Employee Stock and Savings Plans - Note 9

12 Months Ended

Dec. 31, 2011

Employee Stock and Savings Plans [Abstract]

Employee Stock and Savings Plans Disclosure

9. EMPLOYEE STOCK AND SAVING PLANS

In May 2005, we amended and restated our 1989 Stock Option Plan (the 1989 Plan) as the 2005 Equity Incentive Plan (the 2005 Plan), under which a total of approximately 12 million shares of common stock were reserved for issuance. In June 2007, our shareholders approved an amendment to the 2005 Plan by reserving an additional 2.5 million shares of common stock for issuance under the 2005 Plan, bringing the total shares reserved to approximately 14.5 million shares of common stock. As of December 31, 2011, we had approximately 2.1 million shares available for future grants under the 2005 Plan.

The following table summarizes the combined activity under all of our equity incentive plans for the three years ended December 31, 2011:

			Weighted-	Restricted	Weighted-
	Awards	Stock	Average	Stock	Average
	Available	Options	Exercise	Units	Grant Date
	For Grant	Outstanding	Price	Outstanding	Fair Value
	(thousands)	(thousands)		(thousands)
Balances at December 31, 2008	2,452	5,772	$ 8.85	768	$ 5.12
Stock options:
Granted	(1,583)	1,583	$ 0.91	-	-
Exercised	-	(5)	$ 1.69	-	-
Cancelled or forfeited	2,317	(2,317)	$ 8.28	-	-
Restricted stock units:
Granted	-	-	-	-	-
Released	3	-	-	(120)	$ 6.87
Cancelled or forfeited	462	-	-	(264)	$ 4.01
Balances at December 31, 2009	3,651	5,033	$ 6.62	384	$ 4.21
Stock options:
Granted	(2,057)	2,057	$ 3.19	-	-
Exercised	-	(170)	$ 0.81	-	-
Cancelled or forfeited	642	(642)	$ 8.09	-	-
Restricted stock units:
Granted	(5)	-	-	3	$ 3.96
Released	23	-	-	(39)	$ 7.92
Cancelled or forfeited	9	-	-	(5)	$ 6.91
Balances at December 31, 2010	2,263	6,278	$ 5.51	343	$ 3.67
Stock options:
Granted	(1,643)	1,643	$ 2.16	-	-
Exercised	-	(128)	$ 0.85	-	-
Cancelled or forfeited	1,304	(1,304)	$ 7.40	-	-
Restricted stock units:
Granted	-	-	-	-	-
Released	13	-	-	(23)	$ 6.33
Cancelled or forfeited	130	-	-	(74)	$ 3.39
Balances at December 31, 2011	2,067	6,489	$ 4.37	246	$ 3.50

The following table provides information pertaining to the our stock options and restricted stock units with time-based vesting for the years ended December 31, 2011, 2010 and 2009:

	Year Ended December 31,
	2011	2010	2009
Stock options:	(thousands, except weighted-average fair values)
Weighted-average fair value of options granted	$ 1.36	$ 1.96	$ 0.52
Intrinsic value of options exercised	$  122	$  441	$      4
Cash received from options exercised	$  109	$  138	$      9
Restricted stock units with time-based vesting:
Weighted-average fair value of RSUs granted	-	$ 3.96	-

Stock Options

Stock option grants under the 2005 Plan generally vest 25 percent on the first anniversary of the date of grant, and 1/36 per month thereafter. We granted 1.6 million, 2.1 million and 1.6 million stock options during 2011, 2010 and 2009, respectively, with an estimated total grant-date fair value of $2.2 million, $4.0 million and $0.8 million, respectively. We settle employee stock option exercises with newly issued common shares.

The following table summarizes information about stock options outstanding as of December 31, 2011:

	Outstanding Options			Exercisable Options
		Weighted Average	Weighted		Weighted
	Number of	Remaining	Average	Number of	Average
Range of Exercise Prices	Shares	Contractual Life	Exercise Price	Shares	Exercise Price
	(thousands)	(years)		(thousands)
$0.76 - $2.62	2,666	5.0	$ 1.73	919	$ 1.12
$2.63 - $5.86	2,178	4.2	$ 3.65	1,449	$ 3.80
$5.87 - $13.93	1,645	2.0	$ 9.61	1,643	$ 9.61
Total	6,489	4.0	$ 4.37	4,011	$ 5.57

The table below contains additional information with respect to our stock options outstanding at December 31, 2011:

		Weighted	Weighted Average	Aggregate
		Average	Remaining	Intrinsic
	Shares	Exercise Price	Contractual Life	Value
	(thousands)		(years)	(thousands)
Vested and exercisable options	4,011	$ 5.57	3.0	$ 404
Unvested options expected to vest	2,478	$ 2.43	5.5	$ 117
Total outstanding options	6,489	$ 4.37	4.0	$ 521

The aggregate intrinsic value shown in the table above represents the total pre-tax intrinsic value, based on the closing price of our common stock of $1.38 on December 31, 2011, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date. There were approximately 0.7 million shares of common stock subject to in-the-money options that were exercisable as of December 31, 2011.

