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Shareholders' Equity
 12 Months Ended
Dec. 31, 2011
Shareholders' Equity [Abstract]  
Shareholders' Equity

Note 7—Shareholders’ Equity

 

a.

Preferred Stock

We have authorized 1,000,000 shares of preferred stock, with a par value of $0.10 per share. At December 31, 2011, no preferred shares were issued or outstanding.

 

b.

Common Stock

We have authorized 40,000,000 shares of common stock, with a par value of $0.10 per share.

In February 2009, we issued 4,388 unrestricted shares of common stock to our non-employee directors, valued at $37. In May 2009, we issued 10,725 unrestricted shares of common stock to our non-employee directors, valued at $76. In August 2009, we issued 11,881 unrestricted shares of common stock to our non-employee directors, valued at $76. In November 2009, we issued 19,345 unrestricted shares of common stock to our non-employee directors, valued at $77.

In September 2009, we issued 21,340 shares of common stock to four members of the AMTI management team in accordance with the asset purchase agreement for AMTI, valued at $136.

 

In February 2010, we issued 19,346 unrestricted shares of common stock to our non-employee directors, valued at $76. In May 2010, we issued 18,528 unrestricted shares of common stock to our non-employee directors, valued at $87. In August 2010, we issued 16,616 unrestricted shares of common stock to our non-employee directors, valued at $76. In November 2010, we issued 11,811 unrestricted shares of common stock to our non-employee directors, valued at $76.

On April 27, 2010, we entered into Amendment No. 2 to the USE asset purchase agreement. Under the terms of Amendment No. 2, we agreed to issue an aggregate of 200,000 shares of our unregistered common stock, valued at approximately $858, in full satisfaction of our outstanding obligations to the Selling Shareholders under the USE asset purchase agreement. Amendment No. 2 did not change our original assessment that the contingent payout of shares of common stock was related to the acquisition of the assets of USE. Accordingly, we reflected the payment as additional purchase price. This adjustment resulted in an increase to goodwill of $858.

In February 2011, we issued 11,276 unrestricted shares of common stock to our non-employee directors, valued at $77. In May 2011, we issued 17,036 unrestricted shares of common stock to our non-employee directors, valued at $76. In August 2011, we issued 15,981 unrestricted shares of common stock to our non-employee directors, valued at $77. In November 2011, we issued 17,350 unrestricted shares of common stock to our non-employee directors, valued at $76.

 

c.

Treasury Stock

At December 31, 2011 and 2010, we had 1,372,757 and 1,371,900 shares, respectively, of treasury stock outstanding, valued at $7,658 and $7,652, respectively. The increase in treasury shares related to the vesting of restricted stock awards for certain key employees, a portion of which were withheld as treasury shares to cover estimated individual income taxes, since the vesting of such awards is a taxable event for the individuals.

In October 2008, the Board of Directors authorized a share repurchase program of up to $10,000 to be implemented over the course of a six-month period. In April 2009, this share repurchase program expired. Repurchases were made from time to time at management’s discretion, either in the open market or through privately negotiated transactions. The repurchases were made in compliance with Securities and Exchange Commission guidelines and were subject to market conditions, applicable legal requirements, and other factors. We had no obligation under the program to repurchase shares and the program could have been suspended or discontinued at any time without prior notice. We funded the purchase price for shares acquired primarily with current cash on hand and cash generated from operations, in addition to borrowing from our credit facility, as necessary. Under this repurchase program, we made the following share repurchases:

 

      September 30,       September 30,       September 30,       September 30,  
    2009     2008  

Years Ended December 31,

   Shares     Amount     Shares     Amount  
         

First Quarter

     416,305     $ 3,326       —       $ —    

Second Quarter

     —         —         —         —    

Third Quarter

     —         —         —         —    

Fourth Quarter

     —         —         212,108       1,815  
   

 

 

    

 

 

    

 

 

    

 

 

  
         

Total

     416,305     $ 3,326       212,108     $ 1,815  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

d.

Stock Options

We have various stock-based employee compensation plans, for which we follow the provisions of FASB’s guidance on share-based payments, which requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

Our shareholders have approved various equity-based plans that permit the grant of stock options, restricted stock and other equity-based awards. In addition, our shareholders have approved the grant of stock options outside of these plans.

