following is a summary of our restricted stock award transactions at July 2, 2011:

				Weighted
	Number of			Average Grant
	Shares			Date Fair Value
Balance nonvested at December 31, 2010		720,723		$	1.84
Granted		588,932			1.69
Vested		(466,611	)		1.34
Forfeited		(37,638	)		2.06
Balance nonvested at July 2, 2011		805,406		$	2.01

For the majority of restricted stock awards granted, the number of shares issued on the date the restricted stock awards vest is net of the minimum statutory withholding requirements that we pay in cash to the appropriate taxing authorities on behalf of our employees. During the three and six months ended July 2, 2011 we withheld 8,983 and 179,636 shares, respectively, to satisfy $25,000 and $303,000 of employees’ tax obligations. During the three months ended July 3, 2010 we withheld no shares and during the six months ended July 3, 2010 we withheld 181,982 shares to satisfy $573,000 of employees’ tax obligations.

The impact to the condensed consolidated statements of operations was $231,000 and $456,000 and $0.01 and $0.01 on basic and diluted earnings per share for the three and six months ended July 2, 2011, respectively and $147,000 and $252,000 and $0.01 and $0.01 on basic and diluted earnings per share for the three and six months ended July 3, 2010, respectively. No stock compensation cost was capitalized during the period. The total compensation cost related to nonvested awards not yet recognized was $942,000 and the weighted-average period over which the cost is expected to be recognized was 10 months.

Warrants

We had no warrants outstanding at July 2, 2011.