Capital Stock

12 Months Ended

Dec. 31, 2011

Capital Stock [Abstract]

Capital Stock

(11)  Capital Stock

(a)  Basic and Diluted Shares

Basic net income per common share is calculated by dividing net (loss) income applicable to common stock by the weighted average number of common shares outstanding during the period. The calculation of diluted net income per common share is similar to that of basic net income per common share, except the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, principally those issuable upon the exercise of stock options and warrants and the vesting of stock units, were issued during the period.

The following table summarizes the calculation of basic and diluted net (loss) income per common share for each period (in thousands except per share data):

	2011			2010			2009
Numerator:
Net (loss) income	$	(291,766	)	$	(4,650	)	$	38,671
Denominator:
Weighted average shares for basic net (loss)
income per common share		26,083			19,280			14,614
Add dilutive effect of assumed exercise of
stock options and warrants and vesting
of restricted stock units using the
treasury stock method		-			-			100
Weighted average shares for diluted net (loss)
income per common share		26,083			19,280			14,714
Basic net (loss) income per common share	$	(11.19	)	$	(0.24	)	$	2.65
Diluted net (loss) income per common share	$	(11.19	)	$	(0.24	)	$	2.63
Anti-dilutive shares excluded from net (loss)
income per common share calculation		-			31			-

(b)  Equity Incentive Plans

Pursuant to our 2004 Equity Incentive Plan (the "2004 Plan"), as of December 31, 2011 our employees and directors held options to purchase 746,997 shares of common stock and 44,986 unvested restricted stock units. No additional awards can be made under the 2004 Plan.

As of December 31, 2011, our directors did not hold options to purchase shares under our 2002 Non-employee Director Equity Incentive Plan (the "Director Plan"). No additional awards can be made under the Director Plan.

Our 2009 Performance Incentive Plan (the "2009 Plan") allows for the issuance of shares of common stock equal to the sum of:  (i) 4.0 million shares, plus (ii) the number of any shares subject to stock options granted under the 2004 Plan or the Director Plan  which expire, or for any reason are canceled or terminated, without being exercised, plus (3) the number of any shares subject to restricted stock units under the 2004 Plan which are forfeited, terminated or cancelled without having become vested.  As of December 31, 2011, our employees and directors held options to purchase 564,864 shares of common stock and 824,677 unvested restricted stock units.

Option awards are granted with an exercise price equal to the market price of our stock at the date of grant; those option awards generally vest based on four years of continuous service and have seven-year contractual terms.  Share awards generally vest over four years and no dividends are paid on unexercised options or unvested share awards.  Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the applicable plan).

During the year ended December 31, 2011, we issued 172,074 shares of common stock upon the vesting of restricted stock shares and restricted stock units and the exercise of stock options.

In connection with the Separation on November 15, 2010, vested and unvested option awards and unvested restricted stock unit awards of Old Sun were converted into awards with respect to shares of our common stock.  The number of shares subject to and the exercise price of each converted option, and the number of shares subject to each unvested or vested and deferred restricted stock unit, were adjusted to preserve the same intrinsic value of the awards that existed immediately prior to the Separation and REIT Conversion Merger.  Awards held by our former Chief Executive Officer were assumed by Sabra upon Separation and converted to awards with respect to Sabra common stock in a manner similar to the conversion of Old Sun shares to our shares.

A summary of option activity under the 2004 Plan, the 2009 Plan and the Director Plan during the years ended December 31, 2010 and 2011 is presented below:

					Weighted-
					Average		Aggregate
				Weighted-	Remaining		Intrinsic
Options	Shares			Average	Contractual		Value
(Prior to the Separation)	(in thousands)			Exercise Price	Term (in years)		(in thousands)
Outstanding at January 1, 2010	2,310		$	10.05
Granted	496			9.81
Exercised	(185	)		7.10
Assumed by Sabra	(788	)		10.08
Forfeited	(53	)		11.99
Outstanding at November 15, 2010	1,780		$	10.22	4	$	-

					Weighted-
					Average		Aggregate
				Weighted-	Remaining		Intrinsic
Options	Shares			Average	Contractual		Value
(Subsequent to the Separation)	(in thousands)			Exercise Price	Term (in years)		(in thousands)
Outstanding at November 16, 2010	1,478		$	12.30
Granted	88			10.55
Forfeited	(7	)		10.89
Outstanding at December 31, 2010	1,559		$	10.52	4	$	-
Granted	-
Exercised	(53	)	$	8.87
Forfeited	(195	)		13.06
Outstanding at December 31, 2011	1,311		$	10.21	3		-
Exercisable at December 31, 2011	899		$	12.40	3	$	-

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table.  Expected volatility is based on the historical volatility of our stock.  The expected term of options granted is derived using a temporary "shortcut approach" of our "plain vanilla" employee stock options as we do not have sufficient data to develop a more precise estimate. Under this approach, the expected term would be presumed to be the mid-point between the vesting date and the end of the contractual term.  The risk-free rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Options were not granted in the year 2011. The weighted-average grant-date fair value of stock options granted during the year ended December 31, 2010 was $9.92.

The significant assumptions in the valuation model for the year ended December 31, 2010 are as follows:

Expected volatility	49.6 %- 51.9%
Weighted-average volatility	60.4%
Expected term (in years)	4.75
Risk-free rate	1.3% - 2.5%

In connection with the restricted stock units granted to employees we recognized the full fair value of the shares of nonvested restricted stock awards.  A summary of restricted stock activity with our share-based compensation plans during the years ended December 31, 2011 and 2010 is as follows:

				Weighted-
				Average
Nonvested Shares	Shares			Grant-Date
(Prior to the Separation)	(in thousands)			Fair Value
Nonvested at January 1, 2010	999		$	10.93
Granted	623			9.75
Vested	(457	)		10.65
Assumed by Sabra	(130	)		10.52
Forfeited	(35	)		11.61
Nonvested at November 15, 2010	1,000		$	10.33

				Weighted-
				Average
Nonvested Shares	Shares			Grant-Date
(Subsequent to the Separation)	(in thousands)			Fair Value
Nonvested at November 16, 2010	831		$	10.69
Granted	19			10.59
Vested	(6	)		8.82
Forfeited	(7	)		10.99
Nonvested at December 31, 2010	837			10.72
Granted	486			13.63
Vested	(348	)		13.62
Forfeited	(105	)		14.10
Nonvested at December 31, 2011	870		$	10.77

The total fair value of restricted shares vested was $4.7 million for the year ended December 31, 2011 and $4.9 million for the year ended December 31, 2010.

We recognized stock compensation expense of $8.4 million, $6.3 million and $5.8 million for the years ended December 31, 2011, 2010 and 2009 respectively.