In June 2004, shareholders adopted the 2004 Long-Term Incentive Plan (“LTIP”) pursuant to which we were authorized to issue up to 750,000 shares of common stock and grant stock options, restricted stock awards, stock appreciation rights and other stock-based awards. Through shareholder approved amendments to the LTIP in 2006, 2008 and 2011, the total number of authorized under the LTIP increased to 2,900,000.

 

Stock options granted under the LTIP are either Incentive Stock Options (“ISOs”) or Non-Qualified Stock Options (“NQSOs”). Key employees are eligible to receive ISOs and NQSOs; however, directors and consultants are eligible to receive only NQSOs. Most ISOs vest over a three- or five-year period and expire on the sixth or seventh anniversary of the grant date. All NQSOs issued to non-employee directors vest immediately and expire on either the sixth or seventh anniversary of the grant date. Some NQSOs issued to non-employees vest immediately and expire within three years; others have the same vesting characteristics as options given to employees. As of December 31, 2011, there were 2,258,228 stock options outstanding under the LTIP.

On December 19, 2005, we granted our former President and Chief Executive Officer, John, D. Kavazanjian, an option to purchase 48,000 shares of common stock at $12.96 per share outside of any of our equity-based compensation plans, subject to shareholder approval. Shareholder approval was obtained on June 8, 2006. The stock option is fully vested and expires on June 8, 2013.

On March 7, 2008, in connection with his becoming employed by us, we granted our Chief Financial Officer and Treasurer, Philip A. Fain, an option to purchase 50,000 shares of common stock at $12.74 per share outside of any of our equity-based compensation plans. The option is fully vested and expires on March 7, 2015.

On June 9, 2009, in connection with his becoming employed by us, we granted our former Vice-President of Finance and Chief Financial Officer, John C. Casper, an option to purchase 30,000 shares of common stock at $7.18 per share outside of any of our equity-based compensation plans. The option was to vest in annual increments of 10,000 shares over a three-year period commencing June 9, 2010. As a result of his resignation in November 2009, this option was forfeited.

On December 30, 2010, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, options to purchase shares of common stock under the LTIP as follows: (i) 50,000 shares at $6.42, vesting in annual increments of 12,500 shares over a four-year period commencing December 30, 2011; (ii) 250,000 shares at $6.42, vesting in annual increments of 62,500 shares over a four-year period commencing December 30, 2011; (iii) 200,000 shares at $10.00, with vesting to begin on the date the stock reaches a closing price of $10.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date; and (iv) 200,000 shares at $15.00, with vesting to begin on the date the stock reaches a closing price of $15.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date. All such options in items (i) and (ii) shall expire on December 30, 2017. All such options in items (iii) and (iv) shall expire as of the later of December 30, 2017 and five years after the initial vesting commences, but in no event later than December 30, 2020. The options set forth in items (ii), (iii) and (iv) were subject to shareholder approval of an amendment to the LTIP, which approval was obtained on June 7, 2011.

On January 3, 2011, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, an option to purchase 50,000 shares of common stock at $6.58 under the LTIP. The option vests in annual increments of 12,500 shares over a four-year period commencing December 30, 2011. The option expires on December 30, 2017.

In conjunction with FASB’s guidance for share-based payments, we recorded compensation cost related to stock options of $946, $670 and $964 for the years ended December 31, 2011, 2010 and 2009, respectively. As of December 31, 2011, there was $1,730 of total unrecognized compensation costs related to outstanding stock options, which is expected to be recognized over a weighted average period of 2.25 years.

We use the Black-Scholes option-pricing model to estimate fair value of stock-based awards. The following weighted average assumptions were used to value options granted during the years ended December 31, 2011, 2010 and 2009:

 

      September 30,       September 30,       September 30,  
    Years Ended December 31,  
    2011     2010     2009  
       

Risk-free interest rate

     0.97 %      1.67 %      1.69 % 

Volatility factor

     61.62 %      80.61 %      67.75 % 

Dividends

     0.00 %      0.00 %      0.00 % 

Weighted average expected life (years)

     3.78       3.56       3.55  

Forfeiture rate

     15.00 %      14.00 %      10.00 % 

We use a Monte Carlo simulation option-pricing model to estimate the fair value of market performance stock-based awards. The following weighted average assumptions were used to value market performance stock options granted during the year ended December 31, 2011. There were no market performance stock options granted during the years ended December 31, 2010 or 2009.

