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Stockholders' Equity | 12 Months Ended
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May 31, 2014
Equity [Abstract] |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY 1. Capitalization On February 27, 2004, our Board of Directors and the Former Parent, as sole stockholder, approved our Amended and Restated Certificate of Incorporation (the “Amended Certificate”). Under the Amended Certificate, the authorized capital stock is 50,000,000 shares, consisting of 45,000,000 shares of common stock, par value $.01 per share and 5,000,000 shares of preferred stock, par value $.01 per share. Pursuant to the Amended Certificate, (i) each share of voting common stock, $1 par value and (ii) each share of non-voting common stock, $1 par value was reclassified and exchanged into 9,200 shares of issued, fully paid, non-assessable common stock for a total of 9,200,000 shares to be then outstanding. The holders of common stock are entitled to one vote for each share held. Subject to preferences applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably dividends, if any, as may be declared by the Board of Directors out of funds legally available for dividend payments. If we liquidate, dissolve, or wind up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no pre-emptive rights or rights to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future. Our board of directors has the authority to (i) issue the undesignated preferred stock in one or more series, (ii) determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly un-issued series of undesignated preferred stock and (iii) fix the number of shares constituting any series and the designation of the series, without any further vote or action by our stockholders. Shares issued in Navilyst Acquisition On May 22, 2012, a portion of the acquisition and related transaction costs of the Navilyst acquisition were financed through the issuance of approximately 9.5 million shares to investment funds affiliated with Avista Capital Partners, former owners of Navilyst, and as of May 31, 2014 they hold approximately 27% of our outstanding shares. Share Repurchase Program On October 5, 2011, our Board of Directors authorized the repurchase of up to $20 million of our common stock, prior to May 31, 2012. During the fiscal year ended May 31, 2012, we purchased 142,305 shares at a cost of approximately $2.1 million. There were no shares repurchased under this program during fiscal 2014 or 2013. 2. Stock Options We have two stock-based compensation plans. These plans provide for the issuance of up to approximately 5.8 million shares of common stock. 1997 Stock Option Plan In 1997, we adopted a Stock Option Plan (the “1997 Plan”). The 1997 Plan provided for the grant to key employees of both nonqualified stock options and incentive stock options and to members of the Board of Directors and consultants of nonqualified stock options. A total of 1,497,674 shares of our common stock were available to be issued under the 1997 Plan pursuant to the exercise of options. All stock options were to have an exercise price of not less than the fair market value of the shares on the date of grant. Options are exercisable over a period of time to be designated by the administrators of the 1997 Plan (but not more than 10 years from the date of grant) and are subject to such other terms and conditions as the administrators may determine. The vesting schedule is subject to the discretion of our Board of Directors. Options are exercisable immediately upon vesting. In addition, all options, whether vested or not, become exercisable in full immediately upon a change of control, as defined under the 1997 Plan. The 1997 Plan terminated in March 2007 and as such, no further options will be granted under this plan. 2004 Stock and Incentive Award Plan The 2004 Stock and Incentive Award Plan (the “2004 Plan”) provides for the grant of incentive options to our employees and for the grant of non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other incentive awards to our employees, directors and other service providers. A total of 5,750,000 shares of our common stock have been reserved for issuance under the 2004 Plan, of which up to 800,000 shares may be issued upon the exercise of incentive stock options. The compensation committee of the Board of Directors administers the 2004 Plan. The committee determines vesting terms and the exercise price of options granted under the 2004 Plan, but for all incentive stock options the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years. On October 5, 2011, we amended the 2004 Stock and Incentive Award Plan to increase the maximum number of shares of our common stock with respect to which stock options may be granted during any calendar year to one employee from 200,000 shares to 500,000 shares. Stock Option Activity: The following schedule summarizes our stock option activity as of and for the years ended May 31, 2014, May 31, 2013 and May 31, 2012:
| 2014 |  | 2013 |  | 2012
| Shares |  | Weighted- average exercise price |  | Weighted average remaining contractual life |  | Aggregate intrinsic value (in thousands) |  | Shares |  | Weighted- average exercise price |  | Shares |  | Weighted- average exercise price