Restricted Stock Units (RSUs)

Our 2005 Plan provides for grants of timed-based and performance-based RSUs.

Time-Based Restricted Stock Units

Time-based RSUs generally vest at ¼ per year. On occasion and for varying purposes, we grant time-based RSUs with different vesting criteria and duration. In 2011 and 2009, we did not grant any time-based RSUs. During 2011 and 2009, we did not grant any time-based RSUs. During 2010, we granted 3,000 time-based RSUs with a fair value of $12,000.

RSUs under the 2005 Plan are counted against the total number of shares of common stock issuable at 1.75 shares for every RSU.

Performance-Based Restricted Stock Units

The vesting of performance-based RSUs is contingent on our achievement of certain predetermined financial goals and in some cases, the achievement of certain market performance targets. The amount of stock-based compensation expense recognized in any one period can vary based on the achievement or anticipated achievement of specific performance goals. If a performance goal is not met or is not expected to be met, no compensation cost would be recognized on the underlying RSUs, and any previously recognized compensation expense on those RSUs would be reversed.

In 2008, our Board of Directors approved the grant of 683,000 performance-based RSUs to certain of our executives, officers and senior-level management, with vesting in four equal tranches upon the achievement of four sequentially increasing revenue performance targets and contingent on the achievement of certain operating profit margin and stock price thresholds. The fair value of these RSUs was determined using the Monte Carlo valuation methodology. At December 31, 2008, we determined that due to the deteriorating market conditions during the fourth quarter of 2008, it was not probable that any of the four revenue targets and the operating profit targets would be met by the specified dates. As a result, the stock-based compensation related to these RSUs was deemed unrecognizable. We continue to evaluate the likelihood of achieving the performance targets. If and when we determine that the related targets are probable of being achieved, we will begin recognizing expense in the period that such determination is made. We have not recorded any compensation expense related to these performance-based RSUs in 2011, 2010 and 2009. As of December 31, 2011, 0.5 million of the performance-based RSUs had been canceled based on employee terminations, leaving 0.2 million units outstanding.

Employee Stock Purchase Plan

We have a noncompensatory employee stock purchase plan (ESPP) which allows each eligible employee to withhold up to 15 percent of gross compensation over semiannual six-month ESPP periods to purchase shares of our common stock, limited to 2,000 shares per ESPP period. Under the ESPP, employees purchase stock at a price equal to 90 percent of the fair market value (generally the closing price of our common stock) on the trading day prior to the exercise when stock is purchased.

We reserved 6.2 million shares of common stock for issuance under the ESPP, of which 2.7 million shares were available for issuance as of December 31, 2011. During 2011, 2010 and 2009, we issued shares under the ESPP totaling 0.1 million, 0.1 million and 0.2 million, respectively, with average purchase prices of $1.29, $3.19 and $1.50, respectively.

Employee Savings Plan (ESP)

We have a retirement/savings plan (the ESP), which qualifies under section 401(k) of the Internal Revenue Code. All full-time employees of eligible age (over twenty-one years old) can participate in the ESP and can contribute up to an amount allowed by the applicable Internal Revenue Service guidelines. At our discretion, we can make matching contributions to the ESP equal to a percentage of the participants' contributions. In March 2009, we suspended matching contributions under the ESP as a cost-cutting measure and it was reinstated in July 2011.

Deferred Compensation Plan

In 2006, we adopted a Deferred Compensation Plan (the DC Plan), under which we allow eligible employees and non-employee members of our Board of Directors to defer a specified percentage of their base salary or retainer fees, as appropriate. We are obligated to deliver on a future date the contributions to the DC Plan plus income earned on such contributions. These liabilities represent an unsecured general obligation of ours and rank in parity with other unsecured and unsubordinated indebtedness of ours and are non-transferable and non-tradable.

As of December 31, 2011 and 2010, we had approximately $0.2 million and $0.2 million, respectively, in net assets under the DC Plan, which were invested primarily in equity investment funds. These assets are reflected as a component of other assets and the corresponding liabilities are reflected as a component of other liabilities in the accompanying consolidated balance sheets.