 

      September 30,  
    Year Ended  
    December 31,  
    2011  
   

Risk-free interest rate

     2.74 % 

Volatility factor

     63.78 % 

Dividends

     0.00 % 

Weighted average expected life (years)

     5.51  

Forfeiture rate

     0.00 % 

We calculate expected volatility for stock options by taking an average of historical volatility over the past five years and a computation of implied volatility. The computation of expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant. Forfeiture rates are calculated by dividing unvested shares forfeited by beginning shares outstanding. The pre-vesting forfeiture rate is calculated yearly and is determined using a historical twelve-quarter rolling average of the forfeiture rates.

The following table summarizes data for the stock options issued by us:

 

      September 30,       September 30,       September 30,       September 30,  

Year Ended December 31, 2011

  
    Number
of Shares		     Weighted
Average
Exercise
Price
Per Share 		    Weighted
Average
Remaining
Contractual
Term		     Aggregate
Intrinsic
Value		  
         

Shares under option at beginning of year

     1,794,694     $ 9.71                  

Options granted

     1,113,900       7.96                  

Options exercised

     (18,500 )      3.94                  

Options cancelled

     (533,866 )      12.30                  
   

 

 

    

 

 

                  

Shares under option at end of year

     2,356,228     $ 8.34       5.02 years     $ 25  
   

 

 

    

 

 

    

 

 

    

 

 

  

Vested and expected to vest as end of year

     2,077,030     $ 8.74       4.89 years     $ 22  

Options exercisable at end of year

     989,972     $ 9.62       2.97 years     $ 16  

 

      September 30,       September 30,       September 30,       September 30,  
     2010     2009  

Year Ended December 31,

   Number
of Shares		     Weighted
Average
Exercise
Price
Per Share 		    Number
of Shares		     Weighted
Average
Exercise
Price
Per Share		  
         

Shares under option at beginning of year

     1,805,107     $ 10.99       1,651,007     $ 12.33  

Options granted

     468,250       5.41       620,070       5.71  

Options exercised

     (14,000 )      3.91       (103,860 )      4.59  

Options cancelled

     (464,663 )      10.51       (362,110 )      9.86  
   

 

 

    

 

 

    

 

 

    

 

 

  

Shares under option at end of year

     1,794,694     $ 9.71       1,805,107     $ 10.99  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options exercisable at end of year

     1,103,100     $ 12.28       1,697,301     $ 11.22  

The following table represents additional information about stock options outstanding at December 31, 2011:

 

      September 30,xxxx       September 30,xxxx       September 30,xxxx       September 30,xxxx       September 30,xxxx  

Options Outstanding

     Options Exercisable  

Range of

Exercise Prices

   Number of
Outstanding
at December 31, 2011		     Weighted-
Average
Remaining
Contractual
Life		     Weighted-
Average
Exercise Price		     Number
Exercisable
at December 31, 2011		     Weighted-
Average
Exercise Price		  

$3.91-$ 3.91

     224,500       4.68     $ 3.91       144,167     $ 3.91  

$ 4.41-$ 4.41

     169,584       5.12     $ 4.41       58,753     $ 4.41  

$ 4.42-$ 4.42

     318,000       6.94     $ 4.42       -0-     $ 0.00  

$ 4.70-$ 6.37

     122,800       5.84     $ 5.28       13,501     $ 5.00  

$ 6.42-$ 6.42

     300,000       6.00     $ 6.42       75,000     $ 6.42  

$ 6.58-$ 9.70

     225,166       4.94     $ 7.64       114,002     $ 8.46  

$ 9.84-$12.00

     410,283       4.23     $ 10.22       210,283     $ 10.42  

$ 12.18-$12.96

     269,395       1.85     $ 12.79       257,766     $ 12.81  

$ 13.22-$16.15

     295,000       6.23     $ 14.67       95,000     $ 13.97  

$ 17.12-$17.12

     21,500       0.25     $ 17.12       21,500     $ 17.12  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

$ 3.91-$17.12

     2,356,228       5.02     $ 8.34       989,972     $ 9.62  

The weighted average fair value of options granted during the years ended December 31, 2011, 2010 and 2009 was $2.04, $3.06 and $2.77. The total intrinsic value of options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the years ended December 31, 2011, 2010 and 2009 was $45, $43 and $390.

