8. Stock-Based Compensation

Under our 2013 Equity Participation Plan we have outstanding options to purchase shares of our Common Stock and restricted stock awards held by eligible employees, non-employee directors and consultants as granted by the Compensation Committee of the Board of Directors.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the three and nine months ended September 30, 2013 and 2012.

	Three months ended September 30, 2013			Three months ended September 30, 2012			Nine months ended September 30, 2013			Nine months ended September 30, 2012
Expected dividend yield1		-	%		4.44	%		1.37	%		4.40	%
Expected stock price volatility		-	%		60.41	%		54.66	%		60.75	%
Risk-free interest rate		-	%		1.58	%		2.08	%		1.74	%
Expected life of options		-	Years		4.47	Years		4.56	Years		4.47	Years
Estimated fair value per option granted		-		$	1.93		$	1.63		$	1.90

1The Company suspended quarterly dividend payments during the three months ended June 30, 2013.

The dividend yield is based on expected quarterly cash dividends paid to our shareholders as of the date of grant. Expected stock price volatility is based on historical volatility of our stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Additionally, an annualized forfeiture rate of 14.0 percent is used as an estimate of future forfeitures based on our historical forfeiture experience. The stock-based compensation expense is adjusted in later periods if the actual forfeiture rate is different from the estimate.

Total stock-based compensation expense recognized in the consolidated statement of operations for the quarter ended September 30, 2013 was approximately $0.2 million before income taxes. Of the total stock-based compensation expense during the quarter, stock option expense was approximately $0.1 million and restricted stock award and restricted stock unit expense was approximately $0.1 million. Total stock-based compensation expense recognized in the consolidated statement of operations for the nine months ended September 30, 2013 was $2.2 million before income taxes. Of the total stock-based compensation expense recognized in 2013, stock option expense was $1.0 million and restricted stock award expense was $1.2 million.

The following table presents information about outstanding common stock options and restricted grants as of September 30, 2013:

			Options and Awards Outstanding				Options Exercisable
Range of Exercise Prices			Shares	Weighted-Average Remaining Contractual Life (years)	Weighted-Average Exercise Price		Shares	Weighted- Average Exercise Price
	Restricted Stock Awards
	$	0.00	252,483	2.18		N/A	N/A		N/A
	Stock Options
	$	3.47 - 6.93	544,590	8.91	$	4.53	62,164	$	4.87
		6.94 - 10.39	51,962	5.97		8.64	39,887		8.58
		10.40 - 13.86	127,650	6.15		11.40	85,284		11.47
		13.87 - 17.32	22,464	2.39		16.78	22,464		16.78
		17.33 - 20.79	5,496	4.61		18.41	5,496		18.41
		20.80 - 24.25	1,000	1.87		21.09	1,000		21.09
		24.26 - 27.72	6,500	2.35		26.96	6,500		26.95
		27.73 - 31.18	5,958	3.12		29.74	5,958		29.74
		31.19 - 34.65	3,711	3.59		34.65	3,711		34.65
Total Stock Options			769,331	7.90	$	6.96	232,464	$	11.20
Combined			1,021,814	6.49	$	5.24	232,464	$	11.20

At September 30, 2013, the aggregate value of restricted stock awards and restricted stock units was $0.9 million and the aggregate intrinsic value of outstanding and exercisable stock options was zero based on our $3.45 closing stock price at September 30, 2013. The intrinsic value is the amount that would have been received by the optionees had all restricted stock been vested and all stock options been exercised on that date. As of September 30, 2013, total unrecognized stock-based compensation expense related to non-vested stock options and non-vested restricted stock awards was approximately $1.4 million, which is expected to be recognized over approximately 3.68 years.

The following table presents information about stock option and restricted stock activity during the nine months ended September 30, 2013:

	Restricted Stock Awards and Units	Weighted-Average Grant Date Fair Value		Stock Options	Weighted-Average Exercise Price
Balance at December 31, 2012	446,946	$	6.25	1,877,500	$	11.02
Granted	54,907		3.84	129,119		3.89
Forfeited	(10,436)		5.61	(1,236,167)		12.81
Vested	(249,107)		7.97	N/A		N/A
Exercised	N/A		N/A	(1,121)		4.52
Balance at September 30, 2013	242,310	$	5.79	769,331	$	6.95