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Stockholders' Equity
 12 Months Ended
Sep. 30, 2015
Stockholders' Equity [Abstract]  
Stockholders' Equity

11. STOCKHOLDERS’ EQUITY

Common Stock Rights Offering

On August 7, 2014, we completed a $20,000 rights offering (the “Rights Offering”). In the Rights Offering, the Company distributed, at no charge, to the holders of shares of its common stock on July 7, 2014, one non-transferable subscription right for each share of common stock owned. Each right entitled the holder thereof to purchase from the Company 0.214578135 shares of common stock at a subscription price of $5.20 per share, which represented a discount to the market price of the common stock at the closing of the offering. In addition, holders who purchased all of the shares of common stock available to them were entitled to subscribe, at the same subscription price of $5.20 per share, for a portion of any shares of common stock that other holders did not purchase, subject to certain limitations (the “Over-Subscription Privilege”). The Rights Offering was fully subscribed, after giving effect to the exercise of Over-Subscription Privileges, and we received net proceeds of approximately $19,649, after deducting estimated offering expenses, for the issuance of 3,846,150 shares of common stock.

Immediately after giving effect to the Rights Offering, we had 21,768,642 shares of common stock issued and outstanding. Tontine beneficially owned approximately 60% of the shares of common stock outstanding immediately prior to launch of the Rights Offering, and immediately after giving effect to the Rights Offering, Tontine beneficially owned approximately 61% of the Company’s outstanding shares.

Equity Incentive Plan

The 2006 Equity Incentive Plan became effective on May 12, 2006 (as amended, the “2006 Equity Incentive Plan”). The 2006 Equity Incentive Plan provides for grants of stock options as well as grants of stock, including restricted stock. This plan provided for approximately 2.0 million shares of common stock authorized for issuance under the 2006 Equity Incentive Plan, of which approximately 472,054 shares are available for issuance at September 30, 2015. The 2006 Equity Incentive Plan is due to expire in May 2016 unless prior to that time it is reauthorized pursuant to its terms and in accordance with applicable law, including shareholder and Board authorization as applicable. On December 9, 2015, the Company’s Board of Directors approved an Amended and Restated 2006 Equity Incentive Plan (the “Amended Plan”) which would authorize an additional 1,000,000 shares for issuance under the plan and which would be become effective upon approval by shareholders at the Company’s 2016 Annual Shareholders’ Meeting to be held on February 9, 2016. The terms of the Amended Plan are described further in the Company’s definitive Proxy Statement for its 2016 Annual Meeting of Stockholders to be filed with the SEC no later than December 31, 2015.

Stock Repurchase Program

On February 4, 2015, our Board of Directors authorized a stock repurchase program for purchasing up to 1.0 million shares of the Company’s common stock from time to time. Share purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise, and on December 9, 2015, our Board of Directors authorized the repurchase of up to an additional 500,000 shares. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which allows repurchases under pre-set terms at times when the Company might otherwise be prevented from purchasing under insider trading laws or because of self-imposed blackout periods. The program does not require the Company to purchase any specific number of shares and may be modified, suspended or reinstated at any time at the Company’s discretion and without notice. During the year ended September 30, 2015, pursuant the program, the Company repurchased 482,156 shares of common stock at an average of $7.22 per share for a total aggregate purchase price of $3.5 million.

 

 

Treasury Stock

During the year ended September 30, 2015, we repurchased 17,677 common shares from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock issued under the 2006 Equity Incentive Plan. We issued 199,565 shares out of treasury stock under our share-based compensation programs for restricted and unrestricted shares granted. We issued 8,309 shares of treasury stock as payment for outstanding phantom stock units that vested upon the departure of the Company’s Chairman and CEO in January 2015.

During the year ended September 30, 2014, we repurchased 36,272 common shares from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock issued under the 2006 Equity Incentive Plan. We issued 13,500 shares out of treasury stock under our share-based compensation programs for restricted shares granted.

Restricted Stock

Restricted Stock Awards:
Fiscal YearShares GrantedWeighted Average Fair Value at Date of GrantShares VestedShares OutstandingExpense recognized through September 30, 2015
201312,5005.008,3344,16661
201413,5005.424,5009,00040
2015194,0008.51-194,000238

During the years ended September 30, 2015, 2014 and 2013, we recognized $290, $201, and $374, respectively, in compensation expense related to these restricted stock awards. At September 30, 2015, the unamortized compensation cost related to outstanding unvested restricted stock was $1,284. We expect to recognize $522 and $505 of this unamortized compensation expense during the years ended September 30, 2016 and 2017, respectively and $258 thereafter. A summary of restricted stock awards for the years ended September 30, 2015, 2014 and 2013 is provided in the table below:

Years Ended September 30,
2015 2014 2013
Unvested at beginning of year57,666159,246257,826
Granted194,00013,50012,500
Vested(44,500)(115,080)(111,080)
Forfeited---
Unvested at end of year207,16657,666159,246

The fair value of shares vesting during the years ended September 30, 2015, 2014 and 2013 was $353, $571 and $528, respectively. Fair value was calculated as the number of shares vested times the market price of shares on the date of vesting. The weighted average grant date fair value of unvested restricted stock at September 30, 2015 was $8.31.