Outstanding at beginning of year | 2,768,928 |  |  | $ | 14.84 |  |  |  |  |  |  | 2,985,192 |  |  | $ | 15.69 |  |  | 2,680,390 |  |  | $ | 15.96 |
Granted | 391,175 |  |  | $ | 13.01 |  |  |  |  |  |  | 406,700 |  |  | $ | 11.40 |  |  | 1,434,000 |  |  | $ | 13.70 |
Exercised | (105,676 | ) |  | $ | 15.38 |  |  |  |  |  |  | (16,835 | ) |  | $ | 11.15 |  |  | (193,684 | ) |  | $ | 14.22 |
Forfeited | (278,646 | ) |  | $ | 17.45 |  |  |  |  |  |  | (589,787 | ) |  | $ | 17.45 |  |  | (917,126 | ) |  | $ | 14.22 |
Expired | (102,030 | ) |  | $ | 15.69 |  |  |  |  |  |  | (16,342 | ) |  | $ | 15.69 |  |  | (18,388 | ) |  | $ | 24.44 |
Outstanding at end of year | 2,673,751 |  |  | $ | 14.82 |  |  | 4.56 |  | $ | 17,540 |  |  | 2,768,928 |  |  | $ | 14.84 |  |  | 2,985,192 |  |  | $ | 15.69 |
Options exercisable at year-end | 1,675,790 |  |  | $ | 16.12 |  |  | 4.54 |  | $ | 12,906 |  |  | 1,601,028 |  |  | $ | 16.12 |  |  | 1,678,559 |  |  | $ | 17.01 |
Options expected to vest in future periods | 845,256 |  |  | $ | 13.31 |  |  | 5.06 |  | $ | 3,986 |  |  | 1,069,119 |  |  | $ | 13.31 |  |  | 1,075,473 |  |  | $ | 14.19 |
Weighted average fair value of options granted during the fiscal years ended May 31, is as follows:
| 2014 |  | 2013 |  | 2012
Weighted-average fair value of options granted during the year | $ | 4.10 |  |  | $ | 4.19 |  |  | $ | 5.62 |
On May 31, 2014, there remained approximately 1.6 million shares available for granting of options under the 2004 Plan. Options are exercisable into common stock. All of our options were granted at exercise prices equal to the quoted market price of our common stock at the date of the grants. Options under these grants vest 25% per year over four years for employees and 100% after one year for consultants. Initial grants to directors vest 25% per year over four years and subsequent grants to directors vest 33.33% per year over three years. Options granted prior to May 1, 2007 expire on the tenth anniversary of the grant date. Options granted on or after May 1, 2007, expire on the seventh anniversary of the grant date. The total intrinsic value of options exercised was $1.0 million, $0.1 million, and $2.2 million for the years ended May 31, 2014, May 31, 2013 and May 31, 2012, respectively. We generally issue authorized but unissued shares upon stock option exercises and the settlement of performance share awards and restricted stock units. The fair value of the options granted under the 1997 and 2004 Plans was estimated at the date of grant using the Black-Scholes option-pricing model assuming no expected dividends and the following weighted-average assumptions:
| 2014 |  | 2013 |  | 2012
Expected stock price volatility | 34.40 | % |  | 43.91 | % |  | 49.06 | %
Risk-free interest rate | 1.44 | % |  | 0.62 | % |  | 0.70 | %
Expected life of options | 4.74 |  |  | 4.62 years |  |  | 4.59 years |
The following information applies to options outstanding at May 31, 2013:
Range of exercise prices | Number outstanding |  | Weighted- average remaining life in years |  | Weighted- average exercise price |  | Number Exercisable |  | Weighted- average exercise price
$ 6.52 - $11.93 | 463,965 |  |  | 5.64 |  | $ | 11.37 |  |  | 65,832 |  |  | $ | 10.61 |
$12.06 - $12.97 | 343,161 |  |  | 4.86 |  | 12.41 |  |  | 155,661 |  |  | 12.44 |
$13.18 - $13.85 | 432,426 |  |  | 3.38 |  | 13.35 |  |  | 321,348 |  |  | 13.36 |
$13.92 - $14.31 | 430,000 |  |  | 4.21 |  | 13.95 |  |  | 228,750 |  |  | 13.97 |
$14.48 - $15.57 | 202,880 |  |  | 1.09 |  | 15.25 |  |  | 202,880 |  |  | 15.25 |
$15.75 - $16.58 | 376,196 |  |  | 3.39 |  | 16.06 |  |  | 276,196 |  |  | 16.03 |
$16.75 - $19.94 | 267,522 |  |  | 1.06 |  | 18.19 |  |  | 267,522 |  |  | 18.16 |
$20.06 - $31.33 | 157,601 |  |  | 1.26 |  | 23.05 |  |  | 157,601 |  |  | 13.81 |
| 2,673,751 |  |  | 4.56 |  | $ | 14.84 |  |  | 1,675,790 |  |  | $ | 16.12 |
3. Performance Share and Restricted Stock Unit Awards We grant restricted stock units and performance share awards to certain employees under the 2004 Plan. The performance criteria is established by the compensation committee for vesting of the performance share awards and may include factors such as the achievement of certain sales, operating income and earnings per share (“EPS”) goals. Performance share awards are subject to additional conditions, including the recipient’s continued employment with us. The restricted stock unit awards vest in equal annual installments over the term of the grants. Unvested restricted stock unit awards will be forfeited if the recipient ceases to be employed by us, competes with our business or otherwise engages in activities detrimental to our business before such date. The performance share awards and restricted stock units settle in shares of our common stock on a one-for-one basis. We value performance share and restricted stock unit awards based on the closing trading value of our shares on the date of grant. We recognize the compensation cost related to our non-vested stock awards ratably over the requisite service period, or over the performance period when performance award metrics are expected to be achieved, which is consistent with the treatment prior to the adoption of authoritative guidance on share based payment awards.
