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Share-Based Compensation: | 12 Months Ended
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Sep. 30, 2014
Share-Based Compensation: |
Share-Based Compensation: | 13. Share-Based Compensation: The Company accounts for share-based compensation under the provisions of ASC Topic 505-50 and ASC Topic 718 by using the fair value method for expensing stock options and stock awards. Total share-based compensation expense was $810,000, $912,000 and $645,000 for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. The income tax impact recognized as a (charge) credit to additional paid in capital in the statement of shareholders’ equity related to share-based compensation arrangements was ($253,000), ($33,000) and $(5,000) for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. Compensation expense related to share-based awards is recorded as a component of selling, general and administrative expenses. By unanimous consent of the Company’s Board of Directors on January 25, 2013, the applicable option exercise price of each outstanding option to purchase common stock was reduced by $1.50 per share pursuant to the terms of the 1998 Plan or the 2009 Plan (each as defined below), as applicable, to offset the dilutive impact of the special cash dividend paid by the Company on December 27, 2012 to common shareholders of record on December 17, 2012. As required by ASC Topic 718, the Company recorded an expense of $22,000 related to the vested outstanding options as a result of this one-time reduction to the option exercise price in the quarter ended March 31, 2013. For non-vested options, the Company added the additional compensation cost of $59,000 to the remaining unrecognized compensation cost for the original share options, granted under the 2009 Plan, and will expense the total amount ratably over the remaining vesting period of the options in accordance with the guidance provided by ASC Topic 718. The Company has three share-based compensation plans, the 1998 Stock Option Plan (the “1998 Plan”), the 2003 Restricted Stock Plan (the “Restricted Plan”) and the 2009 Stock-Based Incentive Compensation Plan (the “2009 Plan”), each of which the shareholders approved. The 1998 Plan expired on November 13, 2008. The last awards under the Restricted Plan were made in 2010, and no further shares remain to be awarded under the Restricted Plan. 1998 Stock Option Plan The 1998 Plan allowed the granting of incentive and nonqualified stock options to employees, officers, directors and independent contractors, and consultants. No stock options were granted to independent contractors or consultants under this plan. Incentive stock options granted under the 1998 Plan have exercise prices that are at least equal to the fair value of the common stock on grant date. Nonqualified stock options granted under the plan have exercise prices that are less than, equal to or greater than the fair value of the common stock on the date of grant. The Company reserved 3,389,000 shares of common stock for awards under the plan. On November 13, 2008, the 1998 Plan expired and no additional shares were granted under the 1998 Plan after that date. Following is a summary of option activity under the 1998 Plan for fiscal years ended September 30, 2014, 2013, and 2012 and changes during the periods then ended:
|  |  |  | Weighted |  |  |
|  |  |  | Average |  | Aggregate |
|  |  |  | Exercise |  | Intrinsic |
|  | Options |  | Price |  | Value |
Outstanding at September 30, 2011 |  | 387,800 |  | $ | 8.74 |  | $ | — |
Granted |  | — |  | — |  | — |
Exercised |  | — |  | — |  | — |
Cancelled |  | (11,600 | ) | 12.65 |  | — |
Outstanding at September 30, 2012 |  | 376,200 |  | $ | 8.62 |  | — |
Granted |  | — |  | — |  | — |
Exercised |  | (226,800 | ) | 4.63 |  | 174,112 |
Cancelled |  | (4,900 | ) | 11.42 |  | — |
Outstanding at September 30, 2013 |  | 144,500 |  | $ | 12.79 |  | $ | — |
Granted |  | — |  | — |  | — |
Exercised |  | (12,000 | ) | 7.40 |  | 8,604 |
Cancelled |  | (70,500 | ) | 16.25 |  | — |
Outstanding at September 30, 2014 |  | 62,000 |  | $ | 9.91 |  | $ | — |
Vested |  | 62,000 |  | $ | 9.91 |  | $ | — |
Options exercisable at September 30, 2014 |  | 62,000 |  | $ | 9.91 |  | $ | — |
In fiscal 2014 and 2013 and 2012, no options were granted under the 1998 Plan. Therefore, there is no weighted-average grant date fair value and no intrinsic value attributable to individual options granted. 12,000 and 226,800 options under the 1998 Plan were exercised in fiscal 2014 and 2013, respectively. The following table summarizes information about stock options under the 1998 Plan at September 30, 2014:
|  | Options Outstanding |  | Options Exercisable |
Range of Exercise Prices |  | Outstanding As of September 30, 2014 |  | Weighted- Average Remaining Contractual Life |  | Weighted- Average Exercise Price |  | As of September 30, 2014 |  | Weighted- Average Exercise Price |
$ 0.00 | - | $ 5.00 |  | 0 |  | 0.000 |  | $ | — |  | 0 |  | $ | — |
$ 5.01 | - | $ 10.00 |  | 30,000 |  | 3.395 |  | 6.270 |  | 30,000 |  | 6.270 |
$ 10.01 | - | $ 15.00 |  | 28,500 |  | 1.164 |  | 12.523 |  | 28,500 |  | 12.523 |
$ 15.01 | - | $ 20.00 |  | 1,500 |  | 0.268 |  | 18.380 |  | 1,500 |  | 18.380 |
$ 20.01 | - | $ 25.00 |  | 2,000 |  | 0.767 |  | 20.853 |  | 2,000 |  | 20.853 |
|  | 62,000 |  | 2.209 |  | $ | 9.91 |  | 62,000 |  | $ | 9.91 |
Fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Options are exercisable over a maximum term of ten years from date of grant and vest typically over periods of three to five years from the grant date. The expected term of options represents the period of time that options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock price. The risk free interest rate is based on U.S. Treasuries with maturities consistent with the expected life of the options in effect at the time of grant. Compensation expense for employee stock options includes an estimate for forfeitures, and is recognized ratably over the vesting term. Because no options were granted from the 1998 Plan in fiscal 2014, 2013 and 2012, the data for expected dividend, expected volatility, weighted average risk-free interest rate and expected lives is not applicable. Total compensation expense associated with stock option awards to employees under the 1998 Plan was $0, $34,000 and $67,000 for fiscal years ended September 30, 2014, 20113 and 2012, respectively. At September 30, 2014, there is no unrecognized compensation expense related to non-vested stock options under the 1998 Plan that is expected to be recognized during fiscal 2015. Restricted Plan The Restricted Plan for non-employee directors was approved by shareholders at the Company’s February 26, 2004 Annual Meeting of Shareholders. It provided for an annual award of non-vested stock having a fair market value of $40,000 at the close of business on October 1 of each year for all eligible non-employee directors. The stock awards vested and were issued in four quarterly installments during the fiscal year provided the director continued to serve on the board on the quarterly issue date. The last awards under the Restricted Plan were made in 2010, and no further shares remain to be awarded under this Plan. However, the Company continued to make an annual grant of non-vested stock under the 2009 Plan. There were no expenses associated with the grant of non-vested stock to non-employee directors under the Restricted Plan for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. 2009 Stock-Based Incentive Compensation Plan The 2009 Plan authorizes the grant of stock appreciation rights, restricted stock, options and other equity-based awards (collectively referred to as “Awards”). Options granted under the 2009 Plan may be either “incentive stock options” as defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options, as determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Subject to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution,or other similar corporate transaction or event, the maximum number of shares of common stock available for Awards under the 2009 Plan shall be 1,200,000, all of which may be issued pursuant to Awards of incentive stock options. In addition, the Plan provides that no more than 300,000 shares of common stock per year may be awarded to any employee as a performance-based Award under Section 162(m) of the Code. At September 30, 2014 there were 356,395 shares of common stock available for awards under the plan. If any Award is forfeited, or if any option terminates, expires or lapses without being exercised, the related shares of common stock subject to such Award will again be available for future grant. Any shares tendered by a participant in payment of the exercise price of an option or the tax liability with respect to an Award (including, in any case, shares withheld from any such Award) will not be available for future grant under the 2009 Plan. If there is any change in the Company’s corporate capitalization, the Compensation Committee must proportionately and equitably adjust the number and kind of shares of common stock which may be issued in connection with future Awards, the number and type of shares of common stock covered by Awards then outstanding under