Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

13.          SHAREHOLDERS' EQUITY

Equity Financing

In April 2010, we sold 798,000 shares of our common stock to investors at $12.25 per share under a registration statement on Form S-3 declared effective by the Securities and Exchange Commission in December 2009. Net of underwriting fees and other offering expenses, we received $8.8 million in net proceeds from the offering.

Stock-Based Compensation

We compensate officers, directors, and employees with stock-based compensation under two stock plans approved by the Company's shareholders in 2006 and 2011 and administered under the supervision of our Board of Directors. In February 1995 and April 2005, we adopted the 1995 Long-Term Incentive and Stock Option Plan (the 1995 Plan) and the 2005 Stock Incentive Plan (the 2005 Plan), respectively, which provide for the granting of incentive (ISO) and non-qualified (NQO) stock options, stock appreciation rights, restricted stock awards and performance awards to our officers, directors, employees, consultants and independent contractors. The 1995 Plan terminated in February 2005, although the options granted under the 1995 Plan remain outstanding according to their terms. Options granted under the Plans generally vest over three to five years and have a contractual term of six to ten years. At December 31, 2011, a total of 68,500 shares were available for future grant under the 2005 Plan.

The following table summarizes stock option activity for 2011, 2010 and 2009:

	2011					2010					2009
	Shares			WAEP*		Shares			WAEP*		Shares			WAEP*
Options outstanding at beginning of year		463,433		$	9.11		431,133		$	8.10		373,733		$	10.59
Granted		156,000		$	10.21		85,000		$	12.33		68,000		$	8.62
Exercised		(32,100	)	$	3.29		(37,700	)	$	3.31		(600	)	$	1.30
Forfeited or expired		(52,000	)	$	11.16		(15,000	)	$	6.69		(10,000	)	$	9.22
Options outstanding at end of year		535,333		$	9.58		463,433		$	9.11		431,133		$	8.10
Options eligible for exercise at year-end		249,333		$	8.81		213,058		$	7.64		181,383		$	6.39

*Weighted Average Exercise Price

Options outstanding at December 31, 2011 had a weighted average remaining contractual term of 4.1 years and an aggregate intrinsic value of approximately $250,000. Options eligible for exercise at December 31, 2011 had a weighted average remaining contractual term of 2.7 years and an aggregate intrinsic value of $250,000.

The total intrinsic value of stock options exercised during the fiscal years ended December 31, 2011, 2010, 2009 was $211,000, $352,000 and $7,000, respectively. The total fair value of option shares vested during 2011, 2010 and 2009 was $977,000, $716,000 and $578,000, respectively.

The fair value of stock options granted under stock-based compensation programs has been estimated as of the date of each grant using the multiple option form of the Black-Scholes valuation model, based on the grant price and assumptions regarding the expected grant life, stock price volatility, dividends, and risk-free interest rates. Each vesting period of an option award is valued separately, with this value being recognized evenly over the vesting period. The weighted average grant date fair value of options to purchase 156,000, 85,000 and 68,000 shares granted for the years ended December 31, 2011, 2010 and 2009 was $522,000, $348,000 and $279,000, respectively. The weighted average assumptions used to determine the fair value of stock options granted during those fiscal years were as follows:

	2011			2010			2009
Expected life (in years)		3.1			2.8			2.5
Risk-free interest rate		1.47	%		1.39	%		2.63	%
Expected volatility		44	%		78	%		45	%
Dividend yield		0	%		0	%		0	%

The expected life represents the period that the stock option awards are expected to be outstanding and was determined based on historical and anticipated future exercise and expiration patterns. The risk-free interest rate used is based on the yield of constant maturity U.S. Treasury bonds on the grant date with a remaining term equal to the expected life of the grant. We estimate stock price volatility based on a historical weekly price observation. The dividend yield assumption is based on the annualized current dividend divided by the share price on the grant date. We have not historically paid any dividends and do not expect to do so in the foreseeable future.

Other information pertaining to options for the years ended 2011, 2010 and 2009 is as follows:

	2011		2010		2009
Total intrinsic value (at exercise) of stock options exercised	$	211,000	$	352,000	$	7,000
Cash received from the exercise of stock options	$	105,000	$	121,000	$	1,000
Stock-based compensation expense recognized within general and administrative expense on the consolidated statements of operations	$	412,000	$	342,000	$	341,000
Excess income tax benefits from exercise of stock options	$	37,000	$	72,000	$	—

At December 31, 2011, there was approximately $891,000 of total stock option compensation expense related to non-vested awards not yet recognized, which is expected to be recognized over a weighted-average period of 2.3 years.