[ X ]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-1347235
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Class:
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Outstanding at January 29, 2015
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Common stock, par value $.01
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13,687,691
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(Unaudited)
December 31,
2014
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(Audited)
September 30,
2014
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|||||||
Assets
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||||||||
Current Assets
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||||||||
Cash and cash equivalents
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$ | 17,174,024 | $ | 18,191,493 | ||||
Short-term investments
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6,894,000 | 6,632,000 | ||||||
Accounts receivables, net
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4,654,977 | 5,027,856 | ||||||
Inventories, net
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5,359,155 | 5,390,342 | ||||||
Deferred taxes
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1,986,037 | 2,249,435 | ||||||
Other current assets
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771,970 | 543,257 | ||||||
Total Current Assets
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36,840,163 | 38,034,383 | ||||||
Property, plant and equipment, net
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3,997,151 | 2,462,250 | ||||||
Other Assets
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||||||||
Long-term investments
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8,303,000 | 8,302,000 | ||||||
Goodwill
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2,570,511 | 2,570,511 | ||||||
Deferred taxes
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- | 156,622 | ||||||
Other
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316,293 | 322,132 | ||||||
Total other assets
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11,189,804 | 11,351,265 | ||||||
Total Assets
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$ | 52,027,118 | $ | 51,847,898 | ||||
Liabilities and Shareholders’ Equity
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||||||||
Current Liabilities
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||||||||
Accounts payable
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2,468,594 | 2,104,526 | ||||||
Accrued compensation
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1,152,388 | 2,749,080 | ||||||
Accrued expenses
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260,801 | 247,658 | ||||||
Total Current Liabilities
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3,881,783 | 5,101,264 | ||||||
Other Liabilities
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||||||||
Deferred taxes
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108,980 | - | ||||||
Total other liabilities
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108,980 | - | ||||||
Total Liabilities
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3,990,763 | 5,101,264 | ||||||
Commitments and Contingencies
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- | - | ||||||
Shareholders’ Equity
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||||||||
Preferred stock, $.01 par value; authorized 500 shares; no shares outstanding
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- | - | ||||||
Common stock, authorized 50,000,000, $.01 par value; 13,742,873 and 13,742,964, shares issued and outstanding at December 31, 2014 and September 30, 2014
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137,429 | 137,430 | ||||||
Additional paid-in capital
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56,257,338 | 56,036,989 | ||||||
Accumulated deficit
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(8,358,412 | ) | (9,427,785 | ) | ||||
Total Shareholders’ Equity
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48,036,355 | 46,746,634 | ||||||
Total Liabilities and Shareholders’ Equity
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$ | 52,027,118 | $ | 51,847,898 |
Three Months Ended December 31,
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||||||||
2014
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2013
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|||||||
Net sales
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$ | 13,986,620 | $ | 16,147,622 | ||||
Cost of sales
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8,244,106 | 9,209,977 | ||||||
Gross profit
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5,742,514 | 6,937,645 | ||||||
Operating expenses
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||||||||
Selling, general and administrative
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4,125,997 | 3,865,019 | ||||||
Income from operations
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1,616,517 | 3,072,626 | ||||||
Interest income
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25,856 | 19,700 | ||||||
Income before income taxes
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1,642,373 | 3,092,326 | ||||||
Income tax expense
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573,000 | 1,110,000 | ||||||
Net income
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$ | 1,069,373 | $ | 1,982,326 | ||||
Net income per share:
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||||||||
Basic
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$ | 0.08 | $ | 0.16 | ||||
Diluted
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$ | 0.08 | $ | 0.15 | ||||
Weighted average shares outstanding:
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||||||||
Basic
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13,222,180 | 12,689,412 | ||||||
Diluted
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13,581,434 | 13,544,424 |
Three Months Ended December 31
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2014
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2013
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|||||||
Cash flows from operating activities
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||||||||
Net income
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$ | 1,069,373 | $ | 1,982,326 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
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||||||||
Depreciation and amortization
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229,900 | 151,910 | ||||||