| Non-Vested Stock Award Units |  | Weighted Average Grant-Date Fair Value
Balance as of May 31, 2013 | 482,644 |  |  | $ | 12.14 |
Granted | 473,824 |  |  | 13.37 |
Cancelled | (109,634 | ) |  | 12.48 |
Vested | (148,946 | ) |  | 12.62 |
Balance as of May 31, 2014 | 697,888 |  |  | 13.02 |
The total fair value of restricted stock awards vesting was $1.8 million, $1.2 million, and $0.9 million for the years ended May 31, 2014, 2013 and 2012, respectively. 4. Unrecognized Compensation Cost: Under the provisions of authoritative guidance on share based payment awards, we expect to recognize the following future expense for awards outstanding as of May 31, 2014 ($ in thousands):
| Unrecognized Compensation Cost |  | Weighted Average Remaining Vesting Period (in years)
Stock options | $ | 3,382 |  |  | 2.13
Non-vested stock awards | 5,625 |  |  | 2.37
| $ | 9,007 |  |  | 2.28
Unrecognized compensation cost for stock options is presented net of 12% assumed annual forfeitures. 5. Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Stock Purchase Plan”) provides a means by which our employees (the “participants”) are given an opportunity to purchase our common stock through payroll deductions. The maximum number of shares to be offered under the Stock Purchase Plan is 1,200,000 shares of our common stock, subject to any increase authorized by the Board of Directors. Shares are offered through two purchase periods, each with duration of approximately 6 months, commencing on the first business day of the first and third fiscal quarters. An employee is eligible to participate in an offering period if, on the first day of an offering period, he or she has been employed in a full-time capacity for at least six months, with a customary working schedule of 20 or more hours per week and more than five months in a calendar year. Employees who own stock possessing 5% or more of the total combined voting power or value of all classes of our stock are not eligible to participate in the Stock Purchase Plan. The purchase price of the shares of common stock acquired on each purchase date will be the lower of (i) 85% of the fair market value of a share of common stock on the first day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last day of the purchase period, subject to adjustments made by the Board of Directors. The Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. We use the Black-Scholes option-pricing model to calculate the purchase date fair value of the shares issued under the Stock Purchase Plan and recognize expense related to shares purchased ratably over the offering period. For the years ended May 31, 2014, 2013 and 2012, 146,275, 123,556 and 103,362 shares, respectively, were issued at an average price of $9.30, $9.80 and $11.62, respectively, under the Stock Purchase Plan. As of May 31, 2013, 423,895 shares remained available for future purchases under the Stock Purchase Plan. For fiscal 2014, stock based compensation was $5.4 million pre-tax ($3.8 million after tax). For fiscal 2013, stock based compensation was $4.6 million pre-tax ($3.1 million after tax). For fiscal 2012, stock based compensation was $4.1 million pre-tax ($2.7 million after tax). The following table summarizes stock-based compensation in accordance with authoritative guidance on share based payment awards for the years ended May 31, 2014, May 31, 2013 and May 31, 2012, which was allocated as follows:
| May 31, 2014 |  | May 31, 2013 |  | May 31, 2012
| (In thousands)
Cost of sales | $ | 232 |  |  | $ | 271 |  |  | $ | 268 |
Research and development | 483 |  |  | 399 |  |  | 738 |
Sales and marketing | 1,672 |  |  | 1,610 |  |  | 1,340 |
General and administrative | 3,035 |  |  | 2,329 |  |  | 1,744 |
Stock based compensation expense included in operating expenses | 5,190 |  |  | 4,338 |  |  | 3,822 |
Total stock based compensation | 5,422 |  |  | 4,609 |  |  | 4,090 |
Tax benefit | 1,657 |  |  | 1,540 |  |  | 1,386 |
Stock based compensation expense, net of tax | $ | 3,765 |  |  | $ | 3,069 |  |  | $ | 2,704 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph d -Article 4 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 + Details
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