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Capital Transactions | 6 Months Ended
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Jun. 30, 2013
Capital Transactions |
Capital Transactions | (7) Capital Transactions Dividends The declaration of future dividends is subject to the discretion of the Company’s Board of Directors and will depend upon various factors, including the Company’s earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by its Board of Directors. On March 6, 2013, the Company’s Board of Directors declared a cash dividend of $0.10 per common share in an aggregate amount of $1,583 that was paid on March 28, 2013 to shareholders of record on March 18, 2013. On May 8, 2013, the Company’s Board of Directors declared a cash dividend of $0.10 per common share in an aggregate amount of $1,587 that was paid on May 30, 2013 to shareholders of record on May 20, 2013. On August 8, 2013, the Company’s Board of Directors declared a special one-time cash dividend of $1.50 per common share in addition to the Company’s recurring quarterly dividend of $0.10 per common share that is to be paid on August 29, 2013 to shareholders of record on August 19, 2013. The amount of the cash dividend paid to shareholders is expected to be approximately $25.6 million. In addition, the Board of Directors authorized a $10 million share repurchase program to be implemented over two years. Such purchases may be made in the open market, through block trades, in privately negotiated transactions or otherwise. The timing and amount of any share repurchased will be determined based on the Company’s evaluation of market conditions and other factors and the program may be discontinued or suspended at any time. Share-based Compensation Stock option activity for the six months ended June 30, 2013 is as follows:
|  | Number of Shares |  | Weighted Average Exercise Price Per Share |
Options outstanding at December 31, 2012 |  | 1,784 |  | $ | 11.81 |
Granted |  | 623 |  | 15.01 |
Forfeited |  | (35 | ) | 14.67 |
Exercised |  | (149 | ) | 9.11 |
Options outstanding at June 30, 2013 |  | 2,223 |  | 12.84 |
The Company’s outstanding stock options include time-based stock options which vest over differing periods ranging from the date of issuance up to 48 months from the option grant date, performance-based stock options which vest upon achieving operating income margins of six, eight and ten percent as reported in four of five consecutive quarters over the term of the options, performance-based stock options which vest upon achieving cumulative annual net sales revenue growth targets over a rolling two-year period subject to the Company maintaining at least an eight percent operating income margin during the applicable period, and performance-based stock options which vest upon achieving annual net sales targets over a rolling one-year period. During the six-month period ended June 30, 2013, the Company granted options to purchase 623 shares of common stock under the 2012 Stock Incentive Plan to the Company’s executive officers and other employees, which are composed of both time-based stock options and net sales revenue performance-based stock options. These options were issued with a weighted-average exercise price of $15.01 per share and a weighted-average grant date fair value of $6.15 per share. All of the options issued have an option termination date of ten years from the option grant date. The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the six-month period ended June 30, 2013:
|  | 2013 |
Expected life (in years) |  | 5.0 to 6.0 |
Risk-free interest rate |  | 0.6 to 0.8 |
Expected volatility |  | 56.1 to 58.1 |
Dividend yield |  | 2.6 to 2.7 |
Expected option lives and volatilities are based on historical data of the Company. The risk free interest rate is calculated as the average U.S. Treasury bill rate that corresponds with the option life. The dividend yield is based on the Company’s historical and expected amount of dividend payouts, at the time of grant. Share-based compensation expense from time-based stock options for the three-month periods ended June 30, 2013 and 2012 was approximately $729 and $356, respectively, and the related tax benefit was approximately $288 and $142, respectively. Share-based compensation expense from time-based stock options for the six-month periods ended June 30, 2013 and 2012 was approximately $1,803 and $669, respectively and the related tax benefit was approximately $712 and $267, respectively. As of June 30, 2013 and December 31, 2012, the unrecognized share-based compensation expense related to the grants described above was $4,023 and $2,715, respectively. As of June 30, 2013, the remaining compensation expense is expected to be recognized over the weighted-average period of approximately 2.0 years. Shared-based compensation expense from operating income performance-based stock options for the three-month periods ended June 30, 2013 and 2012 was approximately $0 and $329, respectively, and the related tax benefit was approximately $0 and $127, respectively. Shared-based compensation expense from operating income performance-based stock options for the six-month periods ended June 30, 2013 and 2012 was approximately $0 and $652, respectively, and the related tax benefit was approximately $0 and $255, respectively. As of December 31, 2012, there was no remaining compensation expense to be recognized for the operating income performance-based stock options. The Company has not recognized any share-based compensation expense related to the net sales revenue performance-based stock options for the three and six months ended June 30, 2013. Should the Company attain all of the net sales revenue metrics related to the net sales revenue performance-based stock option grants, the Company would recognize up to $1,070 of potential share-based compensation expense. At June 30, 2013, the aggregate intrinsic value of outstanding time-based and performance-based stock options to purchase 2,223 shares of common stock, exercisable time-based and performance-based stock options to purchase 1,146 shares of common stock and time-based and performance-based stock options to purchase 868 shares of common stock that are expected to vest (net of expected forfeitures) was $7,801, $6,447 and $1,287, respectively. At December 31, 2012, the aggregate intrinsic value of outstanding options to purchase 1,784 shares of common stock, the exercisable options to purchase 1,011 shares of common stock, and options to purchase 644 shares of common stock expected to vest was $5,315, $5,016 and $281, respectively. Restricted stock unit activity for the six months ended June 30, 2013 is as follows:
|  | Number of Shares |  | Weighted Average Grant Date Fair Value |
Units outstanding at December 31, 2012 |  | 18 |  | $ | 12.07 |
Granted |  | 14 |  | 12.90 |
Issued |  | (3 | ) | 12.07 |
Forfeited |  | — |  | — |
Units outstanding at June 30, 2013 |  | 29 |  | 12.47 |
RSUs are valued at the market value on the date of grant. Due to post-vesting restrictions, a Finnerty Model was utilized to calculate a valuation discount from the market value of common shares reflecting the restriction embedded in the RSUs preventing the sale of the underlying shares over a certain period of time. The Finnerty Model proposes to estimate a discount for lack of marketability such as transfer restrictions by using an option pricing theory. This model has gained recognition through its ability to address the magnitude of the discount by considering the volatility of a company’s stock price and the length of restriction. The concept underpinning the Finnerty Model is that restricted stock cannot be sold over a certain period of time. Share-based compensation expense from RSUs for the three and six months ended June 30, 2013 was approximately $52 and $127, respectively, and the related tax benefit was approximately $18 and $44, respectively. As of June 30, 2013 and December 31, 2012, the unrecognized share-based compensation expense related to the grants described above was $155 and $99, respectively. As of June 30, 2013, the remaining compensation expense is expected to be recognized over the weighted average period of approximately 0.9 years.

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