FASB’s guidance for share-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. We did not record any excess tax benefits in 2011, 2010 or 2009. Cash received from option exercises under our stock-based compensation plans for the years ended December 31, 2011, 2010 and 2009 was $73, $55 and $226, respectively.

 

e.

Warrants

On May 19, 2006, in connection with our acquisition of ABLE New Energy Co., Ltd., we granted warrants to acquire 100,000 shares of common stock. The exercise price of the warrants was $12.30 per share and the warrants had a five-year term. In January 2008, 82,000 warrants were exercised, for total proceeds received of $1,009. In January 2009, 10,000 warrants were exercised, for total proceeds received of $123. In May 2011, the remaining outstanding warrants to acquire 8,000 shares of common stock expired without being exercised.

 

f.

Restricted Stock Awards

No restricted stock was awarded during the years ended December 31, 2011 and 2010.

During 2009, we issued 16,286 time-vested restricted stock awards to our executive officers. The restrictions will lapse over a three-year period in equal installments, commencing on the first anniversary of the grant date (January 14, 2009). As of December 31, 2011, 7,364 of these shares had vested, and 7,704 of these shares were forfeited.

During 2009, we issued 6,000 time-vested restricted stock awards to our former Vice-President of Finance and Chief Financial Officer, John C. Casper. The restrictions were to lapse over a two-year period in equal installments, commencing on the first anniversary of the grant date (June 9, 2009). As a result of his resignation in November 2009, this restricted stock award was forfeited.

During 2009, we issued 2,500 performance-vested restricted stock awards to our former Vice-President of Finance and Chief Financial Officer, John C. Casper. The restrictions were to lapse only if we met or exceeded the same predetermined target for our operating performance for 2009 as used for determining cash awards pursuant to the non-equity incentive plan. As a result of his resignation in November 2009, this restricted stock award was forfeited.

Restricted stock grants awarded during the years ended December 31, 2011, 2010 and 2009 had the following values:

 

      September 30,       September 30,       September 30,  
    Years Ended December 31,  
    2011     2010     2009  

Number of shares awarded

     —         —         24,786  

Weighted average fair value per share

   $ 0.00     $ 0.00     $ 7.44  

Aggregate total value

   $ —       $ —       $ 185  

The activity of restricted stock grants of common stock for the years ended December 31, 2011, 2010 and 2009 is summarized as follows:

 

      September 30,       September 30,  
          Weighted Average  
    Number of Shares     Grant Date Fair Value  
     

Unvested at December 31, 2008

     76,664     $ 11.47  

Granted

     24,786       7.44  

Vested

     (31,093 )      11.60  

Forfeited

     (23,830 )      9.81  
   

 

 

    

 

 

  

Unvested at December 31, 2009

     46,527     $ 11.42  

Granted

     —         0.00  

Vested

     (9,944 )      12.69  

Forfeited

     (27,535 )      10.80  
   

 

 

    

 

 

  

Unvested at December 31, 2010

     9,048     $ 11.94  

Granted

     —         0.00  

Vested

     (4,925 )      12.01  

Forfeited

     (2,905 )      12.07  
   

 

 

    

 

 

  

Unvested at December 31, 2011

     1,218     $ 11.33  
   

 

 

    

 

 

  

We recorded compensation cost related to restricted stock grants of $(27), $92 and $100 for the years ended December 31, 2011, 2010 and 2009, respectively. During the third quarter of 2009, we determined that the performance measures for certain performance-based restricted stock grants would not be achieved. Therefore, these restricted stock grants did not vest, and we reversed the prior period recognized expense of $301 for these performance-based restricted stock grants. As of December 31, 2011, we had $1 of total unrecognized compensation expense related to restricted stock grants, which is expected to be recognized over the remaining weighted average period of approximately 0.04 years. The total fair value of these grants that vested during the years ended December 31, 2011, 2010 and 2009 was $32, $44 and $209, respectively.

 

g.

Reserved Shares

We have reserved 2,939,723, 2,065,366, and 2,106,617 shares of common stock under the various stock option plans, warrants and restricted stock awards as of December 31, 2011, 2010, and 2009, respectively.