SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

7.  SHARE-BASED COMPENSATION

We issued stock options in the amounts shown in the following table.  The fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Number of options granted	22,000			113,000			34,000			113,000
Grant date fair value of options granted per share	$	17.76		$	20.24		$	17.53		$	20.24
Weighted average exercise price of options granted	$	31.16		$	35.51		$	30.61		$	35.51
Volatility (1)	59		%	57		%	59		%	57		%
Risk free interest rate (2)	2.4		%	3.3		%	2.5		%	3.3		%
Expected term (in years) (3)	6.3			6.3			6.3			6.3
Expected annual dividends	None			None			None			None

(1)	Expected volatility is based on the historical volatility of our common stock over a preceding period commensurate with the expected term of the award.
(2)	The risk free rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.
(3)	The expected term was calculated as the average between the vesting term and the contractual term, weighted by tranche. We used this simplified method as we do not have sufficient historical data in order to calculate a more appropriate estimate.

During the second quarter of 2011, we granted 123,000 restricted stock units (“RSUs”) to certain of our executive officers.  The RSUs were valued at $4.4 million and vest over a weighted average term of 1.8 years.   Vesting of the RSUs is subject to certain performance and market conditions.  We currently expect the performance and market conditions will be satisfied.

We recognized $1.9 million  and $1.2 million in share-based compensation expense related to stock options, restricted stock awards and RSUs during the three months ended June 30, 2011 and 2010, and $3.2 million and $2.2 million during the six months then ended, respectively.  Unrecognized compensation costs related to unvested options, restricted stock awards and RSUs were $11.5 million at June 30, 2011.  These costs are expected to be recognized over the weighted average remaining vesting period of 2.1 years.