All the restricted shares granted under the 2006 Equity Incentive Plan (vested or unvested) participate in dividends issued to common shareholders, if any.

Phantom Stock Units

Phantom stock units (“PSUs”) are primarily granted to the members of the Board of Directors as part of their overall compensation. These PSUs are paid via unrestricted stock grants to each director upon their departure from the Board of Directors. We record compensation expense for the full value of the grant on the date of grant. For the years ended September 30, 2015, 2014 and 2013, we recognized $224, $243, and $295, respectively, in compensation expense related to these grants.

From time to time, PSUs are granted to employees. For the years ended September 30, 2015, 2014 and 2013, these PSUs were paid via unrestricted stock grants to each employee upon the satisfaction of the grant terms. We record compensation expense for the PSUs granted to employees over the grant vesting period. For the years ended September 30, 2015, 2014 and 2013, we recognized zero, zero, and $651, respectively, in compensation expense related to these grants.

Stock Options

We utilized a binomial option pricing model to measure the fair value of stock options granted. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, the risk-free rate of return, and actual and projected employee stock option exercise behaviors. The expected life of stock options is not considered under the binomial option pricing model that we utilize. We did not issue stock options during the year ended September 30, 2014. The assumptions used in the fair value method calculation for the years ended September 30, 2015 and 2013 are disclosed in the following table:

Years Ended September 30,
20152013
Weighted average value per option granted during the period$3.87$3.43
Dividends (1)$ - $ -
Stock price volatility (2)55.6 - 57.8%66.6%
Risk-free rate of return1.34 - 1.48%0.9%
Option term10.0 years10.0 years
Expected life6.0 years6.0 years
Forfeiture rate (3)10.0%10.0%
(1) We do not currently pay dividends on our common stock.
(2) Based upon the Company's historical volatility.
(3) Based upon the Company's historical data.

Stock-based compensation expense recognized during the period is based on the value of the portion of the share-based payment awards that is ultimately expected to vest during the period. Stock-based compensation expense recognized in the Consolidated Statements of Comprehensive Income is based on awards ultimately expected to vest. We estimate our forfeitures at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The following table summarizes activity under our stock option plans.

Weighted Average
SharesExercise Price
Outstanding, September 30, 201220,000$3.24
Options granted150,0005.76
Exercised--
Forfeited and Cancelled--
Outstanding, September 30, 2013170,000$5.46
Options granted--
Exercised--
Forfeited and Cancelled--
Outstanding, September 30, 2014170,000$5.46
Options granted37,0007.25
Exercised--
Forfeited and Cancelled74,0005.76
Outstanding, September 30, 2015133,000$5.79

The following table summarizes options outstanding and exercisable at September 30, 2015:

Exercise PricesOutstanding as of September 30, 2015Remaining Contractual Life in YearsWeighted-Average Exercise PriceExercisable as of September 30, 2015Weighted-Average Exercise Price
$3.24 20,0005.80$3.2420,000$3.24
$5.76 76,0007.58$5.76-$-
$7.27 22,0009.29$7.27-$-
$7.21 15,0009.34$7.21-$ -
133,000$5.7920,000$3.24

Our 2011 options vested over a three year period at a rate of one-third per year upon the annual anniversary date of the grant. Our 2013 and 2015 options cliff at the end of a two year period ending at the anniversary date of the grant. All options expire ten years from the grant date if they are not exercised. Upon exercise of stock options, it is our policy to first issue shares from treasury stock, then to issue new shares. Unexercised stock options expire July 2021, May 2023, January 2025 and February 2025.

During the years ended September 30, 2015, 2014 and 2013, we recognized $(45), $267 and $110, respectively, in compensation expense related to our stock option awards. The net benefit in 2015 relates to a revision in forfeiture assumptions upon the departure of the Company’s Chairman and CEO in January 2015, at which time he forfeited unvested stock options. At September 30, 2015, the unamortized compensation cost related to outstanding unvested stock options was $83. We expect to recognize $65 of this unamortized compensation expense during the year ended September 30, 2016 and the remaining $18 in the year ended 2017.

 

The intrinsic value of stock options outstanding and exercisable was $88 and $57 at September 30, 2015 and 2014, respectively. The intrinsic value is calculated as the difference between the fair value as of the end of the period and the exercise price of the stock options.