the 2009 Plan, the number and type of shares of common stock available under the 2009 Plan, the exercise or grant price of any Award, or if deemed appropriate, make provision for a cash payment with respect to any outstanding Award, provided that no adjustment may be made that would adversely affect the status of any Award that is intended to be a performance-based Award under Section 162(m) of the Code, unless otherwise determined by the Compensation Committee. In addition, the Compensation Committee may make adjustments in the terms and conditions of any Awards, including any performance goals, in recognition of unusual or nonrecurring events affecting the Company or any subsidiary, or in response to changes in applicable laws, regulations or accounting principles, provided that no adjustment may be made that would adversely affect the status of any Award that is intended to be a performance-based Award under Section 162(m) of the Code, unless otherwise determined by the Compensation Committee. Following is a summary of option activity under the 2009 Plan for fiscal years ended September 30, 2014, 2013 and 2012, and changes during the periods then ended:
|  |  |  | Weighted |  |  |
|  |  |  | Average |  | Aggregate |
|  |  |  | Exercise |  | Intrinsic |
|  | Options |  | Price |  | Value |
Outstanding at September 30, 2011 |  | 230,000 |  | $ | 5.11 |  | $ | — |
Granted |  | 280,000 |  | 3.92 |  | — |
Exercised |  | — |  | — |  | — |
Cancelled |  | (50,000 | ) | 4.50 |  | — |
Outstanding at September 30, 2012 |  | 460,000 |  | $ | 4.45 |  | $ | — |
Granted |  | 250,000 |  | 4.06 |  | — |
Exercised |  | (27,999 | ) | 3.78 |  | 118,802 |
Cancelled |  | (1,667 | ) | 3.78 |  | — |
Outstanding at September 30, 2013 |  | 680,334 |  | $ | 3.32 |  | 3,153,696 |
Granted |  | — |  | — |  | — |
Exercised |  | (44,666 | ) | 3.78 |  | 178,823 |
Cancelled |  | (10,500 | ) | 3.78 |  | — |
Outstanding at September 30, 2014 |  | 625,168 |  | $ | 3.28 |  | $ | 1,210,138 |
Vested and expected to vest |  | 625,168 |  | $ | 3.28 |  | $ | 1,210,138 |
Options exercisable at September 30, 2014 |  | 345,167 |  | $ | 3.22 |  | $ | 690,369 |
The following table summarizes information about stock options under the 2009 Plan at September 30, 2014:
Options Outstanding |  | Options Exercisable |
Range of Exercise Prices |  | Outstanding As of September 30, 2014 |  | Weighted- Average Remaining Contractual Life |  | Weighted- Average Exercise Price |  | As of September 30, 2014 |  | Weighted- Average Exercise Price |
$ 0.00 | - | $ 5.00 |  | 625,168 |  | 7.7 |  | $ | 3.28 |  | 345,167 |  | $ | 3.22 |
Fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Options are exercisable over a maximum term of ten years from date of grant and vest typically over periods of three to five years from the grant date. The expected term of options represents the period of time that options granted are expected to be outstanding and is based on historical experience and the expected turnover rate of the employees receiving the options. Expected volatility is based on historical volatility of the Company’s stock. The risk free interest rate is based on U.S. Treasuries with maturities consistent with the expected life of the options in effect at the time of grant. Compensation expense for employee stock options includes an estimate for forfeitures and is recognized ratably over the vesting term. Below are the fair value assumptions used to record compensation expense, related to the 2009 Plan, for the following periods identified:
|  | Fiscal Year Ended September 30, |
|  | 2014 (1) |  | 2013 |  | 2012 |
Expected dividend rate |  | — |  | — |  | — |
Expected volatility |  | — | % | 64.6 | % | 71.1 | %
Weighted average risk-free interest rate |  | — | % | 1.0 | % | 2.1 | %
Expected lives (years) |  | — |  | 7.6 |  | 8.7 |
(1) The Company did not grant any options in fiscal 2014. Total compensation expense associated with stock option awards to employees under the 2009 Plan was $660,000, $678,000 and $377,000 for fiscal years ended September 30, 2014, 2013 and 2012, respectively. Total share-based compensation expense associated with the annual grant of stock awards to non-employee directors under the 2009 Plan was $200,000, $200,000 and $200,000 for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. At September 30, 2014, unrecognized compensation expense of approximately $411,000, net of forfeitures, related to non-vested stock options under the 2009 Plan, is expected to be recognized over a period of approximately two years.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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