Deferred taxes
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529,000 | 1,028,210 | ||||||
Gain on disposal of assets
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- | (86 | ) | |||||
Stock based compensation
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283,627 | 188,160 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable, net
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372,879 | 5,553,199 | ||||||
Inventories, net
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31,187 | 499,673 | ||||||
Other assets
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(222,800 | ) | (189,241 | ) | ||||
Accounts payable and accrued expenses
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(1,219,481 | ) | (2,414,434 | ) | ||||
Net cash provided by operating activities
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1,073,685 | 6,799,717 | ||||||
Cash flows from investing activities
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||||||||
Purchases of property, plant and equipment and intangible assets
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(1,764,875 | ) | (92,298 | ) | ||||
Purchases of investments
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(1,638,000 | ) | (2,606,000 | ) | ||||
Proceeds from maturities of investments
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1,375,000 | 3,782,000 | ||||||
Net cash (used in) provided by investing activities
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(2,027,875 | ) | 1,083,702 | |||||
Cash flows from financing activities
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||||||||
Proceeds from issuance of common stock under employee stock purchase plan
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105,615 | 90,417 | ||||||
Proceeds from issuance of common stock upon exercise of stock options
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1,276 | 25,327 | ||||||
Tax withholding related to exercise of stock options
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- | (72,816 | ) | |||||
Repurchase of common stock
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(170,170 | ) | - | |||||
Net cash (used in) provided by financing activities
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(63,279 | ) | 42,928 | |||||
(Decrease) increase in cash and cash equivalents
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(1,017,469 | ) | 7,926,347 | |||||
Cash and cash equivalents, beginning of period
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18,191,493 | 9,807,957 | ||||||
Cash and cash equivalents, end of period
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$ | 17,174,024 | $ | 17,734,304 | ||||
Supplemental disclosures for cash flow information
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||||||||
Cash paid during the year for income taxes
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$ | - | $ | 79,276 | ||||
Non-cash financing activities
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||||||||
Cashless exercise of stock options
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$ | 3,220 | $ | 22,427 |
Three Months Ended December 31
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||||||||
2014
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2013
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|||||||
Net income
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$ | 1,069,373 | $ | 1,982,326 | ||||
Weighted average common shares
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13,222,180 | 12,689,412 | ||||||
Dilutive potential common shares
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359,254 | 855,012 | ||||||
Weighted average dilutive common shares outstanding
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13,581,434 | 13,544,424 | ||||||
Net income per common share:
|
||||||||
Basic
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$ | 0.08 | $ | 0.16 | ||||
Diluted
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$ | 0.08 | $ | 0.15 |
December 31,
2014
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September 30,
2014
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|||||||
Less than one year
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$ | 6,894,000 | $ | 6,632,000 | ||||
1-3 years
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8,303,000 | 8,302,000 | ||||||
Total
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$ | 15,197,000 | $ | 14,934,000 |
Number of options
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Weighted average
exercise price
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|||||||
Outstanding at September 30, 2014
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373,051 | $ | 4.93 | |||||
Granted
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- | - | ||||||
Exercised
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(1,450 | ) | 3.10 | |||||
Cancelled or Forfeited
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- | - | ||||||
Outstanding at December 31, 2014
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371,601 | $ | 4.94 |
Number of shares
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Weighted
average grant
date fair value
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|||||||
Unvested shares at September 30, 2014
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518,515 | $ | 10.02 | |||||
Granted
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3,000 | 13.33 | ||||||
Vested
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- | - | ||||||
Forfeited
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- | - | ||||||
Unvested at December 31, 2014
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521,515 | $ | 10.04 |
December 31, 2014
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September 30, 2014
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|||||||
Raw materials
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$ | 3,691,417 | $ | 3,729,160 | ||||
Work-in-progress
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483,593 | 292,557 | ||||||
Finished goods
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1,184,145 | 1,368,625 | ||||||
$ | 5,359,155 | $ | 5,390,342 |
Three Months Ended December 31,
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||||||||
2014
|
2013
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|||||||
Customer A
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23 | % | 11 | % | ||||
Customer B
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* | 48 | % |
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Not applicable.
