Shareholders' Equity and Share-based Compensation

9 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Shareholders' Equity and Share-based Compensation

Share Repurchase

In September 2017, the Board of Directors approved a new repurchase program (the “Repurchase Program”) that allowed the Company to repurchase its common shares from the open market pursuant to a pre-established Rule 10b5-1 trading plan or through privately negotiated transactions up to an aggregate of $30.0 million. The amount and timing of any repurchases under the Repurchase Program depend on a number of factors, including but not limited to, the trading price, volume, and availability of the Company's common shares. Shares repurchased under this program are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction of shareholders' equity. From time to time, treasury shares may be reissued as part of the Company's stock-based compensation programs. Gains on re-issuance of treasury stock are credited to additional paid-in capital; losses are charged to additional paid-in capital to offset the net gains, if any, from previous sales or re-issuance of treasury stock. Any remaining balance of the losses is charged to retained earnings.

During the nine months ended March 31, 2020, the Company did not repurchase any shares from the open market. Since the inception of the program, the Company repurchased an aggregate of 6,784,648 shares from the open market for a total cost of $67.3 million, at an average price of $9.92 per share, excluding fees and related expenses. No repurchased shares have been retired. Of the 6,784,648 repurchased shares, 145,428 shares with a weighted average repurchase price of $10.32 per share, were reissued at an average price of $5.30 per share pursuant to option exercises and vested restricted share units. As of March 31, 2020, approximately $13.4 million remained available under the Repurchase Program.

Time-based Restricted Stock Units ("TRSU")

The following table summarizes the Company's TRSU activities for the nine months ended March 31, 2020:



	Number of Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2019	906,341		$	14.09	1.62	$	8,465,225
Granted	483,947		$	8.41
Vested	(416,415	)	$	13.60
Forfeited	(21,125	)	$	13.61
Nonvested at March 31, 2020	952,748		$	11.42	1.85	$	6,107,115

Market-based Restricted Stock Units ("MSUs")

During the quarter ended September 30, 2018, the Company granted 1.3 million market-based restricted stock units ("MSUs") to certain personnel. The number of shares to be earned at the end of performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period. The MSUs vest in four equal annual installments after the end of each performance period. The Company estimated the grant date fair values of its MSUs with derived service periods of 4.5 to 7.5 years using a Monte-Carlo simulation model with the following assumptions: Risk-free interest rate of 2.7%, expected term of 3.5 years, expected volatility of 38.8% and dividend yield of 0%. The Company recorded approximately $0.1 million and $0.4 million of expenses for these MSUs during the three and nine months ended March 31, 2020, respectively, and approximately $0.1 million and $0.5 million during the three and nine months ended March 31, 2019, respectively.

Performance-based Restricted Stock Units ("PRSUs")

The Company granted performance-based RSUs (“PRSUs”) to certain personnel. The number of shares to be earned under the PRSUs is determined based on the level of attainment of predetermined financial goals. The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial goals were met. The Company recorded approximately $0.4 million and $1.1 million of expense for these PRSUs during the three and nine months ended March 31,

2020, respectively, and approximately $0.8 million and $2.2 million during the three and nine months ended March 31, 2019, respectively.

The following table summarizes the Company's PRSUs activities for the nine months ended March 31, 2020:



	Number of Performance-based Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2019	596,724		$	13.95	1.88	$	5,573,402
Granted	155,000		$	7.36
Vested	(110,659	)	$	16.68
Forfeited	(80,354	)	$	11.69
Nonvested at March 31, 2020	560,711		$	11.92	1.89	$	3,594,158

Stock Options

The Company did not grant any stock options during the three and nine months ended March 31, 2020 and 2019. The number of options expected to vest is the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

The following table summarizes the Company's stock option activities for the nine months ended March 31, 2020:



					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise Price		Contractual	Aggregate
	Shares		Per Share		Term (in years)	Intrinsic Value
Outstanding at June 30, 2019	876,478		$	10.98	3.06	$	758,871
Exercised	(2,500	)	$	10.50		$	4,726
Canceled or forfeited	(55,000	)	$	15.00
Outstanding at March 31, 2020	818,978		$	10.71	2.48	$	—
Options vested and expected to vest	818,978		$	10.71	2.48	$	—
Exercisable at March 31, 2020	818,978		$	10.71	2.48	$	—

Employee Share Purchase Plan ("ESPP")

The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:




	Nine Months Ended March 31,
	2020
Volatility rate	46.4%
Risk-free interest rate	1.6%
Expected term	1.3 years
Dividend yield	0%

Share-based Compensation Expense

The total share-based compensation expense recognized in the condensed consolidated statements of operations for the periods presented was as follows:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Cost of goods sold	$	357	$	494	$	1,197	$	1,532
Research and development	991		555		1,987		1,929
Selling, general and administrative	1,528		2,063		4,548		7,198
	$	2,876	$	3,112	$	7,732	$	10,659

As of March 31, 2020, total unrecognized compensation cost under the Company's equity plans was $10.6 million, which is expected to be recognized over a weighted-average period of 2.2 years.