SHARE-BASED PAYMENT

6 Months Ended

Mar. 31, 2013

SHARE-BASED PAYMENT [Abstract]

SHARE-BASED PAYMENT

NOTE 11—SHARE-BASED PAYMENT

Stock options are issued under the Amended and Restated 2004 Stock Incentive Plan, or the Plan. The Plan provides our Board of Directors discretion in creating employee equity incentives, including incentive and non-statutory stock options. Options granted in and after August 2010 typically vest over four years, with 25% of the shares subject to each grant vesting on the first anniversary of the grant date and an additional 1/48^th of the shares vesting each month thereafter until the fourth anniversary of the grant date, and expire ten years from the grant date.  Options granted prior to August 2010 typically vest over five years, with 20% of the shares subject to each grant vesting on each of the first five anniversaries of the grant date, and expire ten years from the grant date.  At March 31, 2013, there were 1,105,323 shares of common stock available for future issuance under the Plan.

STOCK OPTIONS—AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

The following table shows the weighted-average assumptions we used to calculate fair value of share-based options using the Black-Scholes model, as well as the weighted-average fair value of options granted and the weighted-average intrinsic value of options exercised.  We granted 15,400 options from the Plan during the three months ended March 31, 2013 and during the six months ended March 31, 2013, we granted 362,900 options from the Plan.

	Three months ended March 31,						Six months ended March 31,
	2013			2012			2013			2012
Weighted-average assumptions used in Black-Scholes model:
Expected period that options will be outstanding (in years)		5.00			5.00			5.00			5.00
Interest rate (based on U.S. Treasury yields at time of grant)		0.90	%		0.73	%		0.63	%		0.93	%
Volatility		47.88	%		49.09	%		48.09	%		48.76	%
Dividend yield		—			—			—			—
Weighted-average fair value of options granted	$	2.49		$	1.86		$	2.16		$	1.53
Weighted-average intrinsic value of options exercised (in thousands)	$	14		$	0		$	46		$	0

Expected volatilities are based on historical volatility of our stock. In addition, we used historical data to estimate option exercise and employee termination within the valuation model.

STOCK OPTIONS

Stock option activity for all option grants for the six months ended March 31, 2013 is as follows:

				Weighted-average
(in thousands, except per share data)	Shares under option			Exercise price		Remaining contractual term		Aggregate intrinsic value
Options outstanding at September 30, 2012		3,160		$	5.94
Granted		363			5.26
Exercised		(81	)		4.97			$	46
Forfeitures or expirations		(196	)		8.73
Options outstanding at March 31, 2013		3,246		$	5.72		7.35 years	$	1,949
Options vested and expected to vest at March 31, 2013		2,813		$	5.83		7.48 years	$	763
Options exercisable at March 31, 2013		1,704		$	6.48		6.3 years	$	737

Stock-based compensation expense for all stock-based compensation awards granted was based on the grant-date fair value using the Black-Scholes model.  We recognize compensation expense for stock option awards on a ratable basis over the requisite service period of the award.  Stock-based compensation expense was $0.3 million and $0.3 million for the three months ended March 31, 2013 and 2012, respectively, and $0.8 million and $0.7 million for the six months ended March 31, 2013 and 2012, respectively.  In the six months ended March 31, 2013, former employees exercised 80,783 options for an aggregate purchase price of $402,000.

As of March 31, 2013 a total of $2.5 million of unrecognized compensation cost related to stock options, net of estimated forfeitures, was expected to be recognized over a 2.51 year weighted-average period.

BOARD OF DIRECTOR RESTRICTED STOCK UNITS

In accordance with our Board compensation package, our non-employee Board members are awarded 9,000 restricted stock units annually upon their election to our Board at our annual meeting. The following awards are outstanding as of March 31, 2013:

	Total restricted stock units awarded		Vesting date
2012 annual meeting		63,000	April 13, 2013

The amount payable to each member at the vesting date will be the equivalent of 9,000 restricted stock units multiplied by the closing price of our stock on the vesting date.  On April 5, 2013 we granted 9,000 restricted stock units to each of our non employee directors which will vest on April 5, 2014.

The following table provides information on the expense related to the restricted stock unit awards to the Board of Directors:

(in thousands)	2012 annual meeting
Expense recognized for the quarter ended March 31, 2013	$	91
Expense recognized through March 31, 2013		342
Expense to be recognized through vesting date		351