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ISSUER PURCHASES OF EQUITY SECURITIES
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||||||||||||||||
Period
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Total
Number
of Shares
Purchased
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Average
Price Paid
per Share
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Total Number of
Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
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Approximate Dollar Value
of Shares that
May Yet Be Purchased
Under the Program (1)
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||||||||||||
October 1-31, 2014
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—
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—
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—
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—
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||||||||||||
November 1-30, 2014
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—
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—
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—
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$ |
8,000,000
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|||||||||||
December 1-31, 2014
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14,407
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$ |
11.81
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14,407
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7,829,830
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|||||||||||
Total
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14,407
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$ |
11.81
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14,407
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$ |
7,829,830
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(1)
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Amount remaining from the $8,000,000 repurchase authorization approved by the Company’s Board of Directors in November 2014. The program does not obligate Clearfield to repurchase any particular amount of common stock during any period. The repurchase will be funded by cash on hand. The repurchase program is expected to continue indefinitely until the maximum dollar amount of shares has been repurchased or until the repurchase program is earlier modified, suspended or terminated by the Board of Directors.
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February 4, 2015
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/s/ Cheryl P. Beranek
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By: Cheryl P. Beranek
Its: President and Chief Executive Officer
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(Principal Executive Officer)
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February 4, 2015
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/s/ Daniel Herzog
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By: Daniel Herzog
Its: Chief Financial Officer
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(Principal Financial and Accounting Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Clearfield, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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February 4, 2015
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/s/ Cheryl P. Beranek
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By: Cheryl P. Beranek, President and Chief Executive Officer
|
||
(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Clearfield, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
February 4, 2015
|
/s/ Daniel Herzog
|
|
Daniel Herzog, Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
February 4, 2015
|
/s/ Cheryl P. Beranek
|
|
By: Cheryl P. Beranek, President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
February 4, 2015
|
/s/ Daniel Herzog
|
|
Daniel Herzog, Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
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Note 4 - Stock Based Compensation (Details) - Stock Option Activity (USD $)
|
3 Months Ended | |
---|---|---|
Dec. 31, 2014
|
Dec. 31, 2013
|
|
Stock Option Activity [Abstract] | ||
Outstanding at September 30, 2014 | 373,051 | |
Outstanding at September 30, 2014 | $ 4.93 | |
Exercised | (1,450) | (20,400) |
Exercised | $ 3.10 | |
Outstanding at December 31, 2014 | 371,601 | |
Outstanding at December 31, 2014 | $ 4.94 |
Note 4 - Stock Based Compensation
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2014
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Note 4. Stock Based Compensation
The Company recorded $283,627 of compensation expense related to current and past option grants, restricted stock grants and the Company’s Employee Stock Purchase Plan (“ESPP”) for the three months ended December 31, 2014. The Company recorded $188,160 of compensation expense related to current and past equity awards for the three months ended December 31, 2013. This expense is included in selling, general and administrative expense. As of December 31, 2014, $4,968,406 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 9.8 years.
There were no stock options granted during the three-month periods ended December 31, 2014 and December 31, 2013. The following is a summary of stock option activity during the three months ended December 31, 2014:
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At December 31, 2014, the weighted average remaining contractual term for all outstanding stock options was 2.3 years and their aggregate intrinsic value was $2,737,943. At December 31, 2014, the weighted average remaining contractual terms of options that were exercisable was 2.4 years and their aggregate intrinsic value was $2,383,960. During the three months ended December 31, 2014, the Company received proceeds of $1,276 from the exercise of stock options. During the three months ended December 31, 2013, exercised stock options totaled 20,400 shares, resulting in $25,327 of proceeds to the Company.
Restricted Stock
The Company’s 2007 Stock Compensation Plan permits its Compensation Committee to grant other stock-based awards. The Company makes restricted stock grants to key employees and non-employee directors that vest over one to ten years.
During the three-month period ended December 31, 2014, the Company granted employees restricted stock awards totaling 3,000 shares of common stock, with a vesting term of ten years and a fair value of $13.33 per share. Restricted stock transactions during the three-month period ended December 31, 2014 are summarized as follows:
Employee Stock Purchase Plan
Clearfield, Inc.’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide that participating employees may purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phases that ended on December 31, 2014 and December 31, 2013, employees purchased 10,097 and 10,920 shares at a price of $10.46 and $8.28 per
share, respectively. After the employee purchase on December 31, 2014, 175,559 shares of common stock were available for future purchase under the ESPP.
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